16026 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules

DEPARTMENT OF AGRICULTURE ACTION: Proposed rule. Agricultural Marketing Service 7 CFR Parts 1000, 1001, 1002, 1004, 1005, 1006, 1007, 1012, 1013, 1030, 1032, 1033, 1036, 1040, 1044, 1046, 1049, 1050, 1064, 1065, 1068, 1076, 1079, 1106, 1124, 1126, 1131, 1134, 1135, 1137, 1138 and 1139 [DA±97±12]

Milk in the New England and Other Marketing Areas; Decision on Proposed Amendments to Marketing Agreements and to Orders

AGENCY: Agricultural Marketing Service, USDA.

7 CFR Part Marketing area

1000 ...... General Provisions of Federal Milk Marketing Orders. 1001 ...... New England. 1002 ...... New York-New Jersey. 1004 ...... Middle Atlantic. 1005 ...... Carolina. 1006 ...... Upper Florida. 1007 ...... Southeast. 1012 ...... Tampa Bay. 1013 ...... Southeastern Florida. 1030 ...... Chicago Regional. 1032 ...... Southern Illinois-Eastern Missouri. 1033 ...... Ohio Valley. 1036 ...... Eastern Ohio-Western Pennsylvania. 1040 ...... Southern Michigan. 1044 ...... Michigan Upper Peninsula. 1046 ...... Louisville-Lexington-Evansville. 1049 ...... Indiana. 1050 ...... Central Illinois. 1064 ...... Greater Kansas City. 1065 ...... Nebraska-Western Iowa. 1068 ...... Upper Midwest. 1076 ...... Eastern South Dakota. 1079 ...... Iowa. 1106 ...... Southwest Plains. 1124 ...... Pacific Northwest. 1126 ...... Texas. 1131 ...... Central Arizona. 1134 ...... Western Colorado. 1135 ...... Southwestern Idaho-Eastern Oregon. 1137 ...... Eastern Colorado. 1138 ...... New Mexico-West Texas. 1139 ...... Great Basin.

SUMMARY: This final decision to October 1, 1999. This decision sets This decision does not provide for consolidates the current 31 Federal milk forth a replacement for the Class I price conducting referendums of producers to marketing orders into 11 orders. This structure and replaces the basic formula determine if they approve of the consolidation complies with the 1996 price with a multiple component issuance of the consolidated orders. Farm Bill which mandates that the pricing system. This decision also DATES: A notice to conduct a current Federal milk orders be establishes a new Class IV which would referendum on each of the consolidated consolidated into between 10 to 14 include milk used to produce nonfat dry orders will be published separately at a orders. This decision also conforms to milk, butter, and other dry milk future date. the Omnibus Consolidated and powders; reclassifies eggnog; and FOR FURTHER INFORMATION CONTACT: John Emergency Supplemental addresses other minor classification F. Borovies, Branch Chief, USDA/AMS/ Appropriations Bill, which requires that changes. Part 1000 is expanded to Dairy Programs, Order Formulation this decision be issued between include sections that are identical to all Branch, Room 2971, South Building, PO February 1 and April 4, 1999, and of the consolidated orders to assist in Box 96456, Washington, DC 20090– extends the time for implementing simplifying and streamlining the orders. 6456, (202) 720–6274, e-mail address Federal milk order reform amendments [email protected] (after

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April 19, 1999, the e-mail address will Legislative Requirements II. Legislative and Background change to [email protected]). Background Requirements For specific information on the Final Actions Completed During Developmental Regulatory Impact Analysis and the Phase Legislative Requirements Civil Rights Impact Analysis contact: Actions Completed During Rulemaking Section 143 of the Federal Agriculture John R. Mengel, Chief Economist, Phase Improvement and Reform Act of 1996 USDA/AMS/Dairy Programs, Office of Public Interaction and Input (Farm Bill), 7 USC 7253, required that Chief Economist, Room 2753, South Executive Order 12988 by April 4, 1999,1 the current Federal Building, PO Box 96456, Washington, Executive Order 12866 milk marketing orders issued under the DC 20090–6456, (202) 720–4664, e-mail Civil Rights Analysis Executive Summary Agricultural Marketing Agreement Act The Regulatory Flexibility Act and the address [email protected] of 1937, as amended (7 U.S.C. 601–674), Effects on Small Businesses (after April 19, 1999, the e-mail address Paperwork Reduction Act of 1995 be consolidated into between 10 to 14 2 will change to [email protected]). Request for Public Input on Analyses orders . The Secretary of Agriculture SUPPLEMENTARY INFORMATION: Preliminary Statement (Secretary) is also directed to designate Major changes from the proposed rule III. Discussion of Material Issues and the State of California as a Federal milk issued on January 21, 1998, are as Proposed Amendments to the Orders order if California dairy producers follows: Consolidation of marketing areas petition for and approve such an order. Basic formula price replacement and other In addition, the Farm Bill provided that 1. Consolidation of Marketing Areas class price issues the Secretary may address related issues (a) The Western New York State order Class I pricing structure such as the use of utilization rates and was removed from the proposed Classification of milk and related issues multiple basing points for the pricing of Northeast marketing area. Provisions applicable to all orders fluid milk and the use of uniform (b) Six currently-unregulated counties Regional Issues: multiple component pricing when were removed from the consolidated Northeast Region developing one or more basic prices for Central marketing area. Southeast Region manufacturing milk.3 (c) The current Western Colorado Midwest Region Besides designating a date for order was moved from the consolidated Western Region completion of the required Western order to the consolidated Miscellaneous and Administrative consolidation, the Farm Bill further Consolidation of the marketing service, Central marketing area along with 7 required that no later than April 1, 1997, administrative expense, and producer- currently-unregulated Colorado the Secretary shall submit a report to counties. settlement funds Consolidation of the transportation credit Congress on the progress of the Federal 2. Basic Formula Price Replacement balancing funds order reform process that included: a description of the progress made toward (a) The proposed Class III and Class General findings implementation, a review of the Federal IV pricing formulas are revised to adjust IV. Order Language order system in light of the reforms for product yields and make allowances General provisions that result in lowering the Class III and Northeast order provisions Appalachian order provisions 1 Section 143(b)(2) requires that a proposed rule IV prices. Florida order provisions be published by April 4, 1998, and Section (b) Barrel cheese prices (NASS 143(b)(3) provides that ‘‘in the event that the Southeast order provisions survey) are included in the Class III Secretary is enjoined or otherwise restrained by a Upper Midwest order provisions price formula. court order from publishing or implementing the Central order provisions consolidation and related reforms under subsection (c) The basis for measuring the Mideast order provisions (a), the length of time for which that injunction or protein content in milk is changed from Pacific Northwest order provisions other restraining order is effective shall be added a test for total nitrogen to a test for true Southwest order provisions to the time limitations specified in paragraph (2) protein. thereby extending those time limitations by a Arizona-Las Vegas order provisions period of time equal to the period of time for which (d) Advance pricing for Class I will Western order provisions the injunction or other restraining order is continue to be provided, but with a V. Appendix effective.’’ shorter time period (7 days vs. 25 days) A: Summary of Preliminary Suggested 2 Since this proceeding was initiated on May 2, prior to the effective month. The Order Consolidation Report 1996, the Black Hills, South Dakota and the proposed rule had suggested a 6-month B: Summary of Pricing Options Tennessee Valley orders have been terminated. Effective October 1, 1996, the operating provisions declining average mover. C: Summary of Classification Report of the Black Hills order were terminated (61 FR (e) Provides for advance pricing for D: Summary of Identical Provisions Report 47038), and the remaining administrative skim milk in Class II uses in the same E: Summary of Basic Formula Price Report provisions were terminated effective December 31, manner as for Class I. F: Summary of Revised Preliminary 1996 (61 FR 67927). Effective October 1, 1997, the Suggested Order Consolidation Report operating provisions of the Tennessee Valley order 3. Class I Price Structure were terminated (62 FR 47923). The remaining I. Prior Documents administrative provisions of the Tennessee Valley Adopts a Class I price structure that order will be terminated before this consolidation uses the generally higher differential Prior documents in this proceeding process is completed. 3 levels as proposed in Option 1A while include: The Omnibus Consolidated and Emergency retaining the pricing surface of the Supplemental Appropriations Bill, passed in October 1998, extended the time frame for Department’s preferred option. Proposed Rule: Issued January 21, 1998; published January 30, 1998 (63 FR implementing Federal milk order reform amendments from April 4, 1999, to October 1, 1999. 4. Classification 4802). The extension specifies that the final decision, (a) Cream cheese is moved from Class Correction: Issued February 19, 1998; defined as the final rule for purposes of this II to Class III. legislation, will be issued between February 1 and published February 25, 1998 (63 FR April 4, 1999, with the new amendments becoming (b) Shrinkage calculations are revised. 9686). effective on October 1, 1999. The legislation also Table of Contents provides that California has from the date of Extension of Time: Issued March 10, issuance of the final decision until September 30, I. Prior documents 1998; published March 13, 1998 (63 FR 1999, to become a separate Federal milk marketing II. Legislative and Background Requirements 12417). order.

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00003 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.001 pfrm08 PsN: 02APP2 16028 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules required, and any recommendations as well as related reforms. The USDA Northeast, Southeast, and West. considered appropriate for further met with interested parties to discuss Committee membership consisted of improvements and reforms. This report the reform process, assisted in both field and headquarters Dairy was submitted to Congress on April 1, developing ideas or provided data and Programs personnel. The committees 1997.4 analysis on various possibilities, issued were given specific assignments related Finally, the 1996 Farm Bill specified program announcements, and requested to their designated issue and began that USDA use informal rulemaking to public input on all aspects of the meeting in May 1996. implement these reforms. Federal order program. The In addition to utilizing USDA developmental phase began on April 4, Background personnel, partnerships were 1996, and concluded with the issuance established with two university The authorization of informal of the proposed rule on January 21, 1998 consortia to provide expert analyses on rulemaking to achieve the mandated (68 FR 4802). the issues relating to price structure and reforms of the Farm Bill has resulted in The second phase of the plan is the basic formula price options. Dr. Andrew a rulemaking process that is rulemaking phase. The rulemaking Novakovic of Cornell University led the substantially different from the formal phase began with the issuance and analysis on price structure and rulemaking process required to publication of the proposed rule. The published a staff paper entitled ‘‘U.S. promulgate or amend Federal orders. proposed rule provided the public 60 Dairy Sector Simulator: A Spatially The formal rulemaking process requires days to submit written comments on the Disaggregated Model of the U.S. Dairy reform proposals to USDA. On March that decisions by USDA be based solely Industry’’ and a research bulletin 10, 1998, (68 FR 12417) the comment on the evidentiary record of a public entitled ‘‘An Economic and period was extended for an additional hearing held before an Administrative Mathematical Description of the U.S. 30 days until April 30, 1998. In addition Law Judge. Formal rulemaking involves Dairy Sector Simulator’’ 6 Dr. Ronald to requests for written comments, four the presentation of sworn testimony, the Knutson of Texas A&M University led listening sessions were held to receive cross-examination of witnesses, the the analysis on basic formula price verbal comments on the proposed rule. filing of briefs, the issuance of a options and published three working All comments were reviewed and recommended decision, the filing of papers entitled ‘‘An Economic considered prior to the issuance of this exceptions, the issuance of a final Evaluation of Basic Formula Price (BFP) rule. decision that is voted on by affected Alternatives’’, ‘‘The Modified Product producers, and upon approval by The third and final phase of the plan is the implementation phase. The Value and Fresh Milk Base Price producers, the issuance of a final order. Formulas as BFP Alternatives’’, and The informal rulemaking process does implementation phase begins after this ‘‘Evaluation of ‘Final’ Four Basic not require these procedures. Instead, rule is published in the Federal Formula Price Options’’. 7 informal rulemaking provides for the Register. This phase consists of issuance of a proposed rule by the informational meetings conducted by Actions Completed During Agricultural Marketing Service, a period Market Administrator personnel and Developmental Phase of time for the filing of comments by referendums.5 The objective of the interested parties, and the issuance of a informational meetings is to inform USDA maintained frequent contact final decision by the Secretary. producers and handlers about the newly with the industry regarding the reform Referendums will be conducted to consolidated orders and explain the process. To begin, on May 2, 1996, the determine approval of the final decision projected effects on producers and Agricultural Marketing Service (AMS) by the requisite number of producers handlers in the new marketing order Dairy Division issued a memorandum to before the new orders will become areas. After informational meetings are interested parties announcing the held, the referendums will be planned procedures for implementing effective. 8 Full participation by interested conducted. Upon approval of the the Farm Bill . In this memorandum, all parties has been essential in the reform consolidated orders and related reforms interested parties were requested to of Federal milk orders. The issues are by the required number of producers in submit ideas on reforming Federal milk too important and complex to be each marketing area, a final order orders, specifically as to the developed without significant input implementing the new orders will be consolidation and pricing structure of from all facets of the dairy industry. The issued and published in the Federal orders. Input was requested by July 1, experience, knowledge, and expertise of Register. 1996. the industry and public have been Although all of the issues regarding On June 24, 1996, USDA issued a integral to the development of the rule. Federal milk order reform are press release announcing that a public To ensure that maximum public input interrelated, USDA established several forum would be held in Madison, into the process was received, USDA committees to address specific issues. Wisconsin, on July 29, 1996. The forum developed a plan of action and The use of committees allowed the would address price discovery reform process to be divided into more projected time line. The plan of action techniques for the value of milk used in manageable tasks. The committees developed consists of three phases: worked throughout the developmental Developmental, rulemaking, and 6 Copies of these reports may be obtained by and rulemaking phases. The committees implementation. contacting Ms. Wendy Barrett, Cornell University, The first phase of the plan was the established were: Price Structure, Basic ARME, 348 Warren Hall, Ithaca, NY 14853–7801, Formula Price, Identical Provisions, (607) 255–1581, developmental phase. The use of a 7 Classification, and Regional. The Copies of these reports may be obtained by developmental phase allowed USDA to contacting Dr. Ronald Knutson, Agricultural and Regional committee was divided into interact freely with the public to Food Policy Center, Dept. of Ag. Economics, Texas four subcommittees: Midwest, develop viable proposals that A&M University, College Station, TX 77843–2124, (409) 845–5913. accomplished the Farm Bill mandates, 5 As previously noted, this is also the time period 8 Copies of this announcement and all subsequent in which California can consider becoming a announcements and reports can be obtained from 4 Copies of the Report to Congress can be obtain- Federal order based on the Omnibus Consolidated Dairy Programs at (202) 720–4392, any Market ed from Dairy Programs at (202) 720–4392 or via the and Emergency Supplemental Appropriations Bill Administrator office, or via the Internet at http:// Internet at http://www.ams.usda.gov/dairy/. provisions. www.ams.usda.gov/dairy/.

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An Division issued a memorandum to On May 20, 1997, AMS Dairy Division informational packet describing the interested parties requesting input issued a memorandum to interested contents of the proposed rule was sent regarding all aspects of Federal milk parties announcing the release of a to interested parties. order reform and specifically as to its revised preliminary report on Federal On March 10, 1998, USDA issued a impact on small businesses. USDA milk order consolidation. The revisions document that extended the time for anticipated that the consolidation of were based on the input received from filing comments on the proposed rule an Federal orders would have an economic interested parties in response to the additional 30 days, until April 30, 1998. impact on handlers and producers initial preliminary report on order The document also announced that affected by the program, and USDA consolidation. (See Appendix F for USDA would conduct four listening wanted to ensure that, while report summary.) Instead of suggesting sessions to assist interested parties in accomplishing their intended purpose, 10 consolidated orders as in the first submitting comments to USDA. The the newly consolidated Federal orders report, the revised report suggested 11 listening sessions were held on March would not unduly inhibit the ability of consolidated orders and suggested the 30 in Atlanta, Georgia; Liverpool, New small businesses to compete. inclusion of some currently unregulated York; and Dallas, Texas; and on March On December 3, 1996, AMS Dairy territory. The memorandum requested 31 in Green Bay, Wisconsin. Division issued a memorandum to comments from all interested parties on On April 15, 1998, AMS Dairy interested parties announcing the the suggested consolidated orders and Programs announced the issuance of a release of the preliminary report on on any other aspect of the milk report entitled ‘‘Report on the Impacts Federal milk order consolidation. The marketing order program by June 15, of the Federal Order Reform Proposals report suggested the consolidation of the 1997. on Food and Nutrition Service then current 32 Federal milk orders into To elicit further input on the role of Programs, Participants, and ten orders. (See Appendix A for report the National Cheese Exchange price in Administering Institutions’’ by the Food summary.) The memorandum requested calculating the basic formula price, on and Nutrition Service of USDA. The input from all interested parties on the January 29, 1997, the Secretary issued a report analyzed the potential impacts of suggested consolidated orders and on press release announcing steps being the milk order reform pricing proposals any other aspect of the milk marketing taken by USDA to address concerns contained in the proposed rule on the order program by February 10, 1997. raised by dairy producers about how Food Stamp Program, the Women, On March 7, 1997, AMS Dairy milk prices are calculated. In the press Infants, and Children Program, and the Division issued a memorandum to release, the Secretary requested further National School Lunch and Breakfast interested parties announcing the comments from interested parties about Programs.9 The report indicated that release of three reports that addressed the use of the National Cheese Exchange adoption of the proposed rule with the Class I price structure, the in the determination of the basic either Class I price structure would have classification of milk, and the identical formula price, which is the minimum minimal economic impact on these provisions contained in a Federal milk price that handlers must pay dairy programs. Comments on the report were order. The price structure report farmers for milk used to manufacture requested by April 30, 1998. No consisted of a summary report and a Class III products (butter and cheese) comments were received. technical report and discussed several and the price used to establish the Class options for modifying the Class I price I and Class II prices. These comments Public Interaction and Input structure. (See Appendix B for report were requested by March 31, 1997, and As a result of the developmental summary.) The classification report were useful in analyzing alternatives to phase announcements and forum, more recommended the reclassification of the basic formula price in context of the than 1,600 individual comments were certain dairy products, including the order reform process. received by USDA. In addition to the removal of Class III-A pricing for nonfat individual comments, more than 2,000 dry milk. (See Appendix C for report Actions Completed During Rulemaking Phase form letters were received. As a result summary.) The identical provisions of the rulemaking phase proposed rule On January 21, 1998, USDA issued a report recommended simplifying, and listening sessions, nearly 4,500 proposed rule (68 FR 4802) that modifying, and eliminating unnecessary additional comments were received. A recommended consolidating the current differences in Federal order provisions. further breakdown of the rulemaking 31 orders into 11 orders, proposed two (See Appendix D for report summary.) comments by issue is as follows: 1,273 options for consideration as a Comments on the contents of these consolidation; 376 basic formula price; replacement for the Class I price reports, as well as on any other aspect 4,224 Class I price structure; 101 structure, and recommended replacing of the program, were requested from classification; and 79 provisions the basic formula price. The proposed interested parties by June 1, 1997. applicable to all orders. rule also recommended establishing a On April 18, 1997, AMS Dairy The proposed rule provided new Class IV which would include milk Division issued a memorandum to interested parties an opportunity to file used to produce nonfat dry milk, butter, interested parties announcing the comments until March 31, 1998. This and other dry milk powders; release of the preliminary report on period was later extended to April 30, recommended reclassifying eggnog and Alternatives to the Basic Formula Price 1998. Over 205 comments were (BFP). The report contained suggestions, cream cheese, addressing other minor ideas, and initial findings for BFP classification issues; and recommended 9 Copies of this report can be obtained from Dairy alternatives. Over eight categories of expanding part 1000 to include sections Programs at (202) 720–4392, or via the Internet at options were identified with four that are identical to all of the http://www.ams.usda.gov/dairy/.

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More than 1,000 this rule will not preempt any state or All comments that were reviewed by comments were received from interested local laws, regulations, or policies, USDA personnel were available for parties that specifically stated or unless they present an irreconcilable public inspection at USDA. To assist the documented they were small conflict with the rule. public in accessing the comments, businesses. However, this number may The Agricultural Marketing USDA contracted to have the comments not be fully representative of the Agreement Act of 1937 (AMAA), as scanned and published on compact number of small businesses that actually amended, provides that administrative discs. The use of this technology submitted comments because a majority proceedings must be exhausted before allowed interested parties throughout of commenters did not indicate their parties may file suit in court. Under the United States access to the size. A few comments specifically information received by USDA. section 608c(15)(A) of the Act, any USDA also made all publications and addressed the IRFA, Executive Order handler subject to an order may request requests for information available on the 12866, and the paperwork reduction modification or exemption from such Internet. A separate page under the analysis. order by filing with the Secretary a Dairy Programs section of the AMS All announcements and an petition stating that the order, any Homepage was established to provide information packet summarizing the provision of the order, or any obligation information about the reform process. proposed rule were mailed to over imposed in connection with the order is To assist in transmitting correspondence 20,000 interested parties, State not in accordance with law. A handler to USDA, a special electronic mail Governors, State Department of is afforded the opportunity for a hearing account— Agriculture Secretaries or on the petition. After a hearing, the [email protected]—was Commissioners, and the national and Secretary would rule on the petition. The Act provides that the district court opened to receive input on Federal milk ten regional Small Business of the United States in any district in order reforms. Administration offices. In addition, which the handler is an inhabitant, or USDA personnel met frequently with most dairy producers under the orders has its principal place of business, has interested parties from May 1996 were notified through regular market jurisdiction in equity to review the through the issuance of the proposed service bulletins published by Market rule to gather information and ideas on Secretary’s ruling on the petition, Administrators on a monthly basis. provided a bill in equity is filed not the consolidation and reform of Federal Press releases were issued by USDA for milk orders. During this time period, later than 20 days after the date of the the May 2, 1996, December 3, 1996, USDA personnel addressed over 250 entry of the ruling. January 29, 1997, March 7, 1997, and groups comprised of more than 22,000 May 20, 1997, announcements; for the Executive Order 12866 individuals on various issues related to Federal order reform. July 31, 1996, public forum; for the The Department is issuing the final USDA personnel also conducted in- January 21, 1998, proposed rule; and for decision in conformance with Executive person briefings for both the Senate and the March 30 and 31, 1998, listening Order 12866. The final decision is House Agricultural Committees on the sessions and extension of time for determined to be economically progress of Federal milk order reforms. submitting comments.10 These press significant for the purposes of Executive Since May 1996, nine briefings were releases were distributed to Order 12866. When adopting conducted for the committees. The approximately 33 wire services and regulations which are determined to be briefings advised the committees of the trade publications and to each State economically significant, agencies are plan of action for implementing the Department of Agriculture required, among other things, to: Assess Farm Bill mandates; explained the Communications Officer. These the costs and benefits of available preliminary report on the consolidation methods of notification helped to ensure regulatory alternatives; base regulatory of Federal milk orders; explained the that virtually all identified small decisions on the best reasonably- contents of the reports addressing Class businesses were contacted. obtainable technical, economic, and I price structure, classification of milk, Departmental personnel, both in the other information; avoid duplicative identical provisions and basic formula field and from Washington, actively met regulations; and tailor regulations to price; discussed the congressional with interested parties to gather input impose the least burden on society report; and explained the proposed rule and to clarify and refine ideas already consistent with obtaining regulatory contents. submitted. Formal presentations, round objectives. Therefore, to assist in To ensure the involvement of all table discussions, and individually fulfilling the objectives of Executive interested parties, particularly small scheduled meetings between industry Order 12866, the Department prepared a businesses as defined in the Initial representatives and Departmental final Regulatory Impact Analysis (RIA) Regulatory Flexibility Analysis (IRFA), personnel were held. Over 250 for this action. Information contained in in the process of Federal order reform, organizations and more than 22,000 the RIA pertains to the costs and three primary methods of contact were benefits of the revised regulatory individuals were reached through this used: direct written notification, structure and is summarized in the method. Of these individuals, publication of notices through various following analysis. Copies of the RIA approximately 13,400 were identified as media forms, and speaking and meeting can be obtained from Dairy Programs at small businesses. with organizations and individuals (202) 720–4392, any Market regarding the issue of Federal order Administrator office, or via the Internet 10 Copies of these press releases may be obtained reforms. In addition, information has from Dairy Programs at (202) 720–4392, or via the at http://www.ams.usda.gov/dairy. been made available to the public via Internet at http://www.ams.usda.gov/news/ This regulatory action is in the Internet. USDA also made one newsrel.htm. accordance with section 143 of the

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Federal Agriculture Improvement and component pricing system that derives sections of the regulations were Reform Act of 1996, 7 U.S.C. 7253, (the component values from surveyed prices discussed that were considered to be Farm Bill) which required the Secretary of manufactured dairy products. These economically significant. Not all of the of Agriculture (Secretary) to consolidate changes set the stage for increasing changes contained in the proposed rule the existing 31 Federal milk marketing efficiencies in supplying the milk needs were considered economically orders, as authorized by the AMAA, into of Class I markets and address concerns significant. The sections individually between 10 and 14 orders. The Farm that the BFP is no longer a statistically addressed in the January 21st proposed Bill further provided that the Secretary significant measure of the value of rule were marketing area consolidation, may address related issues such as the manufacturing milk. the BFP, the Class I pricing structure use of utilization rates and multiple The rule also classifies milk into four and classification provisions. Since basing points for the pricing of fluid classes according to the products made these are adopted together in the final milk and the use of uniform multiple from such milk. Milk used to produce decision, this analysis reviews the component pricing when developing defined fluid milk products is classified impacts of adopting all of the provisions one or more basic formula prices for as Class I milk. Milk used to produce simultaneously on the dairy industry. manufacturing milk. The Secretary was defined soft manufactured products is The analysis also reviews the impacts of also directed to designate the State of classified as Class II milk. Class III milk adopting the provisions contained in the California as a Federal milk order if is milk used to produce cream cheese January 21st proposed rule with two California dairy producers petition for and defined hard manufactured cheeses, alternative Class I pricing structures. and approve such an order. Finally, the and Class IV milk is milk used to The final RIA and the final decision Farm Bill specified that the Department produce butter and all milk powders. explain in detail the components of Agriculture use informal rulemaking The minimum monthly price for milk adopted in the Federal order regulations to implement these reforms. classified as Class I is equal to the Class and analyzed by the model. A review of The Farm Bill required that a I differential specified for each the projected economic impacts of the proposed rule be published by April 4, marketing order plus the Class I price final decision and the projected 1998, and all reforms of the Federal mover announced on or before the 23rd economic impacts of the alternatives milk order program be completed by day of the month preceding the month for which the price is being announced. that were considered on dairy April 4, 1999. However, the Omnibus The Class I price mover is equal to the producers, processors, consumers, and Consolidated and Emergency higher result from the formulas used to international trade follows. The Supplemental Appropriations Bill, establish Class III and Class IV prices projected impacts are compared to the passed in October 1998, extended the using weighted average prices for baseline projections over a 6-year period time frame for implementing Federal manufactured products as published by milk order reform amendments from from the years of 2000–2005. The the National Agricultural Statistics April 4, 1999, to October 1, 1999. The baseline assumes that the Class III price Service (NASS) for the most recent two extension specified that the final would be the BFP, the Class II price weeks preceding the 23rd of the month. decision, defined as the final rule for would be the BFP plus 30 cents, each Weekly prices are weighted by sales purposes of this legislation, be issued region’s Class I price would be the BFP volumes reported by NASS. plus the current Class I differential and between February 1 and April 4, 1999, Finally, this rule expands Part 1000 to with the new amendments becoming the Class III-a price would continue. include provisions that are identical The RIA details the impacts of the final effective on October 1, 1999. The within each consolidated order to assist legislation also provides that California decision and the other options in simplifying the regulations. These considered on each current order, the has from the date of issuance of the final provisions include the definitions of decision until September 30, 1999, to Federal orders combined, the State of route disposition, plant, distributing California, and the United States. become a separate Federal milk plant, supply plant, nonpool plant, marketing order. handler, other source milk, fluid milk The following table summarizes the The final decision sets forth the product, fluid cream product, impacts of adopting the newly consolidation of the current 31 Federal cooperative association, and commercial consolidated orders and their specific milk orders into 11 orders. The food processing establishment. In provisions, including the Class I price marketing areas are: Northeast, Mideast, addition, the milk classification section, structure adopted in this final decision. Upper Midwest, Central, Appalachian, pricing provisions, and most of the The table also provides data detailing Southeast, Florida, Southwest, Arizona- provisions relating to payments have the projected impacts of the Las Vegas, Western, and Pacific been included in the General consolidated orders and the specific Northwest. Several issues related to the Provisions. These changes adhere with provisions utilizing the two alternative consolidation of Federal milk orders are the efforts of the National Performance Class I price structures—Location- also addressed. The final decision Review—Regulatory Reform Initiative to Specific Differentials (Option 1A) and contains a replacement for the current simplify, modify, and eliminate Relative-Value Specific Differentials Class I price structure and the basic unnecessary repetition of regulations. (Option 1B). Since adopting new formula price (BFP). The final decision Unique regional issues or marketing Federal milk order provisions affect adopts a Class I price structure that uses conditions have been considered and both the regulated dairy industry and the proposed Option 1B price surface as included in each market’s order associated producers, as well as the modified to provide for better alignment provisions. unregulated and State regulated dairy of Class I prices and increases the In the summary of the initial RIA for industries, a comparison of the impacts differential level by 40 cents. The the January 21, 1998, proposed rule, the both Federally and U.S.-wide are current BFP is replaced with a multiple economic impact of certain individual included where possible.

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COMPARISONS OF CERTAIN IMPACTS OF CONSOLIDATED ORDER CHANGES UTILIZING THREE PRICE STRUCTURES ON FEDERAL ORDER (FED) AND U.S. DATA: 6-YEAR AVERAGES (2000±2005)1

Change from baseline Unit Baseline Modified op- Modified op- Final decision tion 1B tion 1A

Class I Diff. (Fed) ...... $/cwt ...... 2.56 ¥0.29 ¥0.69 0.04 Class I price (Fed) ...... $/cwt ...... 16.22 ¥0.19 ¥0.49 0.08 Class I price (U.S.) ...... $/cwt ...... 16.26 ¥0.14 ¥0.38 0.06 All-Milk Price (Fed) ...... $/cwt ...... 15.23 ¥0.02 ¥0.10 0.03 All-Milk Price (U.S.) ...... $/cwt ...... 14.73 0.00 ¥0.05 0.04 Milk Marketings (Fed) 2 ...... mil lbs ...... 111,182.0 8.3 ¥130.8 149.0 Milk Marketings (U.S.) ...... mil lbs ...... 165,142.2 15.2 ¥90.9 128.7 Class I use (Fed) ...... mil lbs ...... 46,955.7 42.0 106.7 ¥16.6 Class I use (U.S.) ...... mil lbs ...... 58,782.2 37.7 98.8 ¥14.9 Cash Receipts (Fed) 3 ...... mil $ ...... 16,944.5 ¥2.5 ¥128.4 104.9 Cash Receipts (U.S.) 4 ...... mil $ ...... 24,347.9 3.5 ¥89.9 77.0 Retail Price (Fed) ...... $/gal ...... ¥0.02 ¥0.04 0.01 Fluid Expend. (Fed) ...... mil $ ...... 7,617.8 ¥80.2 ¥215.4 36.4 Fluid Expend. (U.S.) ...... mil $ ...... 9,562.0 ¥79.1 ¥209.7 31.3 Manufac. Expend. (Fed) ...... mil $ ...... 9,326.7 77.7 87.0 68.5 Manufac. Expend. (U.S.) ...... mil $ ...... 14,785.9 82.5 119.8 45.7 1 Includes the effects of the Class II, III, and IV pricing formulas. 2 Changes in the Final Decision and Modified Option 1A marketings do not include the additional milk from the Upper Midwest and Chicago Regional orders that is expected to be pooled under these options. 3 Cash receipts do not reflect the termination of the $0.15 per hundredweight transportation credit in the New York-New Jersey order and ex- clude the income from additional pooled milk in the consolidated Upper Midwest order for the Final Decision and Modified Option 1A. 4 Cash receipts do not reflect the termination of the $0.15 per hundredweight transportation credit in the New York-New Jersey order and ex- clude the income from additional pooled milk in the consolidated Upper Midwest order for the Final Decision and Modified Option 1A.

As is evidenced by the summary Final Decision annual cash receipts are projected to table, the economic impacts resulting A brief review of the impacts that are decline from the baseline an average of from the adoption of the final decision projected to occur with the $2.5 million during the 6-year period. are minimal when compared to the total implementation of the final decision With the baseline cash receipts values included in the Federal order are: averaging $16,944.5 million this system and in the U.S. This is also true Producers. In general, producers in represents a very insignificant with the alternative options that were markets located in the western, reduction. Fifteen markets are projected considered. Changes in the all-milk southwestern, and northeastern areas of to have increases with 18 markets price, milk marketings, Class I use, and the U.S. may not fare as well as projected to have decreases. cash receipts all represent less than one producers located in other parts of the Processors. Since the final decision is percent of the total baseline projections. country, as measured by the all-milk expected to have little effect on where Although the total impacts are minimal price and cash receipts from milk milk is produced, little impact is from a national perspective, producers, marketings. The average all-milk price expected on fluid milk processors or processors, and consumers may for the combined Federal order markets manufacturers of dairy products. experience a greater impact on a more is expected to average $0.02 per Impacts on fluid milk processors will localized level as is described in the hundredweight lower than the baseline. likely result from changes in the RIA. The average all-milk price is projected minimum Class I and Class II prices that The consolidation of Federal milk to increase in 13 current markets from are the handler’s obligation under the orders into 11 orders with the adopted $0.01 to $0.52 per hundredweight and Federal order system. Fluid processors price structure and all other provision decrease in 19 markets from $0.01 to in 14 of the current Federal order modifications of the final decision best $0.50. One market is estimated to markets will experience increased adheres to the requirements of the Farm average unchanged. The average all- differentials, while processors in 17 of Bill while fulfilling the objectives of the milk price throughout the entire U.S. is the markets will see decreases. Fluid AMAA. The changes adopted in the projected to remain unchanged. It is processors in two markets will see no final decision enhance the efficiencies important to recognize that the all-milk change. The estimated weighted average of fluid milk markets while maintaining price can be impacted considerably by Class I differential for all current equity among processors of fluid milk the change in the Class I utilization due Federal order markets would decrease selling in marketing order areas and to consolidation and the necessary $0.29 per hundredweight. The all- among dairy farmers supplying the alignment of Class I prices within market average Federal order Class I areas’ fluid demands. The final decision consolidated areas. price would decrease $0.19 per provisions achieve this while having Over the 2000–2005 period, gross hundredweight when compared to the minor overall impacts on the Federal cash receipts within the Federal order baseline during the years of 2000–2005. order system and on the U.S. dairy system are expected to increase an The value of manufacturing milk would industry. Although both of the estimated $222.3 million primarily be increased, on average, $82.5 million alternatives considered also have because of changes in transportation per year during the six-year period. minimal impacts, the final decision best payments and the pooling of additional Consumers. Since adoption of the achieves economic efficiencies, equity, milk under the Federal order system. final decision is projected to result in a and program objectives. After adjusting for these changes, slight decrease in the average Class I

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00008 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.009 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16033 price for the years of 2000–2005, it is was expected to average $0.03 per average Class I price for the period of expected that average retail prices will hundredweight higher than the baseline the years 2000–2005, it was expected to decrease about $0.02 per gallon. On an during the years of 2000–2005. The minimally increase retail prices an individual order basis, the changes in average all-milk price was projected to average of $0.01 per gallon. On an the average retail price per gallon may increase in 15 current markets from individual order basis the changes in range from an increase of $0.06 to a $0.01 to $0.34 per hundredweight and the average retail price per gallon would decrease of $0.09. Although consumers decrease in 18 markets from $0.01 to have ranged from an increase of $0.05 will be spending less on fluid milk $0.66. These changes would have to a decrease of $0.01. As a result of the products, consumption is projected to resulted in changing the gross cash price increase, consumers would have remain relatively unchanged. receipts on an individual order basis spent slightly more on fluid milk International Trade. Adopting the during this period ranging from an products and purchased about the same final decision is not expected to have a annual average decrease of $10.3 amount of milk for fluid use. significant impact on domestic butter million to an increase of $48.4 million. International Trade. Options 1B or 1A and nonfat dry milk prices and Overall, gross cash receipts would have were not expected to have a significant therefore, little change in international averaged $104.9 million higher than impact on domestic butter and nonfat trade is expected. International trade of currently received. dry milk prices and therefore, little raw milk and fluid milk products Processors. Since Option 1B would change in international trade would between the United States, Mexico, and have lowered the Class I differentials by have resulted. International trade of raw Canada should be unaffected. However, a weighted average of $0.69 per milk and fluid milk products between the increase in the Class II price could hundredweight, the all-market average the United States, Mexico, and Canada negatively affect the Mexican market for Class I price charged to fluid handlers would have been unaffected. those products. would have declined by $0.49 per In response to the final decision, the hundredweight when compared to the Food and Nutrition Service updated the Other Alternatives baseline during the years of 2000–2005. analysis on the impacts of Federal Order Although implementation of the Lower Class I prices would have been reform provisions on Food and consolidated orders with either the expected to increase sales of fluid milk Nutrition Service programs, Option 1B or Option 1A price surface within the Federal order system by an participants, and administering would still result in less than a annual average of 106.7 million pounds, institutions. The updated report projected one percent change in overall representing less than a one percent analyzes the potential impacts of the Federal order and U.S. prices, cash increase. Similar responses would have milk order reform pricing provisions receipts, and marketings, these two occurred throughout the U.S. Fluid contained in the final decision on the alternatives do not promote market processors would have benefitted from Food Stamp Program, the Women, efficiencies, equity or program lower fluid milk prices and increased Infants, and Children Program, and the objectives as well as the provisions fluid milk sales. National School Lunch and Breakfast adopted and would not result in the Option 1A would have increased Programs. The report also analyzes most preferable allocation of resources Class I differentials by a weighted impacts of adopting either of the over time. A brief review of the impacts average of $0.04 per hundredweight alternative Class I price structure that were projected to occur with the resulting in the all-market average Class options. The report indicates that implementation of these two I price charged to fluid handlers adoption of the final decision alternatives are: increasing by $0.08 per hundredweight provisions, as well as either of the Producers. In general, Option 1B when compared to the baseline during alternatives considered, will have would have reduced producer income the years of 2000–2005. Since the minimal economic impact on these in total and would have reduced the impact of the increased Class I prices programs. This report is included in the proportion of the Class I value would have resulted in an insignificant final RIA appendix. represented in Federal order pools. decrease in fluid milk consumption The impacts of the provisions adopted Mainly producers located in the Upper within the Federal order system, a in the final decision or either of the Midwest and Florida areas would have decrease of 16.6 million pounds, and alternatives considered are minimal benefitted while producers throughout within the U.S., a decrease of 14.9 when compared to the total marketings the rest of the U.S. would have been million pounds, this option would have and revenue generated in the dairy negatively impacted. The all-milk price little expected overall effect on industry both on a national and Federal for all Federal order markets combined processors or manufacturers of dairy order basis. However, neither of the was expected to average $0.10 per products. alternative options considered would hundredweight lower than the baseline Consumers. Since adoption of Option appear to improve market efficiencies or during the years of 2000–2005. The 1B was projected to result in a decrease equity as well as adopting the average all-milk price was projected to in the average Class I price for the provisions contained in the final increase in 10 current markets from period 2000–2005, it was expected that decision. Based on the analyses $0.06 to $0.42 per hundredweight and retail prices would decrease an average completed, the final decision decrease in 23 markets from $0.01 to of $0.04 per gallon. On an individual regulations have been tailored to impose $0.61 during this time period. This order basis the changes in the average the least burden on society while would have resulted in changing the retail price per gallon would have meeting regulatory objectives. In doing gross cash receipts on an individual ranged from an increase of $0.03 to a so, these regulations will replace current order basis during this period ranging decrease of $0.12. As a result of the regulations and will not duplicate any from an annual average decrease of overall price decrease, consumers current regulations that may exist. $48.4 million to an increase of $38.5 would have spent less on fluid milk million. Overall, gross cash receipts products while increasing consumption. Civil Rights Impact Analysis Executive would have averaged $128.4 million The increase in fluid consumption was Summary less than currently received. estimated to be less than one percent. Pursuant to Departmental Regulation Under Option 1A the all-milk price Since adoption of Option 1A was (DR) 4300–4, a Civil Rights Impact for all Federal order markets combined projected to result in an increase in the Analysis (CRIA) reviews the final

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These Federal Milk Marketing Order program (AMAA), into between 10 and 14 orders. provisions include the definitions of to identify any provisions within the The Farm Bill further provided that the route disposition, plant, distributing final decision with actual or potential Secretary may address related issues plant, supply plant, nonpool plant, adverse effects for minorities, women, such as the use of utilization rates and handler, other source milk, fluid milk and persons with disabilities. multiple basing points for the pricing of product, fluid cream product, The CRIA includes descriptions of (1) fluid milk and the use of uniform cooperative association, and commercial the purpose of performing a CRIA; (2) multiple component pricing when food processing establishment. In the civil rights policy of the U.S. developing one or more basic prices for addition, the milk classification section, Department of Agriculture (USDA); and manufacturing milk. The Secretary was pricing provisions, and some of the (3) basics of the Federal milk marketing also directed to designate the State of provisions relating to payments have order program are provided for California as a Federal milk order if been included in the General background information. The civil rights California dairy producers petition for Provisions. These changes adhere with impact analysis of Federal Order Reform and approve such an order. Finally, the the efforts of the National Performance meets the requirements prescribed by Farm Bill specified that the Department Review—Regulatory Reform Initiative to DR 4300–4. As part of the analysis, the of Agriculture use informal rulemaking simplify, modify, and eliminate extensive outreach efforts of USDA to implement these reforms. unnecessary repetition of regulations. through the entire reform process and The Farm Bill required that a Unique regional issues or marketing after the final decision is published are proposed rule be published by April 4, conditions have been considered and highlighted. Additionally, statistical 1998, and all reforms of the Federal included in each market’s order detail is provided of the characteristics milk order program be completed by provisions. of the dairy producer and general April 4, 1999. However, the Omnibus The purpose of the Regulatory populations located within the current Consolidated and Emergency Flexibility Act is to fit regulatory actions and consolidated marketing areas. Supplemental Appropriations Bill, to the scale of business subject to the The analysis discloses no potential for passed in October 1998, extended the actions in order that small businesses affecting dairy farmers with specific time frame for implementing Federal are not unduly or disproportionately characteristics differently than the milk order reform amendments from burdened. To accomplish this purpose, general population of dairy farmers. All April 4, 1999, to October 1, 1999. The it first is necessary to define a small producers, regardless of race, national extension specified that the final business. According to the Small origin, or disability choosing to deliver decision, defined as the final rule for Business Administration’s definition of milk to a Federal order regulated purposes of this legislation, be issued a ‘‘small business,’’ a dairy farm is a handler will receive the minimum blend between February 1 and April 4, 1999, ‘‘small business’’ if it has an annual price. with the new amendments becoming gross revenue of less than $500,000 and Copies of the Civil Rights Impact effective on October 1, 1999. The a handler is a ‘‘small business’’ if it has Analysis can be obtained from Dairy legislation also provides that California fewer than 500 employees. For the Programs at (202) 720–4392; any Market has from the date of issuance of the final purposes of determining which dairy Administrator office; or via the Internet decision until September 30, 1999, to farms are ‘‘small businesses,’’ the at http://www.ams.usda.gov/dairy/. become a separate Federal milk $500,000 per year criterion was used to The Regulatory Flexibility Act and the marketing order. establish a production guideline of The final decision sets forth the Effects on Small Businesses 326,000 pounds per month. Although consolidation of the current 31 Federal this guideline does not factor in Pursuant to the requirements set forth milk orders into 11 orders. Several additional monies that may be received in the Regulatory Flexibility Act (5 issues related to the consolidation of by dairy producers, it should be an U.S.C. 601 et seq.), the Agricultural Federal milk orders are also addressed. inclusive standard for most ‘‘small’’ Marketing Service (AMS) has The final decision contains a dairy farmers. For purposes of considered the economic impact of the replacement for the Class I price determining a handler’s size, if the plant rule on small entities and has prepared structure and the basic formula price. is part of a larger company operating this final regulatory flexibility analysis. These changes set the stage for multiple plants that collectively exceed The Regulatory Flexibility Act provides, increasing efficiencies in supplying the the 500-employee limit, the plant will in summary, that when preparing such milk needs of Class I markets and be considered a large business even if analysis an agency shall address: The address concerns that the BFP is no the local plant has fewer than 500 need for and objectives of the rule; longer a statistically significant measure employees. summary of the significant issues raised of the value of manufacturing milk. The Based on 1996 data, USDA identified in public comments, agency assessment final decision also changes the approximately 80,000 of the 83,000 of the issues raised, and changes made classification of milk by (1) establishing dairy producers (farmers) that had their to the proposed rule based on these Class IV provisions which would milk pooled under a Federal order as issues; the kind and number of small include milk used to produce nonfat dry small businesses. Thus, small entities affected; the recordkeeping, milk, butter, and other dry milk businesses represent approximately 96 reporting, and other requirements; and powders; (2) reclassifying eggnog; and percent of the producers in the United steps taken to minimize the economic (3) making other minor classification States. By 1997 the total number of impact on small entities. changes. These changes recognize the dairy producers that had their milk This regulatory action is in position of butter and milk powders as pooled under a Federal order had accordance with section 143 of the residual products that balance the declined to about 79,000. It is estimated Federal Agriculture Improvement and supply of milk with overall demand, that nearly 76,000 are small businesses. Reform Act of 1996, 7 U.S.C. 7253, (the and equalize the cost of competing During 1997, 78,590 dairy farmers Farm Bill) which required the Secretary products. Finally, this final decision delivered over 105.2 billion pounds of of Agriculture (Secretary) to consolidate expands part 1000 to include provisions milk to handlers regulated under the the existing 31 Federal milk marketing that are identical within each milk orders. This volume represents 68 orders, as authorized by the Agricultural consolidated order to assist in percent of all milk marketed in the U.S.

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Producer deliveries of forms for handlers to complete each unregulated area in New York, Vermont, milk used in Class I products (fluid milk month that are needed to administer the New Hampshire and Massachusetts was products) totaled 44.9 billion pounds— Federal milk marketing orders. The added on the basis of supporting 42.7 percent of total Federal order forms are used to establish the quantity information. As a result, previously producer deliveries. More than 200 of milk used and received by handlers, unregulated handlers would become million Americans reside in Federal the pooling status of the handler, the fully regulated. Because of these two order marketing areas—77 percent of the class-use of the milk used by the reasons, 11 additional plants are total U.S. population. handler, the butterfat content and expected to become fully regulated On the processing side, there are over amounts of other components of the under the program. Of these 11 plants, 1,200 individual plants associated with milk. This information is used to it is estimated that 5 are small Federal orders, and of these plants, compute the monthly uniform price businesses that would need to comply approximately 700 qualify as ‘‘small paid to producers in each of the with the reporting, recordkeeping, and businesses’’ representing about 55 markets. Handlers in the marketing compliance requirements. The percent of the total. During October areas adopting multiple component completion of these reports will require 1997, there were more than 485 fully pricing will be required to complete a person knowledgeable about the regulated handlers (306 distributing additional information regarding the receipt and utilization of milk and milk plants of which 111 were small components of the milk and to assure products handled at the plant. This businesses and nearly 180 supply plants that proper payments are made to most likely will be a person already on of which about 50 percent were small producers. This information is the payroll of the business such as a businesses), 51 partially regulated necessary to establish the values of milk bookkeeper, controller or plant manager. handlers of which 28 were small on the basis of milk components and to The completion of the necessary businesses and 111 producer-handlers assure that producers are paid correctly. reporting, recordkeeping, and of which all were considered small Many handlers already collect and compliance requirements does not businesses for purposes of this final report this information. require any highly specialized skills and RFA, submitting reports under the This rule does not involve additional should not require the addition of Federal milk marketing order program. information collection that requires personnel to complete. In fact, much of The Federal milk order program is clearance by the Office of Management the information that handlers report to designed to set forth the terms of trade and Budget beyond the currently the market administrator is readily between buyers and sellers of fluid approved information collection. The available from normally maintained milk. A Federal order enforces the primary sources of data used to business records, and as such, the minimum price that processors complete the forms are routinely used in burden on handlers to complete these (handlers) in a given marketing area most business transactions. Forms recordkeeping and reporting must pay producers for milk according require only a minimal amount of requirements is minimal. In addition, to how it is utilized. A Federal order information which can be supplied assistance in completing forms is further requires that the payments for without data processing equipment or a readily available from market milk be pooled and paid to individual trained statistical staff. Thus, the administrator offices. A description of dairy producers or cooperative information collection and reporting the forms and a complete Paperwork associations on the basis of a uniform or burden is relatively small. Requiring the Reduction Act analysis follows this average price. It is important to note that same reports for all handlers does not section. a Federal milk order, including the significantly disadvantage any handler No other burdens are expected to fall pricing and all other provisions, only that is smaller than the industry upon the dairy industry as a result of becomes effective after approval, average. overlapping Federal rules. The through a referendum, by dairy New territory, or pockets of regulations contained in this final producers associated with the order. unregulated territory within and decision do not duplicate, overlap or Development of this final decision between current order areas has been conflict with any existing Federal rules. began with the premise that no included in the consolidated marketing additional burdens should be placed on areas where such expansion will not Public Comments the industry as a result of Federal order have the effect of fully regulating plants More than 1,000 comments were consolidation and reform. As a step in that are not now regulated. The addition received from interested parties that accomplishing the goal of imposing no of these areas benefits regulated specifically stated or documented they additional regulatory burdens, a review handlers by eliminating the necessity of were small businesses. However, this of the current reporting requirements reporting sales outside the Federal order number may not be fully representative was completed pursuant to the marketing area for the purpose of of the number of small businesses that Paperwork Reduction Act of 1995 (44 determining pool qualification. Where actually submitted comments because a U.S.C. Chapter 35). In light of this such areas can be added to a majority of commenters did not indicate review, it was determined that this final consolidated area without having the their size. Of the comments submitted, decision would have little impact on effect of causing the regulation of any the majority were received from dairy reporting, recordkeeping, or other currently-unregulated handler, they are producers. The comments from the compliance requirements because these added. producers primarily addressed the would remain almost identical to the Handlers not currently fully regulated issues of Class I pricing and current Federal order program. No new under Federal orders may become consolidation. forms are required; however, some regulated for two main reasons: first, in A few comments were received that additional reporting will be necessary in the process of consolidating marketing specifically addressed the initial the orders that are adopting multiple areas, some handlers who currently are regulatory flexibility analysis (IRFA).

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These comments also addressed the milk provisions will result in its which were proposed to be included in issues of Class I pricing and regulation. The commenter argued that consolidated areas. consolidation and further addressed the this effect is contrary to the IRFA that Numerous comments were received issue of producer-handler regulation. stated ‘‘no additional regulatory burdens from small businesses supporting the The Small Business Administration should be placed on the industry’’ and inclusion of currently-nonregulated submitted views specifically addressing to the intent of the proposed rule that areas in the Northeast order. However, exempt plant status and requesting stated the changes were not intended to after considering the requirements of the further analysis of the impact of fully regulate any producer-handler that Farm Bill, the consolidation of the consolidation on previously unregulated is currently exempt from regulation. existing orders does not necessitate entities, if possible. Other commenters suggested that expansion of the consolidated orders Nearly all of the 1,000 comments producer-handlers should not be into unregulated areas or areas in which addressed Class I pricing and discussed exempt from regulation if their route handlers are subject to minimum Class the impact of Option 1A or Option 1B disposition of Class I products at I pricing under State regulation, on dairy producers’ income. A majority wholesale exceeds 500,000 pounds per especially when the states’ Class I prices of these comments supported Option 1A month or if they have retail sales other exceed or equal those that would be because it would maintain the revenue than at a retail establishment located on established under Federal milk order necessary to stay in business. Many the premises of the producer-handler’s regulation. Such regulation could have commenters opposing Option 1B argued plant. They argued that producer- the effect of reducing returns to that the Class I differential decreases handlers with route disposition above producers already included under State that would occur under this option this limit cannot be considered small regulation without significantly would result in financial losses that businesses and should be subject to affecting prices paid by handlers who would force many dairy farmers out of regulation. compete with Federally-regulated business. Comments filed by service After reviewing the public comments handlers. Two changes made to the prior providers such as feed and implement filed by small businesses in stores that claimed to be small proposed rule as a result of comments combination with updated marketing businesses commented on the negative submitted by small businesses related to data and information and updated impact lower prices received by dairy the exclusion of territory in the analyses, changes were made to the producers had on surrounding consolidated marketing areas. These provisions contained in the proposed community businesses. One commenter changes occurred in the Mideast and rule. Not all of the changes requested by supporting Option 1A further stated that Central orders. The changes ensure that small businesses were feasible but when in order to comply with the purposes two currently-unregulated handlers changes were beneficial to small and objectives of the Regulatory maintain this status. businesses without affecting the Flexibility Act, as stated in the IRFA, a One change occurred in the Mideast objectives of the rule, they were Class I price structure that avoids a order. Based on a comment received burdensome financial impact on dairy incorporated. The changes made to the from Toft Dairy, Incorporated (Toft farmers must be adopted. proposed rule, based in part on small Dairy), a small business dairy processor, About 200 of the comments received business comments, are discussed and Sandusky County Milk Producers from declared small businesses below by issue. Association, a dairy cooperative addressed consolidation issues. These Consolidation representing dairy farmers classified as comments focused on the impact of small businesses, one partial and three including or excluding currently- The proposed rule advanced 11 entire counties in north Central Ohio are unregulated areas. A majority of the consolidated Federal milk marketing excluded from the Mideast marketing comments focused on the Northeast orders. The marketing areas of these area. These areas are currently order and the inclusion or exclusion of orders were expanded to include unregulated. The proposed rule had the currently-unregulated territories in currently-unregulated areas if this did suggested including this currently- New York, Pennsylvania, and Maryland. not result in the regulation of any unregulated territory in the Mideast Comments supporting the inclusion of currently-unregulated handlers or was marketing area which would have currently-unregulated territory not an area in which handlers are resulted in the regulation of Toft Dairy. discussed the need to include this subject to minimum Class I pricing Since the intent of the consolidating territory to prevent inequitable, unfair provisions under State regulations. After marketing orders was not to cause the and disorderly marketing conditions. reviewing the issue in light of the public regulation of any currently-unregulated One supporting commenter noted that comments and updating the initial handler, these areas have been removed the expansion into unregulated areas analysis based on more recent marketing from the marketing area of the Mideast would result in more small businesses data, 11 consolidated orders are adopted order. Toft Dairy will remain an becoming subject to Federal order in the final decision, the same number unregulated processor unless its sales regulation but the commenter did not as proposed in the January 21, 1998, area changes significantly. believe that it would unduly impact rule, but with significant modifications Another change occurred in the their ability to compete. Commenters being made to the marketing areas of the Central order. Based on a comment opposing the inclusion of currently- proposed Northeast and Western orders, received from Central Dairy, unregulated Pennsylvania territory and minor modifications to the Incorporated (Central Dairy), a small argued that producer returns would marketing areas of the proposed business dairy processor, six currently- decline if handlers in this area were Southeast, Mideast, Upper Midwest and unregulated counties in northeast subject to Federal order regulations. Central orders. The final decision Missouri that were proposed to be A few comments were received continues to omit currently-unregulated included in the Central order are addressing the extent of regulation areas specified in the January 21st excluded from the marketing area. applied to producer-handlers. One proposed rule and also omits currently- These areas are currently unregulated. commenter, a small business producer- unregulated areas that comprise a Central Dairy opposed inclusion of handler, indicated that the combination significant distribution area for these six counties because the handler of new definitions and classification of currently-unregulated handlers, some of plans to expand its distribution into this

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Of the Another change to the proposed rule no changes are made in the final commenters supporting Option 1B, few resulting from public comments decision to regulate a producer-handler supported the adoption of a phase-in involves producer-handlers. Since the that is currently exempt from regulation. program. intent of the proposed rule was not to Additional comments submitted by Option 1B was preferred by the increase regulation to any currently- small businesses regarding producer- Department because it would move the unregulated producer-handlers, minor handlers advocated implementing a dairy industry into a more market- modifications have been made to the limitation on the exemption of classification of milk provisions producer-handlers based on size. The determined pricing system. Establishing applicable to all orders and to the commenters suggested that the a national Class I price structure based producer-handler definition in certain on results from the U.S. Dairy Sector producer-handler exemption should be 11 individual orders. limited to those whose Class I route Simulator model, developed and A comment submitted by Promised disposition is 500,000 pounds or less, or administered by Cornell University, Land Dairy, a producer-handler defined whose entire Class I disposition of fluid may increase market efficiencies in the as a small business, stated that the milk is made as retail sales from a retail dairy industry and lowering the change in the classification of milk establishment located on the premises differentials would allow marketing provisions combined with other order of the producer-handler’s processing conditions to have a greater impact on changes would result in their regulation. plant. actual Class I prices paid to producers Promised Land Dairy argues that the Since the intent of the final decision who service the Class I market. The addition of the words ‘‘or acquired for is not to regulate any currently- Department recognized that this would distribution’’ in § 1000.44(a)(3)(iv) unregulated producer-handlers, these impact small businesses, both producer would force milk delivered by a requests have been denied. A review of and processors, because less of the producer-handler to any store associated October 1997 producer-handler route actual value of Class I milk would be with a regulated handler to be sold at no disposition data indicates that if a regulated. In the proposed rule the more than the Class III price because it 500,000 pound Class I route disposition Department stated the following: would be considered a receipt from a limit were implemented, 20 producer- ‘‘Smaller, less efficient producers would producer-handler. Promised Land Dairy handlers out of 111 producer-handlers, likely have a greater responsibility to bargain argued that this would force producer- would become regulated. The with processors for over-order premiums that handlers to become fully regulated. In Department’s reasons for exempting adequately cover their costs. With processors addition, they argued that changes made producer-handlers as discussed less likely to face similar raw product costs, to the Southwest order’s producer- previously have not changed and the less efficient small processors may have to handler definition are not warranted intent of this rule is not to make changes negotiate and/or sustain over-order price and would further result in the to regulate currently-unregulated levels necessary to attract and maintain a regulation of Promised Land Dairy. producer-handlers regardless of size. sufficient supply of milk. Large businesses, The changes in the proposed rule Consequently, these suggested changes both producers and processors, may be in a were not intended to fully regulate any have not been included in the final better competitive position to do this.’’ (63 producer-handler that is currently decision. FR 4912) exempt from regulation. Producer- handlers have been exempt from the Class I Price Structure After reviewing the public comments pricing and pooling provisions of the Another change to the proposed rule, and updating marketing data and orders for several reasons. First, the care resulting in part from the public analyses of Option 1A and Option 1B, and management of the dairy farm and comments received, involves the Class I the Department adopted a Class I price other resources necessary for own-farm price structure. In the proposed rule the structure that provides greater structural production and the management and Department advanced two main price efficiencies in the assembly and operation of the processing are the options—1A and 1B. The Department shipment of milk and dairy products. personal enterprise and risk of the indicated a preference for Option 1B The adopted Class I pricing structure owner. Second, typically producer- because it was more market-oriented. establishes a price surface that utilizes handlers are small businesses that However, the Department recognized in USDSS model results adjusted for all operate in a self-sufficient manner. the proposed rule that Option 1B would known plant locations and establishes Finally, producer-handlers do not have result in lower Class I prices and lower differential levels that will result in an advantage as either producers or blend prices which would have a prices that generate sufficient revenue to handlers so long as they are responsible significant economic impact on small assure an adequate supply of milk. The for balancing their fluid milk needs and businesses, particularly producers. To differential levels will better maintain cannot transfer balancing costs to other lessen the impact, three phase-in equity by raising the level 40 cents per market participants. program options were proposed to be hundredweight higher than the level While the provisions objected to by adopted in conjunction with Option 1B. proposed in Option 1B. The higher Promise Land Dairy would not directly The objective of the phase-in programs differential level reduces the likelihood regulate this entity, they could have a was to provide dairy producers and very serious negative economic impact processors the opportunity to adjust 11 The U.S. Dairy Sector Simulator model is used on its continued operations as a marketing practices to adapt to more to evaluate the geographic or ‘‘spatial’’ value of milk producer-handler. Because it is still the and milk components across the U.S. under the market-determined Class I prices. assumption of globally efficient markets. A more intent of the Department to allow A majority of the public comments detailed description of the model is contained in currently-unregulated producer- received from small businesses the decision.

VerDate 23-MAR-99 17:17 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00013 Fmt 4701 Sfmt 4702 E:\FR\FM\02APP2.XXX pfrm03 PsN: 02APP2 16038 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules of class-price inversions, where the dairy processors. Although only market place. The Department reviewed Class I prices are below the processors are regulated under Federal the regulations from both the small manufacturing milk prices for the milk orders, producers receive benefits producer and small processor month. Updated analysis conducted by from the regulations. Thus, whenever perspectives attempting to maintain a the Interagency Dairy Analysis Team in dairy processors are exempt from balance between these competing the final Regulatory Impact Analysis 12 Federal order regulations they are not interests. indicates that increasing the differential required to pay dairy producers The Farm Bill mandated that the level lessens the economic impact of minimum Federal order prices. current 31 orders be consolidated into moving toward more market-orientation Exempting processors from regulation between 10 to 14 orders. The Farm Bill on small businesses. directly impacts dairy producers. also specified that other issues could be Based on October 1997 data, a review addressed. Eleven orders are adopted in Exempt Plant Limits of the impacts of increasing the the final decision as well as a new Class The Office of the Chief Counsel for exemption levels on processors was I price structure, a basic formula price Advocacy (Office of Advocacy) of the completed. As expected, increasing the replacement, classification of milk U.S. Small Business Administration level would allow additional processors provisions, and the establishment of submitted views on the IRFA pursuant to become exempt. In October 1997, 54 identical provisions in all orders where to its authority under the Regulatory handlers had route disposition equal to possible. The objectives of the final Flexibility Act, 5 U.S.C. 601, as or less than 150,000 pounds. An decision are (1) to comply with the amended by the Small Business additional 57 handlers had route requirements of the Farm Bill and (2) to Regulatory Enforcement Fairness Act, disposition between 150,000 to make other changes in order provisions Pub. L. 104–121, 110 Stat. 866 (1996). 1,000,000 pounds and 327 handlers had consistent with the goals and With regard to the impact of the order route disposition greater than 1 million requirements of the AMAA. The focus consolidation and pricing formulae, the pounds. of these changes is to enhance the Office of Advocacy stated that these Although it may appear that efficiencies of fluid milk markets while issues should be left to the regulated increasing the exemption level would maintaining equity among processors of community and the Department. The not result in exempting many additional fluid milk selling in marketing order Office of Advocacy did comment that a plants, these plants receive milk from a areas and among dairy producers system that ‘‘best resembles the free significant number of producers, a supplying the areas’ fluid demands. market and imposes the least burden on majority of whom are small businesses. Federal milk order regulations do not the industry would be the best In addition, contrary to the intent of disparately apply to small and large alternative.’’ benefitting small businesses by businesses. If a handler is regulated The Office of Advocacy requested an increasing the exemption level, more under a Federal milk order, the explanation of how the 150,000 pound handlers that are considered large provisions of that order apply the same handler exemption was derived and a businesses could become exempt from to all handlers regardless of size. determination of whether this regulation. Implementing the 150,000 Likewise, if a producer’s milk is exemption could be increased. They pound level results in two large associated with a Federal order pool, the questioned whether a greater number of businesses currently regulated (one same pricing and payment provisions small entities would benefit from an fully-regulated and one partially- will be utilized for all producers increase in the limit. The Office of regulated) becoming exempt plants. regardless of size. This final decision Advocacy further requested additional When more large businesses become addresses several issues and adopts analysis on the impact of the exempt it not only impacts producers, provisions that will continue to apply equally to all businesses, both large and consolidation of orders on previously but also impacts other regulated small. The provisions adopted herein unregulated entities, if possible. handlers. In an attempt to maintain a balance attempt to reduce the economic impact The 150,000 pound handler between the interests of both small of Federal milk order regulations on exemption was determined after handlers and small dairy producers, the small businesses to the most reasonable reviewing provisions currently 150,000 pound exemption is extent possible. contained in the Federal milk marketing maintained. Based on previous After reviewing submitted comments orders. The 150,000 pound exemption experience, the exemption of plants of and updating marketing data and was the highest level currently utilized, this size poses no economic threat to the analyses, changes were made to the with some orders containing no such order’s regulated handlers. provisions contained in the proposed exemption. A review of the impact of rule. The IRFA discussed the projected this exemption level on distributing Minimization of Significant Economic impacts of the primary components of plants that were fully regulated in Impacts on Small Businesses the proposed rule on small entities. October 1997 indicated that 15 plants, The Department developed the final These included consolidation, basic 14 of which are small businesses, would decision aware of the impacts of its formula price, Class I price structure, become exempt from regulation based adoption on small businesses, both and classification. Because Federal on this provision. In addition, five dairy producers and processors. In the order provisions are interrelated, it was partially-regulated plants, four of which final decision, the Department has difficult to determine the overall impact are small businesses, would also minimized the significant economic of each component on small entities become exempt. No public comments impacts of these regulations on small because the proposed rule contained were received addressing this issue. entities to the fullest extent reasonably two pricing options. To the fullest Federal milk order regulations must possible while adhering to the stated extent possible, such estimations were balance the interests of small business objectives. The Department reviewed set forth in the proposed rule. dairy producers versus small business the regulatory and financial burdens Below is a description of the primary resulting from these regulations and components contained in the final 12 Copies of the Regulatory Impact Analysis can be obtained from Dairy Programs at (202) 720–4392, determined, to the fullest extent decision that were discussed in the any Market Administrator office, or via the Internet possible, the impact on small IRFA. For comparison purposes, at http://www.ams.usda.gov/dairy. businesses’ abilities to compete in the impacts resulting from each component

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00014 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.017 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16039 are briefly discussed. Because this rule addition of 21 currently-unregulated 6 Missouri counties that are part of the establishes the specific provisions to be counties in Indiana and Kentucky. current Southern Illinois-Eastern contained in Federal milk marketing 3. FLORIDA—current marketing areas Missouri marketing area, plus 54 orders, analysis of the impacts of the of the Upper Florida, Tampa Bay, and currently-unregulated counties in consolidated orders on small businesses Southeastern Florida Federal milk Kansas, Missouri, Illinois, Iowa, is provided. orders. Nebraska and Colorado, plus 8 counties *4. SOUTHEAST—current marketing Consolidation in central Missouri *(six fewer than in area of the Southeast Federal milk order, the proposed rule) that are not The IRFA discussed three order plus 1 county from the Louisville- considered to be part of the distribution consolidation options: (1) The Lexington-Evansville Federal milk order area of an unregulated handler in consolidated marketing areas suggested marketing area; plus 11 northwest central Missouri, *plus 7 currently in the December 1996 Initial Arkansas counties and 22 entire unregulated Colorado counties located Preliminary Report on Order Missouri counties that currently are part between the current Western and Consolidation; (2) the consolidated of the Southwest Plains marketing area; Eastern Colorado order areas. marketing areas suggested in the May plus 6 Missouri counties that currently 8. SOUTHWEST—current marketing 1997 Revised Preliminary Report on are part of the Southern Illinois-Eastern areas of Texas and New Mexico-West Order Consolidation; and (3) the Missouri marketing area; plus 16 Texas Federal milk orders, with the consolidated marketing areas suggested currently unregulated southeast addition of two currently-unregulated in the proposed rule. Determining the Missouri counties (including 4 that were northeast Texas counties and 47 specific economic impacts of marketing part of the former Paducah marketing currently-unregulated counties in area consolidation on handlers, area); plus 20 currently-unregulated southwest Texas. producers, and consumers is difficult. Kentucky counties (including 5 from the 9. ARIZONA-LAS VEGAS—current The IRFA detailed the assumptions former Paducah marketing area). marketing area of Central Arizona, plus utilized to quantify the economic effects *A partial Missouri county that has the Clark County, Nevada, portion of the of consolidation. The IRFA included an been part of the Southwest Plains current Great Basin marketing area, plus analysis of each of the three marketing area will become completely eight currently-unregulated Arizona consolidation options on the weighted unregulated. counties. average use value to determine the *5. MIDEAST—current marketing potential impacts of each option on areas of the Ohio Valley, Eastern Ohio- *10. WESTERN—current marketing producers. The IRFA also included Western Pennsylvania, Southern areas of the Southwestern Idaho-Eastern projections regarding the number of Michigan and Indiana Federal milk Oregon and Great Basin Federal milk handlers that would be regulated under orders, plus Zone 2 of the Michigan orders, minus Clark County, Nevada. the consolidation options and the Upper Peninsula Federal milk order, *The Western Colorado order area, number of these handlers that are small and most currently-unregulated proposed to be included in the Western businesses. counties in Michigan, Indiana and Ohio. order area, is instead included in the The consolidation of orders adopted *One partial and 3 entire counties in consolidated Central order. in the final decision is a result of the north central Ohio are left unregulated, 11. PACIFIC NORTHWEST—current examination and analysis of more recent as they represent the distribution area of marketing area of the Pacific Northwest marketing data in combination with the a currently-partially regulated Federal milk order plus 1 currently- comments received on the proposed distributing plant (Toft Dairy in unregulated county in Oregon. rule. This resulted in modifying Sandusky, Ohio). The consolidated orders presented significantly from the proposed rule the *6. UPPER MIDWEST—current herein reflect the most appropriate marketing areas of the Northeast and marketing areas of the Chicago Regional, boundaries for the purpose of Western orders, and in making minor Upper Midwest, Zones I and I(a) of the implementing the requirements of the modifications to the marketing areas of Michigan Upper Peninsula Federal milk Farm Bill. These orders attempt to avoid the proposed Southeast, Mideast, Upper orders, and unregulated portions of extending regulation to handlers whose Midwest and Central orders. The Wisconsin. *The Iowa Federal order primary sales areas are outside current consolidated orders adopted in the final marketing area portion of one Illinois Federal order marketing areas and who decision are as follows (* denotes county is added to the consolidated are not subject to Federal order changes made from the proposed rule): Upper Midwest marketing area and the regulation. These orders also minimize *1. NORTHEAST—current marketing Chicago Regional portion of another the regulatory burden placed on areas of the New England, New York- Illinois county is removed and added to handlers. New Jersey and Middle Atlantic Federal the consolidated Central area. Based on October 1997 data, it is milk orders, with the addition of: the *7. CENTRAL—current marketing projected that 306 distributing plants contiguous unregulated areas of New areas of the Southern Illinois-Eastern will be fully regulated and 32 Hampshire, northern New York and Missouri, Central Illinois, Greater distributing plants will be exempt. The Vermont; and the non-Federally Kansas City, Southwest Plains, Eastern number of fully-regulated small regulated portions of Massachusetts. Colorado, Nebraska-Western Iowa, businesses will be 111. The number of *The Western New York State order Eastern South Dakota, Iowa (* less the fully-regulated small businesses is down area (ten entire and 5 partial western portion of an Illinois county that will from 164, a 32 percent decline from the New York counties) proposed to be become part of the consolidated Upper proposed rule. This is mainly a result included in the expanded Northeast Midwest area) and *Western Colorado from either large business acquisitions order area has been omitted. Federal milk orders, * plus the portion of these small businesses or because 2. APPALACHIAN—Current of an Illinois county currently in the they have gone out of business. Two marketing areas of the Carolina and Chicago Regional Federal order area, small businesses that are currently Louisville-Lexington-Evansville (minus minus 11 northwest Arkansas counties unregulated will become regulated and, Logan County, Kentucky) Federal milk and 1 partial and 22 entire Missouri as mentioned previously, 14 fully orders plus the marketing area of the counties that are part of the current regulated and four partially-regulated former Tennessee Valley order, with the Southwest Plains marketing area, minus small businesses will become exempt.

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Basic Formula Price most laboratories would test for total Of the remaining 21,750 producers The IRFA reviewed the basic formula solids and somatic cells at the same who would be affected by MCP price replacement options considered. time the butterfat and protein tests are provisions under a Federal order These options included pricing done. (including an estimated 20,650 No new report forms are needed components based on their value in producers qualifying as small under multiple component pricing; manufactured products which was businesses), the milk of approximately however, some additional reporting is proposed and is adopted in the final 13,000, or 60 percent, currently is necessary to enable handlers’ values of received by handlers who test or have decision, economic formulas, futures milk to be determined on the basis of the capability of testing for multiple markets, cost of production, competitive components, and to assure that components and, in many cases, pay pricing, and pricing differentials producers are paid correctly. For the somatic cells. Many of these handlers only. market administrators to compute the also report component results to the The rule closely follows the pricing producer price differential, handlers producers with their payments. Almost plan described in the proposed rule by would need to supply additional all of the producers whose milk replacing the current basic formula information on their currently-required currently is not being tested or paid for price (BFP) with a multiple component monthly reports of receipts and on the basis of components are located pricing system that derives component utilization. In addition to the product in the New England and New York-New values from surveyed prices of pounds and butterfat currently reported, Jersey marketing areas, which would be manufactured dairy products. The handlers would be required to report consolidated with the Middle Atlantic adopted pricing system determines pounds of protein, pounds of other area into the Northeast order. butterfat prices for milk used in Class II, solids, and, in 5 of the orders, somatic Accommodation has been made to Class III and Class IV products from a cell information. This data would be ameliorate handlers’ expenses of testing butter price; protein and other solids required from each handler for all producer milk for component content. prices for milk used in Class III products producer receipts, including milk As component pricing plans have been from cheese and whey prices; and diverted by the handler, receipts from adopted under a number of the present nonfat solids prices for milk used in cooperatives as 9(c) handlers (that is, Federal milk orders since 1988, the Class II and Class IV products from the cooperative acts as a handler); and, component testing needed to implement nonfat dry milk product prices. The in some cases, receipts of bulk milk these pricing plans has been performed specific formulas used to calculate the received by transfer or diversion. by the market administrators prices are described in complete detail Since producers would be receiving responsible for the administration of the in the final decision. payments based on the component orders involved for handlers who have All market participants, both large levels of their milk, the payroll reports not been equipped to make all of the and small, would be affected by the BFP that handlers supply to producers must determinations required under the replacement in the same manner. There reflect the basis for such payment. amended orders. It has been made clear would be no uneven impact on market Therefore the handler would be in the decisions under which these participants on the basis of size. required to supply the producer not plans have been adopted that handlers However, the existence of minimum only with the information currently who would find it unduly burdensome order pricing serves to assure that large supplied, but also, (a) the pounds of to obtain the equipment and personnel handlers pay no less for their milk than butterfat, the pounds of protein, and the needed to accomplish the required smaller entities, and that small pounds of other solids contained in the testing may rely on the market producers receive at least the same producer’s milk, as well as the administrators to verify or establish the minimum uniform price for the milk or producer’s average somatic cell count, tests under which producers are paid. components of milk they produce as and (b) the minimum rates that are As noted above, however, many large producers. Consumers can be required for payment for each pricing handlers not now subject to MCP assured that the prices generally factor and, if a different rate is paid, the provisions under Federal orders have charged for dairy products are prices effective rate also. Many handlers nevertheless already undertaken that reflect, as closely as possible, the already report this additional multiple component testing and forces of supply and demand in the information. It should be noted that payment programs. market. handlers already are required to report information relative to pounds of Class I Price Structure Impact of Multiple Component Pricing production, butterfat and rates of The IRFA discussed two price Provisions on Small Entities payment for butterfat and structure options—location-specific As set forth in the proposed rule, hundredweight of milk to the differentials (Option 1A) and relative- seven of the 11 orders adopted in the appropriate Market Administrator. value specific differentials (Option 1B). final decision provide for milk to be Of over 74,000 producers whose milk The IRFA set forth the projected impacts paid for on the basis of its was pooled in December 1996 under 23 that these two price structures would components—multiple component of the current orders that would be part have on producers and processors. pricing (MCP). of consolidated orders providing for The price structure adopted in this Five of the seven MCP orders also multiple component pricing, the milk of final decision resulted from an provide for milk values to be adjusted 52,500 of these producers was pooled examination and review of more recent according to the somatic cell count of under 13 current orders that have MCP. marketing data in combination with the producer milk. The equipment needed Handlers in these markets already have comments received on the proposed for testing milk for its component incurred the initial costs of testing milk rule. As discussed previously, the content can be very expensive to for its component content, and have Department adopted a Class I price purchase, and requires highly-skilled made the needed transition to reporting structure that provides greater structural personnel to maintain and operate. The the component contents of milk receipts efficiencies in the assembly and cost of infra-red analyzers ranges from on their handler reports to the market shipment of milk and dairy products. just under $100,000 to $200,000. The administrators, and on their reports of The adopted Class I pricing structure infra-red machines that are used by what they have paid producers. establishes a price surface that utilizes

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USDSS model results adjusted for all adopted Class I price structure best in other parts of the country when known plant locations and establishes provides the incentives necessary for comparing the all-milk prices and cash differential levels that will result in increased efficiency in the organization receipts from milk marketings to current prices that generate sufficient revenue to and distribution of the milk supply and baseline projections. These producers assure an adequate supply of milk. The dairy products. represent approximately one-third of the differential levels will better maintain Classification Provisions total producers associated with Federal equity by raising the level 40 cents per orders. Of these producers, about 30 hundredweight higher than the level The IRFA discussed the classification percent are considered small businesses. proposed in Option 1B. The higher of milk provisions contained in the When compared to the baseline, over a differential level reduces the likelihood proposed rule. The IRFA concluded that 6-year period from the years of 2000– of class-price inversions, where the the classification of milk provisions 2005, the all-milk price for all Federal Class I prices are below the would not have a significant economic orders is expected to decrease an manufacturing milk prices for the impact on a substantial number of small average of $0.02 per hundredweight. month. Updated analysis conducted by entities. With two primary exceptions, Changes in the all-market price on an the Interagency Dairy Analysis Team in these changes are adopted in the final individual order basis is projected to the final Regulatory Impact Analysis 13 decision. The two exceptions are: (1) range from a decrease of $0.50 per indicates that increasing the differential Leaving cream cheese as a Class III hundredweight to an increase of $0.52 level lessens the economic impact of product as currently classified, and (2) per hundredweight. Cash receipts are moving toward more market-orientation leaving the fluid milk product exclusion expected to increase by an estimated on small businesses. standard for products packaged in ‘‘all- $222.3 million primarily because of The adopted Class I price structure metal, hermetically-sealed containers’’ changes in transportation payments and reduces Class I differentials from as currently classified. In addition, other the pooling of additional milk. After current levels in 17 markets ranging minor changes have been made adjusting for these changes, cash from $0.04 per hundredweight in the including revising the shrinkage receipts are projected to decline from Ohio Valley order to $1.18 per provisions to more closely resemble the baseline an average of $2.5 million hundredweight in the Eastern Colorado current provisions, re-adding the during the 6-year period. With the order. Option 1B would have reduced provision for milk that is dumped or baseline cash receipts averaging differentials from current levels in 29 used for animal feed, and classifying $16,944.5 million this represents a very markets ranging from $0.01 in Central inventory of fluid milk products and small reduction. Illinois order to $1.58 in the Eastern fluid cream products in bulk form in Class IV. One additional change, as Since the final decision is projected to Colorado order. The adopted Class I have minor effects on where milk is price structure will increase Class I previously discussed in the comment section, was made to ensure that produced, little impact is expected on differentials in 14 markets ranging from processors or manufacturers of dairy $0.08 in the Greater Kansas City order producer-handlers that are not currently regulated by the Federal order program products. A majority of the fully- to $0.57 in the Southeastern Florida regulated processors associated with order and leaves two orders unchanged. will maintain this status. The provisions improve reporting and accounting Federal orders will benefit from a Option 1B would have increased Class decrease in Class I prices. About 209 I differentials in only two markets— procedures for handlers and provide for greater market efficiencies. processors, 74 of which are small $0.15 in Chicago Regional and $0.17 in businesses, would experience decreases Southeastern Florida—and would have Conclusion ranging from $0.04 to $1.18 per left two orders unchanged. Option 1A A review of the impacts on small hundredweight. About 69 processors, 22 would have increased differentials in 21 entities of consolidating the current of which are small businesses, located markets ranging from $0.01 per Federal milk orders into 11 orders in primarily in the Midwest and Florida hundredweight in New England, New conjunction with the basic formula areas, would experience Class I price York-New Jersey, and Unregulated New price replacement, classification increases ranging from $0.08 to $0.57 York and New England to $0.50 in the provisions, and the three different Class per hundredweight. About 28 Upper Midwest order, lowered I price structure options, indicates that processors, 14 of which are small differentials in seven markets from the provisions set forth in the final businesses, would experience no change $0.04 in Ohio Valley to $0.18 in Eastern decision adhere to the mandates of the in Class I prices. Colorado, and left four markets Farm Bill, and provides more market Implementing the consolidated orders unchanged. efficiencies while minimizing the with the modified Option 1B price Although the adopted Class I price impact of these regulations on small structure would have a significant structure will result in price changes entities. Since the Federal order impact on many small entities, both that affect both large and small entities, program serves to benefit dairy producers and processors. Producers this option best meets the objectives of producers by regulating dairy processors located everywhere except the Midwest the AMAA. The adopted Class I price through classified pricing, provisions and Florida regions would have been structure recognizes that there are must be established that maintain a negatively impacted. When compared to limitations in the extent that the balance between the interests of small the baseline, over a 6-year period from marketplace can be relied upon to dairy producers and processors. The the years of 2000–2005, the all-milk establish prices to producers that are provisions contained in the final price for all Federal orders was equitable and reasonable given decision best maintain this balance. projected to annually average $0.09 per marketing conditions. Similarly, it The adoption of the consolidated hundredweight lower, with individual recognizes that handlers will be assured orders and the provisions contained order changes ranging from ¥$0.61 per a higher degree of price equity. The therein, including the adopted Class I hundredweight to $0.42 per price structure, will affect some small hundredweight. Cash receipts were 13 Copies of the Regulatory Impact Analysis can be obtained from Dairy Programs at (202) 720–4392, entities. Producers located in the expected to annually average over $100 any Market Administrator office, or via the Internet western, southwestern, and northeastern million less than the baseline, a .01 at http://www.ams.usda.gov/dairy. areas may not fare as well as producers percent decrease.

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Most fully-regulated fluid processors of the producers would have benefitted of Management and Budget (OMB) would have benefitted from the decrease from this modest increase. pursuant to the Paperwork Reduction in Class I differentials. Lower Since this option is projected to have Act of 1995 (44 U.S.C. chapter 35) under differentials would have reduced Class minor effects on where milk is OMB control number 0581–0032, I prices in 29 of the current markets produced, little impact would have been through September 30, 2001. from between $0.01 to $1.58 per expected on processors or The amendments set forth in the final hundredweight. Two markets would manufacturers of dairy products. Option decision do not contain additional have had increases of $0.15 and $0.17 1A would have increased Class I information collections that require per hundredweight in Class I prices. differentials by an average of $0.04 per clearance by the OMB under the When compared to the baseline, the hundredweight resulting in the all- provisions of 44 U.S.C. Chapter 35. Class I price for all Federal orders was market average Class I price charged to Following is a general description of the projected to average $0.49 per fluid handlers increasing by $0.08 per reporting and recordkeeping hundredweight lower over a 6-year hundredweight when compared to the requirements, reasons for these period from the years of 2000–2005. baseline during the years of 2000–2005. requirements and an estimate of the Lower Class I prices would have been Processors would have experienced a annual burden on the dairy industry. expected to increase U.S. sales of fluid Class I price increase in 21 of the Title: Report Forms Under Federal milk by 98.8 million pounds annually. current orders ranging from $0.01 to Milk Orders (From Milk Handlers and Most fluid processors would have $0.50 per hundredweight, affecting Milk Marketing Cooperatives). benefitted from the lower fluid milk nearly 190 fully-regulated processors of OMB Control Number: 0581–0032. prices and increased fluid milk sales. which about one-third are small Expiration Date of Approval: businesses. Since the impact of the September 30, 2001. Although most fluid processors would Type of Request: Extension and have benefitted from the consolidation increased Class I prices would have resulted in an insignificant decrease in revision of a currently approved of orders with the modified Option 1B information collection. price surface, only about one-third of fluid milk consumption within the Federal order system, a decrease of 17.1 Abstract: Federal Milk Marketing the fully-regulated plants are small Order regulations authorized under the businesses and these plants may have million pounds, and within the U.S., a decrease of 14.9 million pounds, this Agricultural Marketing Agreement Act been negatively impacted. With less of of 1937, as amended (7 U.S.C. 601–674), the actual value of fluid milk option would have little expected effect on processors or manufacturers of dairy require milk handlers to report in detail represented by the minimum prices the receipt and utilization of milk and established by Federal orders, more products. Implementing the consolidated orders milk products handled at each of their emphasis would have been placed on with the Option 1A price structure plants that are regulated by a Federal processors’ and producers’ abilities to would likely have minimized the Order. The data are needed to negotiate and/or sustain over-order financial impact of Federal milk orders administer the classified pricing system prices that might be necessary to on small entities. However, this option and related requirements of each maintain an adequate supply of milk. does not facilitate the movement Federal Order. This would have resulted in less towards a more efficient system of Rulemaking amendments to the handler equity which could have placed supplying fluid milk to meet market orders must be approved in referenda small processors at a disadvantage in demands within the Federal order conducted by the Secretary. competing for a supply of milk. regulatory program. Although this The terms of each of the current milk Adoption of this option would have option minimizes the impact of marketing orders are found at 7 CFR resulted in large fluid processors regulations on small businesses, it does parts 1001–1199; the terms of each of benefitting from the regulations at the not best meet the desired outcomes and the proposed orders in this document expense of more than 50 percent of the objectives of the final decision. are found at 7 CFR parts 1001–1135. total producers who would have The provisions adopted in the final The authority for requiring reports is experienced price decreases. decision best fulfill the requirements of found at 8c(5) and (7) and 8d of the Act. Additionally, small processors would the AMAA while minimizing the The current authority for requiring not have been assured equity in regulatory burdens on small businesses. records to be kept is found in the competing with large businesses for a The consolidated orders, with the general provisions at 7 CFR part 1000.5. milk supply. Hence, the Department adopted Class I price structure and other In the final decision, this authority is determined the impact of consolidating provisions, ensures that the Federal found in the general provisions at 7 CFR orders with the modified Option 1B order program will continue to establish part 1000.27. The Act also provides for price structure would have had a more and maintain market stability and milk marketing agreements, but there burdensome financial impact on a orderly marketing conditions for milk. are none in effect. significant number of small businesses. The adopted provisions will further A Federal milk marketing order is a Implementing the consolidated orders provide that milk prices are established regulation issued by the Secretary of with the Option 1A price structure at levels high enough to generate Agriculture that places certain would have minimal overall impact on sufficient revenue for producers to requirements on the handling of milk in small businesses. When compared to the maintain adequate supplies of milk the area it covers. It requires that baseline, the all-milk price for all while providing equity to handlers. The handlers of milk for a marketing area Federal orders was projected to average provisions contained in the final pay not less than certain minimum class $0.03 per hundredweight higher, with decision do not unduly or prices according to how the milk is individual order changes ranging from disproportionately burden small used. These prices are established under ¥$0.66 per hundredweight to $0.34 per businesses. an order on the basis of evidence hundredweight over a 6-year period concerning the supply and demand from the years of 2000–2005. Cash Paperwork Reduction Act of 1995 conditions for milk in the market. A receipts were expected to average over The information collection milk order requires that payments for $482.1 million more than the baseline, requirements contained in this decision milk be pooled and paid to individual a .02 percent increase. Nearly 50 percent previously were approved by the Office farmers or cooperative associations of

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The handlers. reporting of that information is required, Act imposes penalties for order The Report of Receipts and Utilization no other alternative to the mode of violations, such as the failure to pay and the Producer Payroll Report are information collection has been found. producers not later than prescribed completed by regulated milk handlers However, where possible, reported dates. The orders require payments to and milk marketing cooperatives and information is accepted using computer and from the producer-settlement fund are the principal reporting forms needed tapes or diskettes as alternatives to to be made monthly. Also, class prices to administer Federal milk marketing submitting the requested information on are based on the monthly Basic Formula orders. these report forms. Comments were price series. The orders also provide for the public requested to help assess the number of dissemination of market statistics and handlers using computers, word Annual Reporting and Recordkeeping other information for the benefit of processors and other electronic Burden producers, handlers, and consumers. equipment to create and store Estimate of Burden: Public reporting Each milk order is administered by a documents, as well as the extent to burden for this collection of information market administrator who is an agent of which the Internet is used to exchange is estimated to average 0.87 hours per the Secretary of Agriculture. Part of the information. response. market administrator’s duties are to We are confident that the information prescribe reports required of each we collect does not duplicate Respondents: Milk Handlers and Milk handler, and to assure that handlers information already available. Dairy Marketing Cooperatives. properly account for milk and milk Programs has an ongoing relationship Estimated Number of Respondents: products, and that such handlers pay with many organizations in the dairy 772. producers and associations of producers industry that also respond to other Estimated Number of Responses per according to the provisions of the order. governmental agencies. Thus, we are Respondent: 35. The market administrator employs a aware of the reports dairy industry Estimated Total Annual Burden on staff that verifies handlers’ reports by organizations are submitting to other Respondents: 23,858 hours. examining records to determine that the government agencies. required payments are made to Information collection requirements Estimated annual cost to respondents producers. Most reports required from have been reduced to the minimum for report preparation: $276,514 (23,858 handlers are submitted monthly to the requirements of the orders, thus hours at $11.59 per hour). Although market administrator. Confidentiality of minimizing the burden on all hourly rates vary among handlers in information collection is assured handlers—those considered to be small various localities, the wage paid to through section 608(d) of the Act, which as well as large entities. Forms require clerical workers engaged in report imposes substantial penalties on anyone only a minimal amount of information preparation is estimated to be violating these confidentiality which can be supplied without data comparable to about a grade GS–7, step requirements. processing equipment or a trained 1. The forms used by the market statistical staff. The primary source of It is important to note that the burden administrators are required by the data used to complete the forms are being reported is an estimate of the respective milk orders that are routinely used in all business amount of time that would be required authorized by the Act. The forms are transactions. Thus, the information of current program participants. authorized either in the general collection and reporting burden is It is expected that the final decision provisions (Part 1000) or in the sections relatively small. Requiring the same should have little impact on the of the respective orders. The forms are reporting requirements for all handlers reporting and recordkeeping burden on used to establish the quantity of milk does not significantly disadvantage any handlers regulated under the Federal received by handlers, the pooling status handler that is smaller than industry of handlers, the class-use of the milk average. milk marketing order program. In fact, used by the handler and the butterfat If the collection of this information as a result of the consolidation of content and amounts of other were conducted less frequently, data Federal orders from 31 to 11 as components of the milk. needed to keep the Secretary informed proposed, an overall reduction in The frequency of performing these concerning industry operations would reporting and recordkeeping recordkeeping and reporting duties not be available. Timing and frequency requirements may occur due to greater varies according to the form; the of the various reports are such to meet uniformity in forms used and fewer frequency ranges from ‘‘on occasion’’ to the needs of the industry and yet ‘‘special’’ forms that currently apply to ‘‘annually’’ but ‘‘monthly’’ is perhaps minimize the burden of the reporting one or a few orders. There should also most common. In general, most of the public. be a reduction in the burden on information that handlers report to the The collection of the required handlers that currently file reports for market administrator is readily available information is conducted in a manner individual orders that are being from normally maintained business consistent with guidelines in 5 CFR consolidated. records. Thus, the burden on handlers 1320.6. The orders require that the Non-substantial changes would be to complete these recordkeeping and market administrator compute monthly necessary on the required reports and reporting requirements is expected to be minimum prices to producers based on records to correctly identify the new minimal. In addition, assistance in monthly information. Without monthly Federal market order (e.g. the current— completing forms is readily available information, the market administrator, and separate—reports for the Upper from market administrator offices. for example, would not have the Florida, Tampa Bay and Southeastern Regarding the use of improved information to compute each monthly Florida marketing areas would be information technology to reduce the price, nor to know if handlers were combined into one report for the Florida reporting and recordkeeping burden, the paying producers on dates prescribed in marketing area).

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Request for Public Input on Analyses rule, two preliminary reports on order in marketing conditions in some of the Comments on the Executive Order consolidation were issued by the markets after publication of the initial 12866 analysis, the initial regulatory Agricultural Marketing Service’s Dairy Preliminary Report, data concerning flexibility analysis, and the paperwork Division, in December 1996 and May those markets was updated to January reduction analysis were requested in the 1997. The proposed rule, issued in 1997, and more detailed information proposed rule, which was published in January 1998, included consideration of was gathered regarding the geographic public comments received in response distribution of route sales by individual the Federal Register on January 30, to these preliminary reports. handlers and their specific sources of 1998. Specifically, interested parties The 1996 Farm Bill specifically producer milk. The updated and more were invited to submit comments on the provides for the inclusion of California detailed data were used in re-examining regulatory and informational impacts of as a separate Federal milk order, but the the appropriate boundaries of the this proposed rule on small businesses. provision is contingent upon petition initially-suggested Northeast, More than 1,000 comments were and approval by California producers. Appalachian, Southeast, Mideast, received from interested parties that The Omnibus Consolidated and Central, and Western marketing areas specifically stated or documented they Emergency Supplemental for the Revised Preliminary Report on were small businesses. However, this Appropriations Bill, passed in October Order Consolidation. The Revised number may not be fully representative 1998, extended the time for Preliminary Report, in turn, was of the number of small businesses that implementing Federal milk order reform modified on the basis of comments actually submitted comments because a amendments from April 4, 1999 to received for development of the majority of commenters did not indicate October 1, 1999. The legislation proposed rule. their size. A few comments specifically provides that California has from the Nearly 1,300 comments filed in addressed the initial regulatory date of issuance of this final decision response to the proposed rule had some flexibility analysis (IRFA), the Executive until September 30, 1999, to become a applicability to the topic of order Order 12866, and the Paperwork separate Federal milk order. This consolidation. Approximately 750 of Reduction Analysis. These comments additional time is intended to allow these comments were received as 6 form have been considered and addressed California dairy interests the letters, one of which (filed by above. opportunity review this final decision to approximately 120 commenters) Preliminary Statement determine whether a Federal milk order advocated a national marketing area for California, consistent with the map comprised of 10 order areas The material issues in this rule relate provisions adopted for the consolidated covering all of the contiguous 48 states. to: orders, would best meet their milk The other form letters advocated the 1. Consolidation of marketing areas. marketing regulatory needs. addition of currently-unregulated area 2. Basic formula price replacement and Over 150 comments were received to the Northeast area. Another 350 other class price issues. that addressed the issue of a Federal comments also addressed the 3. Class I pricing structure. milk order for California, with desirability of adding unregulated areas 4. Classification of milk and related approximately 120 of them being a form to the proposed consolidated marketing issues. letter advocating a California Federal areas (primarily the Northeast), with 5. Provisions applicable to all orders. milk order. These comments, and a only about 55 of these being opposed to 6. Regional issues: number of additional individual the inclusion of unregulated areas. a. Northeast Region. comments, came primarily from The comments specifically applicable b. Southeast Region. commenters outside California who to each of the consolidated marketing c. Midwest Region. expressed a need for California and areas are described in the sections d. Western Region. Federal order prices for milk used in dealing with the individual 7. Miscellaneous and administrative manufactured products to be in closer consolidated areas. matters. alignment to eliminate California In combination with consideration of a. Consolidation of the marketing manufacturers’ perceived competitive the comments received, data similar to service, administrative expense, advantage in product prices. that gathered for October 1995 were and producer-settlement funds. Interest in a Federal milk order has compiled for October 1997 to determine b. Consolidation of the transportation been expressed by some California whether the consolidated marketing credit balancing funds. producers, but for the most part areas delineated in the proposed rule c. General findings. California commenters expressed a continued to represent the most desire to have a chance to study and appropriate boundaries for the purpose II. Discussion of Material Issues and comment on this final decision before of implementing the requirements of the Amendments to the Orders deciding whether to pursue a proposal 1996 Farm Bill. A discussion and explanation of the for a California Federal order. The October 1997 data allowed a material issues and determinations The preliminary reports, the proposed ‘‘snapshot’’ of the marketing patterns of contained in this rule are as follows: rule, and this final decision concerning fluid milk processors for that month. order consolidation were prepared using The regulatory status of distributing 1. Consolidation of Marketing Areas data gathered about receipts and plants for October 1997 is known, and Subtitle D, Chapter 1 of the 1996 Farm distribution of fluid milk products by all the regulatory status of each plant could Bill, entitled ‘‘Consolidation and Reform known distributing plants located in the be projected on the basis of the plant’s of Federal Milk Marketing Orders,’’ 47 contiguous states, not including the receipts and dispositions, and where its requires, among other things, that the State of California. Data describing the milk was distributed. The information Federal milk marketing orders be sources and disposition of fluid milk in the sections entitled ‘‘Distributing limited to not less than 10 and not more products for the month of October 1995 Plants’’ within the description of each than 14. Nearly 1,300 public comments were used to compile the initial marketing area are based on the October received in response to the proposed Preliminary Report. In response to data, as are the lists of plants and pool rule addressed the subject of order comments and questions about certain plant status following the consolidation consolidation. Preceding the proposed marketing area boundaries and changes portion of this decision. It should be

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The any plant can change whenever its located in the adjoining area likely does consolidation of markets having operations or areas of distribution not have a strong enough association different payment plans will be more change. with the adjoining area to require dependent on whether the basic formula The result of the examination and consolidation. component pricing plan is appropriate analysis of the more recent data in For a number of the consolidated for a given consolidated market, or combination with the comments on the areas it would be very difficult, if not whether it would be more appropriate to proposed rule was to modify impossible, to find a boundary across adopt a pricing plan using significantly from the proposed rule the which significant quantities of milk are hundredweight pricing derived from marketing areas of the proposed not procured for other marketing areas. component prices. Northeast and Western orders, and to In such cases, analysis was done to 7. Milk utilization in common dairy make very minor modifications to the determine where the minimal amount of products. Utilization of milk in similar marketing areas of the proposed route disposition overlap between areas manufactured products (cheese vs. Southeast, Mideast, Upper Midwest and occurred, and the criterion of butter-powder) was also considered to Central orders. overlapping route disposition generally be an important criterion in determining As in the case of data referring to the was given greater weight than how to consolidate the existing orders. operations of less than three handlers or overlapping areas of milk supply. Some Comments on Consolidation Criteria producers in the preliminary reports analysis also was done to determine and proposed rule, some of the data whether milk pooled on adjacent Most of the comments relative to used to determine the consolidated markets reflects actual movements of order consolidation criteria were areas is restricted from use by the public milk between markets, or whether the submitted prior to publication of the because it refers to individual fluid milk variations in amounts pooled under a proposed rule. It was the overall distributing plants and the origins of given order may indicate that some milk opinion of the commenters that producer milk supply for those plants. is pooled to take advantage of price overlapping route disposition and milk However, the basis for the marketing differences rather than because it is procurement are the most important area boundaries is described as needed for Class I use in the other criteria to consider in the consolidation specifically as possible without market. process. In addition, Class I use divulging such proprietary information. 3. Number of handlers within a percentages and regulation on the basis The same seven primary criteria as market. Formation of larger-size markets of handler location were noted as were used in the two preliminary is a stabilizing factor. Shifts of milk and/ important criteria to consider. To some reports and the proposed rule were used or plants between markets becomes less extent, the consolidated marketing areas to determine which markets exhibit a of a disruptive factor in larger markets. included in this final decision do sufficient degree of association in terms Also, the existence of Federal order combine markets with similar Class I of sales, procurement, and structural markets with handlers too few in utilization rates rather than markets that relationships to warrant consolidation. number to allow meaningful statistics to would result in Class I use percentages The criteria are as follows: be published without disclosing being more uniform between markets. 1. Overlapping route disposition. The proprietary information should be This result occurs because adjoining movement of packaged milk between avoided. markets, where most of the sales and Federal orders indicates that plants from 4. Natural boundaries. Natural procurement competition takes place more than one Federal order are in boundaries and barriers such as between handlers regulated under competition with each other for Class I mountains and deserts often inhibit the different orders, tend to have similar sales. In addition, a degree of overlap movement of milk between areas, and utilization rates rather than because the that results in the regulatory status of generally reflect a lack of population criterion is one that should be used to plants shifting between orders creates (limiting the range of the consumption determine appropriate consolidations. disorderly conditions in changing price area) and lack of milk production. Also, Class I utilization rates are a relationships between competing Therefore, they have an effect on the function of how much milk is pooled on handlers and neighboring producers. placement of marketing area boundaries. an order with a given amount of Class This criterion is considered to be the In addition, for the purposes of market I use. Differences in rates, to the extent most important. consolidation, large unregulated areas they result in differences in blend prices 2. Overlapping areas of milk supply. and political boundaries also are paid to producers, provide an incentive This criterion applies principally to considered a type of natural barrier. for milk to move from markets with areas in which major proportions of the 5. Cooperative association service lower Class I utilization percentages to milk supply are shared between more areas. While not one of the first criteria markets with higher Class I use. than one order. The competitive factors used to determine marketing areas, Regulation of processors on the basis affecting the cost of a handler’s milk cooperative membership often may be of their location rather than their sales supply are influenced by the location of an indication of market association. areas has largely been incorporated in the supply. The pooling of milk Therefore, data concerning cooperative the consolidated orders by a provision produced within the same procurement membership can provide additional that would pool a handler under the area under the same order facilitates the support for combining certain marketing order for the area in which the handler uniform pricing of producer milk. areas. is located unless more than 50 percent Consideration of the criterion of 6. Features or regulatory provisions of the handler’s Class I route overlapping procurement areas does not common to existing orders. Markets that dispositions are distributed in another mean that all areas having overlapping already have similar regulatory order area. This provision should help areas of milk procurement should be provisions that recognize similar to assure that the order under which a consolidated. An area that supplies a marketing conditions may have a head distributing plant is pooled will not minor proportion of an adjoining area’s start on the consolidation process. With change from month to month, and that milk supply with a minor proportion of calculation of the basic formula price a plant operator is subject to the same its own total milk production while replacement on the basis of provisions, such as producer pay prices, handlers located in the area are engaged components, however, this criterion as are its primary competitors.

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The consolidated orders also include partially regulated handlers, one in New fully regulated. Under the consolidated provisions that lock plants processing York and one in Vermont, are expected order, one of the plants will be partially primarily ultra-high temperature (UHT) to become fully regulated because the regulated only with respect to its or extended shelf-life milk into pooling provisions of the consolidated commercial sales, and the other will be regulation under the order for the area order will be more like those of all the exempt on the basis of size. in which the plant is located. Such other orders than is currently the case Several comments advocated that all plants often have widely dispersed in the New York-New Jersey order. Two of a state’s territory should be included route sales into a number of order areas, plants that currently are fully regulated in one Federal order to assure that all with sporadic deliveries to different on the basis of the ‘‘grandfather’’ clause producers in a state are paid on an areas. Without some type of lock-in of the New York-New Jersey order will equitable basis, or to make it easier to provision, such a plant may be pooled become partially regulated when this maintain state statistical data. One of in several different orders in as many provision ceases to exist. the primary reasons for Federal milk months. At the same time, the plant’s In the consolidated Appalachian orders is that milk marketing occurs milk supply generally is procured from marketing area, two distributing plants, readily across state boundaries, making a given group of producers located in one currently unregulated and one state milk marketing regulation more the same area as the UHT (or extended partially regulated, would become fully difficult to enforce. It is important that shelf-life) plant. Having the plant regulated as a result of including the Federal milk marketing areas continue pooled under a succession of different marketing area of the Tennessee Valley to recognize the free interstate orders with widely varying blend prices order, terminated in October 1997. movement of milk to and from milk creates a disorderly condition for the These plants both were fully regulated plants. There are cases where natural producers involved. under the Tennessee Valley order, and boundaries such as mountains or rivers On the basis of the distributing plant lost their regulatory status as a result of may result in part of a state having a pooling standards included for all the termination. closer marketing relationship with an eleven orders in this final decision, A plant currently partially regulated adjoining state than with other areas of there are three non UHT pool under the Southeast order would the same state. distributing plants that would have become fully regulated as a result of Although the Revised Preliminary more sales in an order area other than ‘‘locking in’’ to regulation plants that Report suggested that several currently the one in which they are regulated. distribute primarily UHT or extended non-Federally regulated areas be added Two of these plants are the Superbrand shelf-life products. Another Southeast to some consolidated marketing areas, Dairy Products distributing plant in distributing plant, currently fully the proposed rule omitted areas in Greenville, South Carolina, and the regulated, would become partially which handlers are subject to minimum Kroger Dairy distributing plant in regulated because of failure to meet the Class I pricing under State regulation Winchester, Kentucky, both located in consolidated order’s pooling standards. unless the affected handlers or States the Appalachian order, but which likely Two distributing plants that currently requested inclusion. This final decision will qualify for pooling under the are partially regulated under the continues to omit such areas, and also Southeast and Mideast orders. In Chicago Regional order would become omits currently-unregulated areas that addition, the Hiland Dairy plant in fully regulated under the consolidated comprise a significant distribution area Fayetteville, Arkansas, in the Southeast Upper Midwest order because of a for currently-unregulated handlers, consolidated area, likely will qualify for change in the definition of receipts that some of which were proposed to be pooling under the Central order. In are used in the calculation of percentage included in consolidated areas. cases in which these plants compete of total receipts used in route Considering the requirements of the almost entirely for a producer milk disposition for the determination of 1996 Farm Bill, consolidation of the supply in the area in which they are pool status. existing orders does not necessitate located, lock-in provisions are Three plants, one in each of the expansion of the consolidated orders incorporated to assure that the plant is consolidated Upper Midwest, Central, into unregulated areas or areas in which pooled where located for the purpose of and Pacific Northwest marketing areas, handlers are subject to minimum Class competitive equity. would change regulatory status as I pricing under State regulation, Some changes in regulatory status are depicted in the attached list of especially when the states’ Class I prices expected to occur because of the distributing plants and regulatory status. exceed or equal those that would be addition of regulated area (in the These plants are distributing plants that established under Federal milk order Northeast), the consolidation of are listed as being fully regulated in regulation. Such regulation could have marketing areas, changes in pooling October 1997 and becoming either the effect of reducing returns to standards, and changes in the partially regulated or exempt under the producers already included under State definitions of types of plants. The consolidated orders. These plants, regulation without significantly expected changes are based on data having small amounts of route affecting prices paid by handlers who collected for October 1997 and may dispositions, actually were pooled on compete with Federally-regulated differ in some respects at the time the the basis of their performance as supply handlers. consolidated orders go into effect. plants or as part of supply plant units. However, there are numerous The regulatory status of three It is unknown whether they will counties and portions of counties Vermont handlers is expected to change continue to qualify as pool supply located within and between Federal from partially regulated to fully plants, but will not meet the pool order marketing areas that have not been regulated because a significant distributing plant standards of the included in the defined order areas percentage of their sales is in areas that consolidated orders. during the course of the more than 60 will be added to the Northeast In the Pacific Northwest, the Oregon years the program has developed. In consolidated marketing area, and a and Washington State prison systems some cases, these small areas were left partially-regulated New York handler is both operate fluid processing plants that unregulated many years ago to maintain expected to meet the pooling standards have route distribution in commercial the unregulated status of a small because of the consolidation of channels, competing with regulated handler. In others, these areas probably marketing areas. Two other currently handlers. These plants are not currently formed a ‘‘buffer’’ between separate

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These areas agreement with AMS to provide performed to determine or suggest should be included in the defined alternative analyses on Federal order consolidated marketing areas. consolidated marketing areas if their reform issues. These researchers used an As noted before, AMS’ analysis inclusion would not have the effect of economic model (the Cornell U.S. Dairy focused initially on distributing plant regulating any unregulated handlers Sector Simulator, or USDSS), to receipts and distribution information for who currently distribute milk in these determine 10–14 optimal marketing October 1995, updated as needed for areas. The issue of whether to regulate areas. Cornell’s first options for 10–14 further analysis during development of currently-unregulated areas is discussed marketing areas were presented at an the proposed rule. Equivalent data was in more detail with regard to the October 1996 invitational workshop for gathered for October 1997 to assure that individual consolidated marketing areas dairy economists and policy analysts the consolidated marketing areas in the sections of this decision dealing held in Atlanta, Georgia. Based on continue to represent actual marketing with those areas, especially the USDSS model results, these options relationships between the current order Northeast area. would result in minimum cost flows of areas, with more current information The occurrence of partial counties in milk using the known concentrations of used as needed for further analysis. The marketing area definitions should be milk production and population, data gathered by the Dairy Division from minimized for the purpose of without considering the location of milk Federal Milk Market Administrators simplifying handlers’ reporting burden. plants. The marketing area maps that reflects actual movements of milk, both The continued existence of these were circulated using these first results from production areas to processing unregulated areas, partially regulated were those referenced by interested plants, and from processing plants to counties, and counties split between persons who cited the Cornell results in consumption areas. This final decision marketing areas serves only to their comments on the Preliminary considers this data, the seven criteria complicate the reporting of route Reports on Order Consolidation and on described fully above, and information dispositions outside the marketing area the proposed rule. by regulated distributing plant handlers provided by the USDSS model analysis. A second set of options was presented for the purpose of determining pool The consolidated marketing area by Cornell researchers in spring 1997. qualifications and increase the costs of options presented by Cornell are not These options were generated with a administering the orders. adopted because the USDSS model does further-developed USDSS model. In In order to avoid extending Federal not adequately reflect issues or factors updating the model, the researchers regulation to handlers whose primary that strongly affect which current enhanced the inputs to its model as a sales areas are outside current Federal marketing areas are most closely related. means of better reflecting the actual order marketing areas and who For this reason, this decision is based on structure of the national market for fluid currently are not subject to Federal data reflecting actual distribution and milk products. These model updates order regulation, it has been determined procurement by fluid milk processing allowed for determination of the that the appropriate in-area Class I plants. disposition percentage portion of the minimum cost flows of: milk, pool distributing plant definition is 25 intermediate and final products from Marketing Areas percent for all orders. Discussion of this producers to plants; from plants to plants; and from plants to consumers on Following are maps of the current provision is included in the section of marketing areas and the 11 consolidated this decision dealing with identical the basis of the locations of milk supplies, dairy product processing marketing areas, followed by brief provisions. The 25-percent level of in- descriptions of the marketing areas area sales will assure that currently- plants, and consumers. The enhanced model is intended to provide for (with those modified from the Proposed regulated handlers retain their pool Rule, and the modifications, marked status. At the same time, increasing geographic market definition on the basis of a resulting set of optimal, by*) and the major reasons for from current levels the percentage of in- consolidation. A more detailed area sales required for pool status under efficient simulated flows of milk and dairy products between locations. description of each consolidated order the consolidated orders will allow State- follows this summary. regulated and most other non-Federally Although the USDSS model considers At the end of the Order Consolidation regulated handlers to operate at their important factors such as milk supply portion of this decision is appended a current level of sales within Federal and demand locations and list of distributing plants associated order areas without being subject to full transportation constraints in with each consolidated marketing area, Federal order regulation. determining the optimal consolidated marketing areas, it aggregates processing with each plant’s expected regulatory Cornell University Study locations, sometimes at locations that status, determined on the basis of data In addition to AMS’ analysis of the are not representative of where describing the plants’ operations during receipt and distribution data in the substantial volumes of milk are October 1997. development of this decision, processed. In addition, the model does BILLING CODE 3410±02±P

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BILLING CODE 3410±02±C

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Eleven Consolidated Marketing Areas Missouri marketing area; plus 16 incidence of partial counties in *1. NORTHEAST—current marketing currently unregulated southeast marketing areas. Major consolidation criteria include areas of the New England, New York- Missouri counties (including 4 that were an overlapping procurement area New Jersey and Middle Atlantic Federal part of the former Paducah marketing between the Chicago Regional and milk orders, with the addition of: the area); plus 20 currently-unregulated Upper Midwest orders and overlapping contiguous unregulated areas of New Kentucky counties (including 5 from the procurement and route disposition area Hampshire, northern New York and former Paducah marketing area). between the western end of the Vermont; and the non-Federally *A partial Missouri county that has Michigan Upper Peninsula order and regulated portions of Massachusetts. been part of the Southwest Plains the Chicago Regional order. A number *The Western New York State order marketing area will become completely unregulated to minimize the reporting of the same cooperative associations area (ten entire and 5 partial western market member milk throughout the New York counties) proposed to be complications caused by partially regulated counties. consolidated area. included in the expanded Northeast *7. CENTRAL—current marketing order area has been omitted. The Major reasons for this consolidation include sales and procurement area areas of the Southern Illinois-Eastern handlers who would be added to those Missouri, Central Illinois, Greater currently fully regulated under the three overlaps between the Southeast order and these counties. Kansas City, Southwest Plains, Eastern separate orders either have a sufficient Colorado, Nebraska-Western Iowa, percentage of their route disposition *5. MIDEAST—current marketing areas of the Ohio Valley, Eastern Ohio- Eastern South Dakota, Iowa (* less the within the consolidated marketing area portion of an Illinois county that will Western Pennsylvania, Southern to meet the pooling requirements or are become part of the consolidated Upper Michigan and Indiana Federal milk located in the area to be added. Midwest area) and *Western Colorado orders, plus Zone 2 of the Michigan Reasons for consolidation include the Federal milk orders, * plus the portion Upper Peninsula Federal milk order, existence of overlapping sales and of an Illinois county currently in the and most currently-unregulated procurement areas between New Chicago Regional Federal order area, counties in Michigan, Indiana and Ohio. England and New York-New Jersey and minus 11 northwest Arkansas counties *One partial and 3 entire counties in between New York-New Jersey and and 1 partial and 22 entire Missouri north central Ohio are left unregulated, Middle Atlantic. An important measure counties that are part of the current since they represent the distribution of association is evidenced by industry Southwest Plains marketing area, minus efforts to study and pursue area of a currently-partially regulated 6 Missouri counties that are part of the consolidation of the three Federal orders distributing plant (Toft Dairy in current Southern Illinois-Eastern prior to the 1996 Farm Bill. Sandusky, Ohio). Missouri marketing area, plus 54 2. APPALACHIAN—Current Major criteria for this consolidation currently-unregulated counties in marketing areas of the Carolina and include the overlap of fluid sales in the Kansas, Missouri, Illinois, Iowa, Louisville-Lexington-Evansville (minus Ohio Valley marketing area by handlers Nebraska and Colorado, plus 8 counties Logan County, Kentucky) Federal milk from the other areas to be consolidated. in central Missouri *(six fewer than in orders plus the marketing area of the With the consolidation, most route the proposed rule) that are not former Tennessee Valley order, with the disposition by handlers located within considered to be part of the distribution addition of 21 currently-unregulated the Mideast order would be within the area of an unregulated handler in counties in Indiana and Kentucky. marketing area. Also, nearly all milk central Missouri, *plus 7 currently Overlapping sales and procurement produced within the area would be unregulated Colorado counties located areas between these marketing areas are pooled under the consolidated order. between the current Western and major factors for this consolidation. The portion of the Michigan Upper Eastern Colorado order areas. 3. FLORIDA—current marketing areas Peninsula marketing area included in This configuration would leave 31 of the Upper Florida, Tampa Bay, and the Mideast consolidated area has sales unregulated counties in central Missouri Southeastern Florida Federal milk and milk procurement areas in common that are intended to delineate the orders. with the Southern Michigan area and distribution area of Central Dairy at Natural boundary limitations and has minimal association with the Jefferson City, Missouri, which has overlapping sales and procurement western end of the current Michigan limited distribution in Federal order areas among the three orders are major Upper Peninsula marketing area. territory. reasons for consolidation, as well as a *6. UPPER MIDWEST—current Major criteria on which this measure of association evidenced by marketing areas of the Chicago Regional, consolidation is based include cooperative association proposals to Upper Midwest, Zones I and I(a) of the overlapping route disposition and consolidate these three marketing areas. Michigan Upper Peninsula Federal milk procurement between the current Further, the cooperative associations in orders, and unregulated portions of orders. The consolidation would result this area have worked together for a Wisconsin. *The Iowa Federal order in a concentration of both the sales and number of years to accommodate marketing area portion of one Illinois supplies of milk within the consolidated needed movements of milk between the county, in which Chicago Regional marketing area. The consolidation three Florida Federal orders. handlers have the preponderance of would combine several relatively small *4. SOUTHEAST—current marketing sales, is added to the consolidated orders and provide for the release of area of the Southeast Federal milk order, Upper Midwest marketing area, and the market data without revealing plus 1 county from the Louisville- Chicago Regional portion of another proprietary information. In addition, Lexington-Evansville Federal milk order Illinois county, in which Iowa order many of the producers in these areas marketing area; plus 11 northwest handlers have the preponderance of share membership in several common Arkansas counties and 22 entire sales, is removed and added to the cooperatives. The Western Colorado Missouri counties that currently are part consolidated Central area. These area has become more closely associated of the Southwest Plains marketing area; changes will reduce overlapping route with the Eastern Colorado area than plus 6 Missouri counties that currently disposition between the two with the Great Basin area since issuance are part of the Southern Illinois-Eastern consolidated orders and reduce the of the proposed rule.

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8. SOUTHWEST—current marketing The major criterion on which the based include overlapping sales areas of Texas and New Mexico-West consolidation is based is sales overlap between Southwestern Idaho-Eastern Texas Federal milk orders, with the between the sole Las Vegas, Nevada, Oregon and Great Basin, as well as a addition of two currently-unregulated handler and handlers regulated under significant overlap in procurement for northeast Texas counties and 47 the Central Arizona order in both Clark the two orders in five Idaho counties. currently-unregulated counties in County, Nevada, and unregulated The two orders also have similar southwest Texas. portions of northern Arizona. The Grand multiple component pricing plans and Canyon and sparsely populated areas in Major criteria supporting this most of the milk used in nonfluid the northwest part of Arizona, and the consolidation include sales and products under both orders is used in sparsely populated desert region of procurement area overlaps and common cheese. eastern Arizona constitute natural cooperative association membership Collection of detailed data for barriers between this and adjacent between the Texas and New Mexico- individual handlers indicates that the marketing areas. In addition, the most West Texas marketing areas, and similar strength of earlier relationships between significant relationship between this the former Great Basin and Lake Mead marketing concerns with respect to area and any other is represented by the trade with Mexico for both orders. orders that justified their 1988 merger substantial volumes of bulk and have dwindled significantly, with the Addition of the currently-unregulated packaged milk exchanged between the Texas counties will result in the Las Vegas area now more closely related Arizona-Las Vegas area and Southern to a combination of southern California regulation of no additional handlers, California. and will reduce handlers’ recordkeeping and Central Arizona handlers. *10. WESTERN—current marketing 11. PACIFIC NORTHWEST—current and reporting burden and the market areas of the Southwestern Idaho-Eastern administrator’s administrative costs. marketing area of the Pacific Northwest Oregon and Great Basin Federal milk Federal milk order plus 1 currently- 9. ARIZONA-LAS VEGAS—current orders, minus Clark County, Nevada. unregulated county in Oregon. The marketing area of Central Arizona, plus *The Western Colorado order area, degree of association with other the Clark County, Nevada, portion of the proposed to be included in the Western marketing areas is insufficient to current Great Basin marketing area, plus order area, is instead included in the warrant consolidation. eight currently-unregulated Arizona consolidated Central order. The major counties. criteria on which the consolidation is

TABLE 1.ÐMARKET INFORMATION: POPULATION, UTILIZATION, PRODUCER MILK AND WEIGHTED AVERAGE UTILIZATION VALUE (WAUV) IN CONSOLIDATED MARKETING AREAS

1 2 2 3 Market Population Class I utiliza- Producer milk WAUV (millions) tion 2 (percent) (1000 lbs.) (per cwt)

Northeast ...... 49.0 48.6 1,962,335 $13.97 Appalachian ...... 17.3 85.0 410,372 13.35 Florida ...... 14.1 90.6 217,952 15.69 Southeast ...... 26.9 85.6 482,499 13.60 Mideast ...... 31.0 58.9 1,040,112 13.42 Upper Midwest ...... 18.5 24.1 1,597,232 12.94 Central ...... 21.5 50.1 868,443 13.29 Southwest ...... 21.3 53.4 649,872 13.97 Arizona-Las Vegas ...... 5.7 46.3 195,943 13.84 Western ...... 3.2 32.5 304,129 13.14 Pacific Northwest ...... 9.0 35.6 539,987 13.33

Total ...... 217.5 N/A 7,756,390 N/A

1 Based on July 1, 1997 estimates. 2 Based on October 1997 information, for plants which would be fully regulated under assumptions used in this decision. 3 Not a blend priceÐshown solely for the purpose of showing impact of consolidation on utilization.

TABLE 2.ÐMARKET INFORMATION: NUMBER OF PLANTS IN CONSOLIDATED MARKETING AREAS

1 Distributing plants Manufacturing Market and supply Fully regulated 2 FR small 3 (FR) Exempt businesses plants

Northeast ...... 64 9 31 95 Appalachian ...... 25 3 4 13 Florida ...... 12 1 2 4 Southeast ...... 36 1 3 37 Mideast ...... 51 4 27 59 Upper Midwest ...... 27 3 13 301 Central ...... 35 3 7 84 Southwest ...... 21 2 5 17 Arizona-Las Vegas ...... 5 1 2 3 Western ...... 11 1 5 18 Pacific Northwest ...... 19 4 12 27

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TABLE 2.ÐMARKET INFORMATION: NUMBER OF PLANTS IN CONSOLIDATED MARKETING AREASÐContinued

1 Distributing plants Manufacturing Market and supply Fully regulated 2 FR small 3 (FR) Exempt businesses plants

Total ...... 306 32 111 669 1 Based on October 1997 information. Excludes: (1) out-of-business plants through December 1998; and (2) new plants since October 1997. 2 Exempt based on size (less than 150,000 lbs. route distribution per month). 3 Based on May 1997 information.

Descriptions of Consolidated Marketing consumption is discussed to help price. The current utilization data is Areas describe how much milk is needed to published each month for each Federal Each of the consolidated order areas supply the fluid needs of the population milk order market. Pool data was used is described in the text following this of each marketing area. Per capita to calculate the effects of consolidation introduction. The criteria which were consumption numbers were estimated on utilization. Other plants. The presence of used to determine which areas should by state using data from a report on ‘‘Per manufacturing and supply plants in and be consolidated are explained. For each Capita Sales of Fluid Milk Products in near the consolidated order areas, and consolidated area, the following Federal Order Markets,’’ published in the December 1992 issue of Federal the products processed at these plants, information is included: # are described for each consolidated area. Geography. The political units (states, Milk Order Market Statistics, 391, This information was collected by counties, and portions of counties) issued May 1993. This data was the market administrators’ offices for May included in each area, the topography, most recent available. Production. A description of the 1997, and has been changed from the and the climatic conditions are amount and sources of milk production proposed rule only where changes from described for the purpose of delineating for the market is included for the the proposed marketing areas have the territory to be incorporated in each purpose of identifying the supply area occurred. consolidated marketing area and for each consolidated marketing area. Cooperative Associations. The describing its characteristics pertaining Production data by state and county for number of cooperative associations to milk production and consumption. each Federal milk order was compiled pooling member milk under each of the This information was derived   from information collected by the current individual orders included in principally from Microsoft Encarta 96 offices administering the current each consolidated area, and the number Encyclopedia, and augmented by Federal milk orders (market that pool milk in more than one of the several U.S. atlases. administrators’ offices). For most of the areas is identified. This information was Population. The total population of consolidated marketing areas, obtained from market administrators’ each area and its distribution within the production data has been updated to offices, updated to December 1997 from area is included for the purpose of October 1997. For several of the the proposed rule. For purposes of the identifying where milk is consumed. consolidated areas, however, October consolidation discussion, the four July 1, 1997, population estimates were 1997 data is difficult to compile and, cooperative associations that combined obtained from ‘‘CO–97–1 Estimates of when compared with previously to create Dairy Farmers of America the Population of Counties,’’ Population published statistics, may yield (DFA) are considered to be a single Estimates Program, Population Division confidential information. For these organization. of the U.S. Bureau of the Census. areas, the data cited in the proposed Criteria for Consolidation. The extent Metropolitan Statistical Area (MSA) rule has been used to describe the to which the criteria used in identifying information is provided by the United sources of milk for the consolidated markets to be consolidated are States Office of Management and Budget market. supported by the marketing conditions (OMB), which defines metropolitan Distributing plants. For each present in each of the consolidated areas areas according to published standards marketing area the number and types of is discussed. that are applied to Census Bureau data. distributing plants expected to be Discussion of comments and To be described as an MSA, an area (one associated with each marketing area are alternatives. Comments filed in or more counties) must include at least included, with the locations of plants by response to the consolidation section of one city with 50,000 or more population centers, to identify where the proposed rule and alternatives inhabitants, or a Census Bureau-defined milk must be delivered. This considered are summarized and urbanized area (of at least 50,000 information was collected by market discussed for each consolidated area. inhabitants) and a total metropolitan administrators’ offices. The expected Northeast population of at least 100,000 (75,000 in regulatory status was determined on the New England). Areas with more than 1 basis of each plant’s receipts and route The consolidated Northeast marketing million population may be described as distribution of fluid milk during area is comprised of the current New ‘‘consolidated metropolitan statistical October 1997. Changes in plant England, New York-New Jersey, and areas’’ (CMSAs) made up of component operations or distribution patterns could Middle Atlantic Federal milk order parts designated as primary change the expected status. marketing areas (Orders 1, 2, and 4), metropolitan statistical areas (PMSAs). Utilization. The utilization with currently-unregulated areas in For purposes of the marketing area percentages of the current individual northern New York, Vermont and New descriptions in this decision, the term orders and the effect of consolidation on Hampshire added. The entire areas of ‘‘MSA’’ also includes CMSAs and the consolidated orders are described the States of Connecticut (8 counties), PMSAs. for each marketing area, with an Delaware (3 counties), Massachusetts Per capita consumption. Available estimate of the effect of consolidation on (14 counties), New Hampshire (10 data pertaining to per capita each current individual order’s blend counties), New Jersey (21 counties),

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Rhode Island (5 counties), and Vermont number 1 agricultural commodity in a population in the consolidated (14 counties) are contained within the terms of cash receipts during 1996. marketing area of 6.8 million. consolidated Northeast order area. In Principally along the Atlantic coastline Of the 12 other MSAs in the addition, the District of Columbia, 21 is a flatter area where other agricultural consolidated marketing area, 6 are counties and the City of Baltimore in activities, including greenhouse and located in New York State, with an Maryland, 41 complete and 3 partial nursery, fruit, truck and mixed farming, average population of nearly 400,000 counties and the 5 boroughs of New take place. A near-continuous strip each. Two are located in Pennsylvania, York City in New York, the 15 along the east coast of the area, from with populations of .6 and .45 million. Pennsylvania counties currently northeast Massachusetts southwest to One MSA in Vermont, 1 in Delaware, included in the Middle Atlantic the Baltimore area, is a major industrial and 2 in Massachusetts have average marketing area, and 4 counties and 5 area and is heavily populated. populations of 163,000. cities in Virginia are included in the Fluid Per Capita Consumption consolidated order. There are 156 Population complete and 3 partial counties and 8 According to July 1, 1997, population Fluid per capita consumption cities, including the District of estimates, the total population in the estimates vary within the Northeast Columbia, in the consolidated Northeast consolidated Northeast marketing area from 16.7 pounds per month in the marketing area. is 49 million. The area is very densely more southern parts of the region to 20 The Western New York State order populated, especially along a coastal pounds per month in New England. area, proposed to be included in the strip extending from Boston, These rates would result in a weighted consolidated Northeast area, is not Massachusetts, in the northeast to average of 18 pounds per month, and an included at the request of the business Washington, D.C., in the southwest. In estimated total fluid milk consumption rate of 882 million pounds per month entity that would be most affected by its this consolidated marketing area of for the Northeast marketing area. inclusion because the currently- approximately 160 counties, 106 are Approximately 752 million pounds of unregulated portions of Pennsylvania included within Metropolitan Statistical this fluid milk consumption would be are not included. Areas (MSAs). The 20 Metropolitan required along the heavily-populated Statistical Areas in the consolidated Geography coastal area extending from northeast Northeast marketing area account for The Northeast marketing area extends Massachusetts southwest through 93.7 percent of the total market area from the Canadian border on the north, Washington, D.C. and northern Virginia. population. south to northern Virginia, eastern Handlers who would have been fully Maryland and Delaware, with its eastern Almost sixty percent of the marketing regulated under the consolidated edge along the western border of Maine area population is located in 6 Northeast order during October 1997 at the northern end of the marketing interconnected MSAs in 48 counties, distributed 828.1 million pounds within area, and along the Atlantic Ocean for extending from central New Jersey to the consolidated marketing area. the remainder. The total northeast- southern New Hampshire. The six October 1997 sales within the marketing southwest extent of the marketing area MSAs are: Springfield, Massachusetts; area by handlers that would be is approximately 600 miles. The Boston-Worcester-Lawrence, regulated by other orders totaled 6.2 marketing area extends westward to Massachusetts/New Hampshire/Maine/ million pounds, and sales by handlers Lake Ontario in New York State (about Connecticut; Providence-Fall River- who would have been partially 350 miles east to west), goes only as far Warwick, Rhode Island/Massachusetts; regulated were 18.9 million pounds. west as the northern part of New Jersey New London-Norwich, Connecticut/ Sales in the marketing area by exempt (about 60 miles), and expands westward Rhode Island; Hartford, Connecticut; and government plants, and by again across the eastern half of southern and New York-Northern New Jersey- producer-handlers totaled 6.6 million Pennsylvania, taking in a small part of Long Island, New York/New Jersey/ pounds. northeast Virginia, eastern Maryland, Connecticut/Pennsylvania. The and Delaware (about 230 miles east to population in this northeastern portion Milk Production west). There is a large State-regulated of the marketing area is concentrated In October 1997, nearly 19,000 area in Pennsylvania just to the west of most heavily at its northern and producers from 13 states pooled 1.9 the Northeast marketing area; and most southern ends—the New York City area billion pounds of milk on the three of the State of Virginia to the south of has a population of approximately 20 orders comprising the consolidated the marketing area also is regulated million, and the Boston area’s Northeast order. With the addition of under a State order. The consolidated population is approximately 5.5 million. several currently-unregulated handlers, Northeast marketing area is contiguous Two of the other MSAs, Hartford and it is probable that approximately 2 to no other consolidated marketing Providence, each have over 1 million billion pounds of milk per month will areas, but parts of it, in south central population. Although each of these six be pooled under the Northeast order. New York State and south central MSAs is described as a separate area in Eleven of the 13 states supplying milk Pennsylvania, are very close to the the population data, many of the to the three Federal order pools are at consolidated Mideast area. counties involved are divided between least partly in the marketing area, and The northern and northwestern parts separate MSAs. 84 percent of the producer milk pooled of the Northeast area are large areas of Just southwest of the New York City under the three orders in October 1997 coniferous forests that are somewhat MSA is the Philadelphia-Wilmington- came from just 3 states—New York (41.5 mountainous. To the south and Atlantic City, Pennsylvania/New Jersey/ percent), Pennsylvania (32.2 percent), southeast of the forested areas are areas Delaware/Maryland MSA, with a and Vermont (10.3 percent). Over 10 where dairy farming predominates as population of 6 million. Some counties million pounds of milk was produced in the primary type of agriculture. In fact, of these two MSAs are adjacent. each of fifty-one counties: 1 county in for 4 of the 10 states that are located in Southwest of the Philadelphia MSA and northeast Connecticut, 3 in the most the Northeast marketing area (New separated from it by only one county is northwestern of the Maryland portion of Hampshire, New York, Pennsylvania the Washington, DC/Baltimore, the marketing area, 30 spread over most and Vermont) dairy products were the Maryland/northern Virginia MSA, with of New York, 1 on the western edge of

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This number plants: 13 in Vermont (4 in the milk was produced within the includes 31 of the pool distributing Burlington area), 1 in New Hampshire consolidated marketing area. plants. Under the consolidated order, it and 10 in Massachusetts (all in the Less than one-third of the milk is anticipated that there would be 5 pool Boston-Worcester-Lawrence area), 1 in production for the consolidated market distributing plants in the Boston- Rhode Island (in the Providence-Fall Worcester-Lawrence area, 6 in the was produced within 100 miles of the River-Warwick area), 7 in Connecticut heavily populated coastal corridor. Philadelphia-Wilmington-Atlantic City (3 in the Hartford area and 4 in the New Although the Northeast area contains area, and 11 in the New York-Northern York-Northern New Jersey-Long Island two out of the top five milk-producing New Jersey-Long Island area. The area), 12 in New Jersey (all in the New states in the U.S. (New York and Hartford, Connecticut, area would have York-Northern New Jersey-Long Island Pennsylvania), the population of the 2 pool distributing plants, Providence- area), 2 in Delaware (one in the marketing area is nearly 20 million more Fall River-Warwick would have 3, and than the next most-populated the Washington-Baltimore area would Philadelphia-Wilmington-Atlantic City consolidated area (the Mideast area, have 4 pool distributing plants. area), 7 in Maryland (four in the Washington-Baltimore area), 13 in with 31 million people). The Northeast, Of the remaining 81 distributing therefore, is a very significant milk plants, 14 pool distributing plants were Pennsylvania (5 in the Philadelphia- production area with a very high located in other MSAs as follows: 8 in Wilmington-Atlantic City area), and 29 demand for fluid milk and dairy New York; 4 in Pennsylvania; and 2 in in New York (9 in the New York- products. Massachusetts. Sixty-seven distributing Northern New Jersey-Long Island area). Fifteen of the 95 plants are pool Distributing Plants plants, including 19 pool distributing plants, were not located in MSAs. plants. Of these pool plants, 7 are Using distributing plant lists included manufacturing plants—5 manufacture Utilization in the proposed rule, with the pooling primarily powder, 1 manufactures standards at 25 percent of route According to October 1997 pool primarily cheese and 1 manufactures dispositions as in-area sales, and statistics for handlers who would be primarily other products. There are 8 updated for known plant closures fully regulated under this Northeast pool supply plants—1 has no primary through December 1998, 141 order, the Class I utilization percentages product, but ships only to distributing distributing plants would be expected to for the New England, New York-New plants; 5 are supply plants that be associated with the Northeast Jersey, and Middle Atlantic markets manufacture primarily Class II products, marketing area. On the basis of data were 52, 45, and 53 percent, and 2 supply plants manufacture collected for October 1997, the plants respectively. Based on calculated primarily cheese. Of the remaining 80 associated would include 64 fully weighted average use values for (1) the nonpool plants in the Northeast regulated distributing plants (58 current order with current use of milk, marketing area, 73 are manufacturing currently fully regulated, 5 currently and (2) the current order with projected plants—37 manufacture primarily Class partially regulated, and 1 currently use of milk in the consolidated II products, 1 manufactures primarily unregulated), 15 partially regulated (2 Northeast order, the potential impact of butter, 33 manufacture primarily cheese currently fully regulated and 13 this decision on producers who supply and 2 manufacture primarily other currently partially regulated). Nine the current market areas is estimated to products. Seven of the remaining exempt plants having less than 150,000 be: New England, a 9-cent per cwt nonpool plants are supply plants—2 are pounds of total route disposition per decrease (from $14.09 to $14.00); New supply plants that manufacture month (3 currently fully regulated, 2 York-New Jersey, a 8-cent per cwt primarily Class II products and 5 are currently partially regulated, 2 currently increase (from $13.91 to $13.99); and supply plants that manufacture exempt based on size, and 2 currently Middle Atlantic, a 10-cent per cwt primarily cheese. unregulated) and 47 producer-handlers decrease (from $14.00 to $13.90). The (45 currently producer-handlers, 1 weighted average use value for the There are also six supply or currently partially regulated, and 1 consolidated Northeast order market is manufacturing plants in the unregulated currently unregulated) would have been estimated to be $13.97 per cwt. For area of New York—one in the associated with the market during October 1997, combined Class I unregulated county of Chautauqua, one October 1997. Three handlers who utilization for Orders 1, 2 and 4 was in the unregulated portion of currently are exempt based on 47.7 percent based on 917.3 million Cattaraugus County, two in the institutional status would continue to be pounds of producer milk used in Class unregulated portion of Allegany County, exempt on the same basis, and 3 I out of 1.922 billion total producer milk and two in the unregulated portion of handlers located in the Western New pounds. Steuben County. Two are pool supply York order area who would have been The Northeast area is one of two plants—one manufactures primarily fully regulated under the proposed rule consolidated marketing areas that would Class II products and the other would continue to be unregulated under have a significantly higher-than-average manufactures primarily cheese. The any Federal order. percentage of its milk used in Class II. remaining four are nonpool Since October 1997, 14 distributing Currently, all three of the orders have manufacturing plants—three plants (3 in New York, 2 in each of the Class II utilization between 15 and 25 manufacture primarily cheese and one States of Massachusetts, Maryland, New percent. When the markets are manufactures primarily Class II Jersey, Pennsylvania and Vermont, and combined the average for the products.

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Cooperative Associations somewhat of a barrier to milk marketing Maryland, West Virginia, Vermont, During December 1997, 76 in the northeast by limiting the Massachusetts, New Hampshire, and cooperative associations pooled their association of non-Maine milk with the Maine. More than 50 commenters urged members’ milk on the three Northeast Maine pool. the continued omission of Pennsylvania The merger of these markets has been orders. Three of the cooperatives pooled Milk Marketing Board Areas 2, 3, and 6 previously proposed by interested milk on all three orders, 3 pooled milk from any of the consolidated Federal parties. A committee comprised chiefly on both the New England and New order areas. of Northeast region cooperatives was Most of the comments supporting York-New Jersey orders, and 3 others formed over three years ago to study a expansion of the Northeast consolidated pooled milk on both the New York-New merger of the three Federal orders. In marketing area into non-federally Jersey and Middle Atlantic orders. The support of a Northeast consolidation, regulated areas, especially 9 cooperative associations that pooled the committee and other interested Pennsylvania, argued that handlers in milk on more than one of the Northeast parties, including handlers and the non-federally regulated areas orders represented 72.6 percent of regulatory agencies, have noted: compete for milk supplies in the same cooperative milk pooled under the 3 overlapping sales and procurement milksheds and for fluid milk sales in the orders and 55 percent of the total milk. areas; a trend toward consolidation of same markets as Federally-regulated Seventy-six percent of the milk pooled cooperative processors and handlers in handlers, with the surrounding federal in the Northeast is cooperative the region (leaving the remaining order pool(s) carrying the necessary association milk, with 80 percent of handlers with larger distributing areas reserve milk supplies for the Class I Federal Order 1 milk, 68.4 percent of and volumes); and regulation of plants sales distributed by non-regulated Federal Order 2 milk, and 87 percent of by an order in which they are not handlers. In addition, the comments Federal Order 4 milk pooled by located. The proponents of argued that dairy farmers whose milk is cooperatives. consolidation have indicated that priced in individual handler pools at The 5 cooperatives that market milk consolidation would tend to solve some primarily-fluid handlers under PMMB only under Order 1 account for 26.7 of the presently existing inequities and regulation have a competitive advantage percent of the milk marketed under that would lead to greater efficiency for over neighboring producers whose milk order by cooperative associations, and handlers and order administration. is included in marketwide pools that 21.3 percent of total milk marketed blend the cost of balancing milk Discussion of Comments and under Order 1. In Order 2, only 40.4 supplies for fluid use with returns from Alternatives percent of cooperative association milk the fluid market. is marketed by the 59 co-ops that market Prior to issuance of the proposed rule, Nearly 60 comments, many from milk only under Order 2. Milk marketed alternatives to the consolidation of the Pennsylvania dairy farmers, opposed by these cooperatives represents 27.6 order areas included in the Northeast expansion of the consolidated Northeast percent of the total milk pooled for marketing area that were considered order area into Pennsylvania. Comments December 1997. Three cooperative included the addition of all currently stated that the PMMB individual associations that marketed milk only on unregulated and State-regulated area handler pools result in greater returns to the Order 4 portion of the Northeast adjoining the Order 1, 2 and 4 marketing producers, and producer returns would order marketed 8.2 percent of the milk areas. These considerations included decline if handlers are required to pay marketed by cooperatives under this Pennsylvania Milk Marketing Board the additional fluid value into the order. This amount of milk represented (PMMB) Areas 2, 3, and 6, some or all marketwide pool to subsidize cheese/ 7.2 percent of total milk pooled under of the non-Federally regulated part of powder plants. Order 4 in December 1997. the State of Virginia, the unregulated As stated in the introduction to the areas of West Virginia and Maryland, consolidation discussion, consolidation Criteria for Consolidation the Western New York State order area of the existing orders does not The current New England, New York- and northern New York, northern necessitate expansion of the New Jersey, and Middle Atlantic Vermont and New Hampshire, pockets consolidated orders into currently- Federal milk order marketing areas of unregulated area in Massachusetts, unregulated areas, especially if such (Orders 1, 2, and 4) should be and the State of Maine. The proposed expansion would result in the consolidated because of the rule would have included in the regulation of currently-unregulated interrelationship between Orders 1 and consolidated Northeast marketing area handlers. Handlers located in PMMB 2 and between Orders 2 and 4 regarding the unregulated areas of Vermont, New areas 2, 3, and 6 are regulated under the route disposition and milk supply. Hampshire, Massachusetts, northern State of Pennsylvania if they do not Eighty percent of fluid milk disposition New York, and the Western New York have enough sales in any Federal order by handlers who would be fully State order area. area to meet an order’s pooling regulated under the consolidated order Nearly 1,150 comments that dealt to standards. These PMMB handlers are is distributed within the consolidated some extent with the consolidation of subject to minimum Class I pricing, marketing area. Fully regulated handlers the Northeast order area were received sometimes at price levels that exceed account for 96 percent of the fluid milk in response to the proposed rule. those that would be established under products distributed within the Approximately 125 of these comments Federal milk order regulation. When consolidated marketing area. The favored adoption of a national such plants do meet Federal order utilization of the three markets is marketing area map that would include pooling standards, the State of similar, and several cooperative all U.S. territory in the 48 contiguous Pennsylvania continues to enforce some associations market their members’ milk states in one of ten Federal order areas. of its regulations in addition to Federal in all three markets. The three markets Over 950 comments favored the order regulations. Inclusion of the are surrounded by State-regulated and expansion of the Northeast area into all Pennsylvania-regulated handlers in the unregulated areas to the west and south, of Pennsylvania, with more than 600 of consolidated marketing area would have the Atlantic ocean to the east, and these comments also favoring expansion little effect on handlers’ costs of Class I Canada to the north. The adjoining into some combination of the milk (or might reduce them), and would Maine State milk order also serves as unregulated areas of New York, reduce returns to a few producers. In

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There is no compelling reason to Appalachian order regulation that make it difficult to extend Federal order regulation to determine whether PMMB regulation encompass this State-regulated The consolidated Appalachian gives State-regulated handlers a cost marketing area. marketing area is comprised of the advantage over Federally-regulated The Western New York State order current Carolina (Order 5) and plants distributing milk in the same area, proposed to be added to the Louisville-Lexington-Evansville (Order areas. Some of the differences between consolidated Northeast area because the 46) marketing areas (less one Kentucky PMMB and Federal order regulation are: persons regulated under that order had county that is included in the (1) The number of classes of use (two so requested, is not included. Upstate consolidated Southeast marketing area) versus four); (2) the location at which Milk Producers Cooperative (Upstate), as well as 64 counties and 2 cities milk is priced (where it is distributed the entity that would be most affected formerly comprising the marketing area for sale to consumers versus where it is by the inclusion of this area, had of the Tennessee Valley Federal Order received from producers for processing); supported its addition prior to issuance (Order 11), terminated in October 1997, (3) individual handler pooling versus of the proposed rule. Because the and currently-unregulated counties in marketwide pooling; and (4) State proposed rule failed to include the Indiana and Kentucky. There are 297 regulatory treatment of milk sold in State-regulated Pennsylvania areas in counties and 2 cities in this interstate commerce, including milk the consolidated Northeast area, consolidated marketing area. This area distributed outside the State and however, Upstate determined that it remains unchanged from the proposed received from outside the State. In would be faced with unfair competition rule. addition to creating different costs from PMMB-regulated handlers and Geography among similarly-located State- and requested that the Western New York Federally-regulated handlers, PMMB order area be left out of the consolidated The Appalachian market is described regulation may result in different costs Northeast order area. geographically as follows: 7 unregulated between similarly-located PMMB- All of the comments received that Georgia counties (formerly part of Order regulated handlers. However, since the dealt with the inclusion of unregulated 11), 20 Indiana counties (17 currently in main focus of this rulemaking process area in the States of Massachusetts, New Order 46 and 3 currently unregulated), has been to consolidate existing Federal Hampshire, and Vermont and the 81 Kentucky counties (47 currently in marketing areas, it would be more currently-unregulated northern area of Order 46, 16 formerly part of Order 11, appropriate to consider this issue of New York State in the consolidated and 18 currently unregulated), all North marketing area expansion in Northeast order area supported the Carolina and South Carolina counties Pennsylvania at a future time. addition of this area. According to the (100 and 46, respectively, and all Maine has been and continues to be comments, inclusion of the currently currently in Order 5), 33 Tennessee excluded from Federal order regulation. unregulated areas will assure that counties (formerly part of Order 11), 8 Three comments, two from New York distributing plant operators that counties and 2 cities in Virginia State Dairy Foods and one from Crowley currently are fully regulated would be (formerly part of Order 11), and 2 West Foods, Inc., a fluid milk processor with placed on an equal competitive footing Virginia counties (formerly part of Order distributing plants regulated under the with handlers currently unregulated, 11). New York-New Jersey and New England while having no negative effect on the The consolidated Appalachian market orders, suggested including Maine in producers who would be affected. reaches from the Atlantic coastline the consolidated Northeast order on the Inclusion of these currently unregulated westward to southern Indiana and basis that Maine regulation depends on areas would lighten handlers’ reporting western Kentucky’s border with Illinois. balancing seasonal reserves on the New burden and the market administrator’s It is surrounded by Illinois on the west, England order, and that the inclusion of administrative burden in keeping Indiana, northeastern Kentucky, West Maine would allow similarly situated separate data on sales in this small Virginia and Virginia to the north, the handlers equal opportunities. Five unregulated area. The number of Atlantic Ocean on the east, and Georgia, comments supported Maine’s exclusion handlers who would be affected by Alabama, western Tennessee and from Federal orders because of its these additions is minimal, and the southwestern Kentucky to the south. geographic separation from other areas, additions would enhance the efficiency Measuring the extreme dimensions, this its long history of successful milk of Federal order administration while market extends about 625 miles from its marketing regulation, and the limited easing the reporting burden of regulated northwest corner in Indiana to its impact of its pricing system on other handlers. southeastern corner on the South regulated areas. In addition to the northern portions of Carolina-Georgia border, about 300 There appears to be little reason to New Hampshire, Vermont, and New miles south-to-north from the South add the State of Maine to the York, and the small area of Carolina-Georgia border to the North consolidated Northeast order area. Massachusetts, the offshore Carolina-Virginia border, about 500 Maine handlers with significant Massachusetts counties of Dukes and miles west-to-east from the distribution in the Federal order areas Nantucket are added to the marketing Appalachian-Southeast markets’ border can be and are pooled under Federal area. The only entity currently operating in Tennessee to eastern North Carolina, orders, limiting the extent of any in those counties (a producer-handler and about 375 miles west-to-east from competitive advantage. Inclusion of on Martha’s Vineyard) would be exempt the Illinois-Indiana border to West Maine-regulated handlers in the from the pooling and pricing provisions Virginia and Virginia. consolidated marketing area would have of the order by virtue of its status as a The Appalachian market is little effect on handlers’ costs of Class I producer-handler and by having fewer contiguous to 3 other consolidated

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00032 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.039 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16057 marketing areas: the Southeast area to the South Carolina border about at the the second-largest Kentucky MSA, is the southwest and south, the Central mid point of the North and South located in the center of the state and has area to the west and the Mideast area to Carolina border, and about 250 miles just under half a million people. the north. Unregulated counties in West west of the Atlantic coast. Less than 100 Generally, the Kentucky counties in the Virginia and State-regulated area in miles to the north lies the second-largest Appalachian marketing area are not Virginia also border this market to the MSA of Greensboro-Winston-Salem- heavily populated. Only two have north. North and South Carolina have High Point, North Carolina, with a populations over 100,000. They are almost 500 miles of coastline on the population of 1.15 million. About 50 Jefferson county, where Louisville is Atlantic Ocean. miles east of Greensboro is the third- located, and Fayette county, home to In terms of physical geography, largest MSA, Raleigh-Durham-Chapel Lexington. similarities exist across the states or Hill, with 1.05 million people. The Indiana counties in the Appalachian areas included in this market. Southern Raleigh MSA abuts the Greensboro market have a population of .8 million. Indiana and central Kentucky are in the MSA. An additional four North Carolina Only Vanderburgh county has a Interior Low Plateau region where MSAs are among the largest of the 17 population over 100,000. Evansville, the valleys and steep hillsides are typical. MSAs containing 57 percent of the only MSA in the portion of Indiana In this market, the Appalachian or population of the consolidated included in the Appalachian market, is Cumberland and Alleghany Plateaus are marketing area, for a combined in Vanderburgh county. Evansville’s found in West Virginia, Virginia, population of one million. North MSA contains 289,000 and is located on Kentucky, Tennessee and northwestern Carolina is the most populous state in the Indiana-Kentucky border, near the Georgia on the western edge of the the consolidated marketing area with Illinois state line. Appalachian Mountains. Eastern 7.4 million; over sixty percent of the There are seven Georgia counties Tennessee and both western North and population of North Carolina is located within the consolidated Appalachian South Carolina are in the Blue Ridge in these seven MSAs. marketing area, with a total population region, which is part of the Appalachian South Carolina is the second-most of .3 million. Three of them, Catoosa, Mountain range. Moving eastward populous state in the consolidated area, Dade, and Walker, are part of the toward the Atlantic Ocean, the central with 3.8 million people. The Carolinas Chattanooga MSA. These three counties part of the Carolinas are in the Piedmont contain nearly two-thirds of the have a combined population of 124,000. Plateau, with the Atlantic Coastal Plain consolidated market’s population. The 10 Virginia counties in the covering approximately the remaining Greenville is the largest MSA in the Appalachian market have a population eastern half of both these states. state with a population of 905,000. of .3 million. Three of the counties, Climatic types in this region vary Greenville is located in the northwest Scott, Washington and Bristol City, are somewhat. Humid subtropical climates corner of the state. Charleston, the part of the Johnson City-Kingsport- are typical in most of North and South second-largest MSA in South Carolina, Bristol MSA. The two West Virginia Carolina, as well as Virginia (which is with over half a million people, is counties within the Appalachian market affected by elevation differences) and approximately at the midpoint of South have a total population of .1 million. southern Indiana. Humid continental Carolina’s coast. climates are typical for northwestern The Tennessee portion of the Fluid Per Capita Consumption Georgia, western North and South consolidated Appalachian market has a Estimates of fluid per capita Carolina and southern West Virginia. population of 2 million, with three consumption within the consolidated Temperate climates are common in MSA’s that are included in the largest Appalachian marketing area vary from eastern Tennessee and central 17 in the market. These three areas 15.8 per month for South Carolina to Kentucky. contain 1.6 million, or just under 80 20.4 pounds per month for Indiana. Use Much of the consolidated percent of the population in that part of of 17 pounds per month as a weighted Appalachian area does not provide a Tennessee that is included in the average results in an estimated 294 hospitable climate or topography for Appalachian marketing area. The largest million pounds of fluid milk dairy farming. As an agricultural Tennessee MSA is Knoxville, which is consumption for the Appalachian pursuit, dairy farming is far down the in the eastern end of Tennessee near marketing area. Appalachian handlers’ list in the area, accounting for an North Carolina. Six counties make up route disposition within the area during average of less than five percent of all the Knoxville MSA with a combined October 1997 totaled 283 million receipts from farm commodities for the population of 650,000. The Johnson pounds, with another 21 million states involved. Crops such as tobacco, City-Kingsport-Bristol area, the second- distributed by other order plants, corn and soybeans, and other livestock largest Tennessee MSA, is located in the partially regulated plants, and plants commodities such as cattle/calves, northeastern tip of Tennessee along the exempt both for reasons of both size and turkeys and broiler chickens are more Virginia and North Carolina border, and institutional status. prevalent in this region. contains 460,000 people. Chattanooga, the third-largest MSA in Tennessee, is Milk Production Population located on the Tennessee-Georgia Milk production data for the According to July 1, 1997, population border, and has a population of 447,000. Appalachian consolidated order area estimates, the total population in the The three MSAs run northeast to has not been updated from December Appalachian marketing area is 17.3 southwest just west of the North 1996 to October 1997 as have the data million. There are 24 Metropolitan Carolina border. for most of the other consolidated order Statistical Areas (MSAs) within the The Kentucky portion of the areas. The Tennessee Valley order was consolidated marketing area, containing consolidated Appalachian market terminated October 1997. As a result, on 62.3 percent of the area’s population. contains 2.7 million people. There are the basis of 10 percent of receipts The largest 17 contain 57 percent of the two MSAs within the state that are distributed within the Southeast order population of the market. Charlotte, included in the largest 17 in the market. area, three of the Tennessee Valley- North Carolina, is the largest MSA in The largest is Louisville, which lies on regulated handlers became pool plants the marketing area with a population of the border with Indiana and has a under the Southeast order. 1.35 million. Charlotte is located near population of one million. Lexington, Consequently, milk production data for

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00033 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.040 pfrm08 PsN: 02APP2 16058 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules the consolidated Appalachian and southeast Tennessee; two in the Johnson plant and one plant exempt on the basis Southeast orders based on October 1997 City-Kingsport-Bristol area and three of size. pool data would not be representative of southwest of Knoxville. Only one of the Of the remaining 13 distributing the milk that would be pooled on those six counties in Virginia that supplied plants associated with the market, one consolidated orders. Available over 3 million pounds to Orders 5 and pool plant would be located in a North information indicates that the sources of 11 is located within the marketing area. Carolina MSA and one pool plant would milk for the consolidated Appalachian Five of the six are located in southwest be located in a South Carolina MSA. market have not changed in any Virginia, with the other in the northwest The eleven remaining distributing significant way from the December 1996 part of the State. plants, eight of which are expected to be data. pool plants, would not be located in In December 1996, over 4,000 Distributing Plants MSAs. Three (2 pool, 1 exempt) would producers from 359 counties in 15 states Using distributing plant lists included be in North Carolina, and 3 would be in pooled 443.3 million pounds of in the proposed rule, with the pooling Virginia (1 pool and 2 partially producer milk on Orders 5, 11 and 46. standards adjusted to 25 percent of regulated). Three plants in Kentucky, 1 Approximately 71 percent of the milk route dispositions as in-area sales and in Indiana, and 1 in Tennessee are pooled on the three orders was updated for known plant closures expected to be pool plants. produced within the proposed through December 1998, 31 distributing The 25 plants expected to be fully consolidated marketing area. plants would be expected to be regulated under the Appalachian order North and South Carolina are the only associated with the Appalachian had distribution totaling 365 million States that are located entirely within marketing area, including 25 fully pounds in October 1997, with 78 the consolidated marketing area, and regulated distributing plants (23 percent within the consolidated provided nearly all of their producers’ currently fully regulated, 1 currently marketing area. milk to Order 5 (encompassing the partially regulated, and 1 currently A South Carolina plant included entire States of North and South unregulated), 2 partially regulated (both above in the description of fully regulated distributing plants— Carolina), with 103.7 and 34 million currently partially regulated), 3 exempt Superbrand Dairy Products, Inc., in pounds, respectively. Neither of these plants, on the basis of having less than Greenville (about 140 miles northeast of states produces enough milk to meet 150,000 pounds of total route Atlanta)— has a greater proportion of its even the fluid milk requirements of its disposition per month (2 currently fully sales in the Southeast market than in the population. Kentucky producers pooled regulated and 1 currently unregulated), Appalachian market. This plant 101.1 million pounds on the three and 1 government agency plant currently is locked into regulation under orders, with 89 percent produced within (currently a government agency plant). the consolidated marketing area. the Carolina order based on its need to Tennessee producers pooled 69.9 Four of the 31 distributing plants procure a milk supply in the Carolina million pounds on the three orders, expected to be associated with the order, although it has greater route principally on Order 11, with 84 percent consolidated area are located in disposition in the Southeast. This lock- produced within the consolidated Virginia, with only one located within in is included in the Appalachian order marketing area. Although Virginia is the marketing area. The plant in the provisions. primarily outside the marketing area, marketing area currently is fully Utilization producers from 40 Virginia counties regulated and is expected to remain so, supplied 68.5 million pounds of milk and one of the other Virginia plants, As in the case of milk production for the Tennessee Valley and Carolina currently partially regulated, also is data, October 1997 data for the three order markets in December 1996. expected to be fully regulated. The other markets consolidated in the Georgia producers pooled 27.6 million two Virginia plants, both currently Appalachian order are not available pounds and Indiana producers pooled partially regulated, are expected to because of the termination that month of 21 million pounds in December, with remain in that status. Since October the Tennessee Valley order. Instead of the balance of the milk pooled on the 1997, 2 distributing plants in the using October 1995 data from the three orders originating in Alabama, marketing area have gone out of proposed rule, however, September Connecticut, Illinois, Maryland, business. 1997 data is used as representative for Massachusetts, New Mexico, Under the consolidated Appalachian this section. Pennsylvania, and West Virginia. order, there would be 18 distributing According to September 1997 pool Thirty-four counties each supplied plants in the largest Appalachian MSAs statistics for handlers who would be over 3 million pounds of milk to the having distributing plants. There would fully regulated under this Appalachian three markets consolidated in this area. be 3 pool distributing plants in the order, the Class I utilization percentages One such county was located in New Greensboro-Winston-Salem-High Point for the Carolina and Louisville- Mexico, and another in Pennsylvania. area. The Charleston area would have 2 Lexington-Evansville markets and the Eight were located in Kentucky, south pool distributing plants. The Johnson former Tennessee Valley market were and southwest of Lexington, and City-Kingsport-Bristol, Tennessee, area 86, 80, and 87 percent, respectively. southeast of Louisville. Eleven were would have 2 pool distributing plants. Based on calculated weighted average located in North Carolina west of the The Greenville-Spartanburg-Anderson, use values for (1) the current order with Raleigh-Durham area, with all but one South Carolina, area would have 2 pool current use of milk, and (2) the current located near Greensboro, Winston- distributing plants. The Knoxville area order with projected use of milk in the Salem, Asheville, Charlotte or Durham. would have 1 pool distributing plant consolidated Appalachian order, the Of the two South Carolina counties that and 1 exempt plant, with less than potential impact of this decision on supplied over 3 million pounds each, 150,000 pounds of total route producers who supply the current one was located northwest of Columbia, disposition per month. The Charlotte, market areas is estimated to be: and the other northwest of Charleston. Chattanooga, Lexington, Louisville, and Carolina, unchanged (from $13.59); The five Tennessee counties that pooled Evansville areas would each have 1 pool Louisville-Lexington-Evansville, a 3- over 3 million pounds of milk on the distributing plant. The Raleigh-Durham cent per cwt increase (from $12.73 to three orders are located in northeast and area would have one government agency $12.76); and Tennessee Valley, a 6-cent

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In included combining all of the current Class I utilization for Orders 5, 11 and addition to the Carolina order, the fifth Florida, Carolina, Tennessee Valley and 46 was 85.0 percent based on 349.0 cooperative pooled the milk of Texas Southeast order areas, consolidating the million pounds of producer milk used producers on the Texas, Southern Southeast and proposed Appalachian in Class I out of 410.4 million total Illinois-Eastern Missouri, Chicago, and areas, and including all of the State of producer milk pounds pooled. Southeast orders. Kentucky in one order, specifically the Other Plants In addition to the 55 percent of the Southeast. These alternative September 1997 Tennessee Valley milk consolidations were examined at length Also located within the consolidated supply from cooperative associations Appalachian marketing area during May and were found to have less overlap in pooling milk on the other two sales and procurement than the 1997 were 13 supply or manufacturing Appalachian markets, one cooperative plants: 4 in Kentucky (1 in the Appalachian marketing area. that also pooled milk on the Southeast Thirteen comments that pertained Louisville area), 5 in North Carolina (1 order in December 1997 supplied in the Charlotte-Gastonia-Rock Hill area specifically to the proposed approximately 15 percent of the milk Appalachian area were filed by 12 and one in the Greensboro-Winston- pooled on the Tennessee Valley order. Salem-High Point area), 1 in Tennessee, commenters in response to the proposed Three cooperative associations that and 3 nonpool cheese plants in Indiana rule. Six of these comments supported supplied less than 2 percent of the milk (1 in the Lexington area and one in the the consolidation of the Appalachian pooled under Order 46 did not supply Louisville area). Three of the 13 plants marketing area as described in the are pool plants, or have a ‘‘pool side.’’ milk to either the Carolina or Tennessee proposed rule, including comments Two of the three pool plants (one in Valley markets. filed by several affected dairy farmers, Kentucky and the one in Tennessee) are Criteria for Consolidation the North Carolina Department of ‘‘split plants,’’ that is, one side of a plant Agriculture, the North Carolina Dairy is a manufacturing facility, and the Overlapping route disposition and Producers Association, and a comment other side receives and ships Grade A procurement are the primary criteria on filed on behalf of Piedmont Milk Sales, milk, and accounting is done separately. which this consolidation is based. There Inc., Hunter Farms, Land O’Sun Dairies Of these pool plants, the pool sides of is a stronger relationship between the and Milkco, Inc. This last comment the 2 split plants have no primary three marketing areas involved than stated that the Appalachian and product, shipping only to distributing between any one of them and any other Southeast areas should not be combined plants. The nonpool side of one of these marketing area on the basis of both because a separate milk order area plants manufactures cheese, while the criteria. Route dispositions within the should exist between the consolidated nonpool side of the other manufactures Appalachian area by handlers who Northeast and Southeast order areas. powder. The other pool plant is a would be regulated under this order The comment argued that existence of supply plant that manufactures account for 93 percent of the total fluid the Appalachian area would be primarily Class II products. Of the other milk products distributed in the area. expected to result in blend price nonpool plants in the Appalachian The primary sources of the remaining 7 differences between and among the marketing area, 5 manufacture primarily percent are four other consolidated Northeast, Mideast, Appalachian, cheese and 5 manufacture primarily order areas, with no more than 3 percent Southeast and Florida orders such that Class II products. distributed by any of the four. Handlers milk supplies will move South and East to be regulated under the Appalachian as needed. Cooperative Associations order distributed nearly 80 percent of Seven comments supported the Using September 1997 cooperative their route dispositions within the combination of the Appalachian and association information for the former marketing area. Southeast areas, or at least the inclusion Tennessee Valley order area and Over two-thirds of the milk supply for of more territory in the Appalachian December 1997 information for the the Appalachian market is produced area. The Kentucky Farm Bureau Carolina and Louisville-Lexington- within the marketing area, with a large Federation urged that all Kentucky Evansville (Order 46) orders, it can be part of the rest of the milk supply counties and the proposed Appalachian estimated that approximately 75 percent coming from unregulated areas to the area be combined with the Southeast. of the milk in the consolidated north (Virginia and Pennsylvania). The The comment stated that this further Appalachian area was supplied by 12 Appalachian order area supplies a consolidation would make milk cooperatives. Dairymen’s Marketing significant minority of the milk supply utilization rates more similar across the Cooperative, Inc., and cooperative for the Southeast market, but in October order, would facilitate and encourage associations that merged to form Dairy 1997 this amount was less than the milk flow to deficit areas and minimize Farmers of America supplied nearly half amount supplied to the Southeast area any negative price impacts on of the milk pooled on all three markets from the Southwest area. In addition, a producers. According to the Carolina- during these months. Carolina-Virginia large proportion of the milk produced in Virginia Milk Producers Association, Milk Producers Association, Inc., the Appalachian order area that was the existence of separate Southeast and supplied approximately 20 percent of pooled on the Southeast order in Appalachian order areas could result in the milk pooled on both the Carolina October 1997 was received at plants that disorderly marketing conditions on the and Tennessee Valley markets. formerly were pooled under the eastern side of the proposed Southeast Five cooperative associations terminated Tennessee Valley order, and order area. Comments filed by Trauth supplied 16 percent of the milk pooled will be pooled under the consolidated Dairy urged the inclusion of the under the Carolina order in December Appalachian order. There is also northern areas of Kentucky, including 1997, but supplied no milk to the other common cooperative association the Newport, Kentucky, area containing two markets. Three of these affiliation between the markets. Louis Trauth Dairy, Inc., in the

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Also included in the Florida the inclusion of Charleston, West order than by consolidation with the market is approximately 150 miles of Virginia, and areas of West Virginia Appalachian area. the Panhandle, a narrow strip of land south of Charleston, as well as the Ohio A dairy farmer in West Virginia urged extending west along the Gulf of Mexico counties surrounding Cincinnati and the that the State of West Virginia be added from the northern part of the peninsula. northern counties of Kentucky, in the to the Appalachian order area because The water surrounding most of Florida’s Appalachian market rather than the milk usage for Class I milk and cost of peninsula constitutes a natural Mideast market to promote orderly production would then become similar boundary, as east-to-west travel is marketing of milk. The DFA comment to the other states in the Appalachian limited. stated that adequate milk supplies do area. Another dairy farmer referred to a Almost all of Florida has a humid not exist in close proximity to comment filed earlier to include subtropical climate. The southern end of processors in the greater Cincinnati, Maryland in the Appalachian area the state and the islands south of the Ohio, and Charleston, West Virginia, instead of the Northeast. peninsula have a tropical wet and dry markets, and that an economic incentive As discussed in the proposed rule, climate. In general, the state’s climate must be provided to assure a milk consolidating the Carolina and can and does affect levels of milk supply to those processors. A second Tennessee Valley markets with the production negatively. Seasonal Southeast does not represent the most DFA comment recommended that the variation in production for this market appropriate consolidation option Southeast and Appalachian order areas typically is greater than for most other because of the minor degree of be combined because the primary U.S. regions. The importance of dairy overlapping route disposition and supplemental milk supply for both areas farming as an agricultural pursuit in producer milk between these areas. That is in more western states (Texas, New Florida is relatively minor (7 percent of conclusion continued to be supported Mexico and Missouri). The comment total receipts from agricultural by data gathered for distributing plants stated that it is likely that these commodities), with several crops supplemental supplies would be likely for October 1997. contributing more total receipts to the to be associated with the Southeast The northern Kentucky/southern State’s income. However, no livestock order because of its greater proximity, Ohio and West Virginia area was commodity is as important in Florida as and eastern Southeast milk would be examined in painstaking detail with dairy farming. ‘‘stair-stepped’’ across to the updated data to determine whether or Appalachian order to reduce hauling where this area could be divided to Population costs. According to DFA, during the reflect handlers’ sales areas and supply market’s flush production month, the procurement areas better than in the According to July 1, 1997, population Appalachian order would not bear the proposed rule. No support for such a estimates, the total population in the burden of surplus milk since the distant modification to the proposed rule could consolidated Florida marketing area is surplus milk would be associated with be found. Only one Appalachian 14.1 million. Ninety-three percent of the the Southeast order in addition to the handler has significant route disposition population of the marketing area is eastern Southeast milk supplies that within the Ohio Valley order area, while located in Metropolitan Statistical Areas also would be associated with the a very small volume of Class I sales (MSAs). The two largest MSAs are Southeast order to avoid inefficient milk moves from the Ohio Valley area into Miami-Fort Lauderdale (Miami) on the movements, resulting in a the Order 46 area. There is even less eastern side of the southern end of the disproportionate burden of surplus milk overlap between either West Virginia or peninsula, and Tampa-St. Petersburg- pooled on the Southeast order. Maryland and the Appalachian area, Clearwater (Tampa) midway on the For the month of October 1997, a and no justification for changing the western side of the peninsula. Broward month when some supplemental marketing area of either of these States. and Dade Counties comprise the Miami supplies usually are required for short population center (currently in Order markets, nearly one-quarter of the Florida 13) with a population of 3.5 million. producer milk pooled on the current The consolidated Florida marketing The Tampa population center (currently Southeast order originated in the States area is comprised of the three current in Order 12) is comprised of Hernando, of Missouri, New Mexico, and Texas. Federal order marketing areas contained Hillsborough, Pasco and Pinellas For the same month, just over 1 percent wholly in the state of Florida: Upper counties with a population of 2.2 of the producer milk pooled on the Florida (Order 6), Tampa Bay (Order 12) million. The six counties in these two Louisville-Lexington-Evansville and and Southeastern Florida (Order 13). population centers represent about 41 Carolina orders was produced in those There are 63 counties in this percent of the total marketing area more western States. It is clear that the consolidated area (40 in Order 6, 13 in population. western milk is a much more important Order 12, and 10 in Order 13). This area Fluid Per Capita Consumption source of supply for the Southeast area remains unchanged from the proposed than for the Appalachian area, and that rule. Florida customarily is considered a the magnitude of this difference is an deficit milk production state. For much indication of how much these two Geography of the year, milk needs to be imported consolidated markets differ. The ability The consolidated Florida marketing from other states in order to meet the to pool surplus milk on the Southeast area is described geographically as all demand for fluid consumption. Based order is directly related to the addition counties in the State of Florida, with the on the population figure of 14.1 million of the southern Missouri/northwest exception of the four westernmost and an estimated per capita fluid milk Arkansas area to the Southeast counties in the Florida Panhandle. This consumption rate of 17 pounds of fluid marketing area, an addition that was marketing area is a large peninsula, milk per month, total fluid milk strongly urged by DFA. Concerns about ranging from about 140 miles in width consumption in the Florida marketing the ability of handlers in the eastern in the north to about 50 miles in width area is estimated at 239.7 million part of the Southeast area to attract a in the south, that extends south from the pounds per month.

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During October 1997, 216 million pounds of producer milk in October the current markets’ pools. Three ice pounds of milk were disposed of in the 1997, almost all of which was pooled on cream plants are located in the Tampa consolidated marketing area by all Order 13. area and one pool supply plant is in the Florida distributing plants expected to Jacksonville area. Distributing Plants be fully regulated under the Florida Cooperative Associations order. Other order plants had route Using plant lists included in the disposition within Florida of 14.2 proposed rule, with pooling standards In December 1997, three cooperatives million pounds. Another 1.3 million adjusted to 25 percent of route marketed milk in the Florida markets, pounds of milk was distributed within dispositions as in-area sales, updated for representing nearly 100 percent of the the consolidated area by partially known plant closures through December milk marketed. Effective October 1, regulated handlers, producer-handlers, 1998, 12 plants would be expected to be 1998, Florida Dairy Farmers and exempt plants. The discrepancy fully regulated under the consolidated Association, which marketed milk between the actual total route Florida market. Four of these plants are under all three Florida orders, and disposition of 231.5 million pounds and located in the Miami MSA and three in Tampa Independent Dairy Farmers’ the estimated consumption level of the Tampa MSA. Three plants are Association, Inc., which marketed milk 239.7 million pounds may be explained located in mid-Florida, one in the only under the Tampa Bay order, by the older than average population in Orlando area and two in the Lakeland- merged to create Southeast Milk, Inc. Florida. Winter Haven area. Two more are The December 1997 production located in northeast Florida: one in the marketed by these two cooperatives in Milk Production Jacksonville area, and one in Daytona all three Florida orders comprised 93 In October 1997, 175.8 million Beach. One plant in the Tampa MSA, percent of the producer milk associated pounds of milk produced in Florida currently fully regulated, would be with the three markets. Dairy Farmers of were pooled in four Federal orders; 98.5 exempt on the basis of size. One America, Inc. (DFA), members marketed percent of this milk was pooled on the partially regulated plant in the nearly 7 percent of producer milk three current Florida orders. About 340 Jacksonville area would be expected to associated with the three Florida orders producers located in Florida (96 percent continue its partially regulated status, on the Tampa Bay and Southeastern of all Florida producers having and one producer-handler is not located Florida pools. association with Federal orders) had within an MSA. producer milk pooled on at least one of Slightly less than two-thirds of the Criteria for Consolidation the three Florida markets. A small consolidated market’s population is The consolidated Florida market number of Florida producers had contained in the MSAs where fully should encompass the current producer milk associated with Order 7, regulated plants are located. marketing areas of the Upper Florida, while more than 100 Georgia producers Tampa Bay and Southeastern Florida Utilization had producer milk associated with the Federal milk orders. Natural boundary Florida markets. Additionally, 44.7 According to October 1997 pool limitations and overlapping sales and million pounds of Georgia milk was statistics for handlers who would be procurement areas among the three pooled on the three Florida markets; 89 fully regulated under this Florida order, orders are major reasons for percent of this milk went to Order 12. the Class I utilization percentages for consolidation, as well as a measure of There are 40 counties in Florida that the Upper Florida, Tampa Bay, and association evidenced by cooperative pooled milk in at least one of the three Southeastern Florida markets were 91, association proposals to consolidate current Florida orders. Eight of these 88, and 94 percent, respectively. Based these three marketing areas. Further, the counties produced 66.5 percent of the on calculated weighted average use cooperative associations in this area milk pooled. values for (1) the current order with have worked together for a number of Three counties (Gilchrist, Lafayette current use of milk, and (2) the current years to accommodate needed and Suwannee, about 75 miles west of order with projected use of milk in the movements of milk between the three Jacksonville) had 42.3 million pounds of consolidated Florida order, the potential Florida Federal orders, and into and out producer milk. For these three counties, impact of this rule on producers who of the area. 72.6 percent of the October 1997 supply the current market areas is Discussion of Comments and producer milk was pooled on the Tampa estimated to be: Upper Florida, a 4-cent Alternatives Bay order, which is located per cwt decrease (from $15.39 to approximately 150 miles southeast of $15.35); Tampa Bay, a 8-cent per cwt Prior to the issuance of the proposed the counties. increase (from $15.54 to $15.62); and rule, the inclusion of other Federal Nearly 90 percent of Clay County’s Southeastern Florida, a 13-cent per cwt order marketing areas with the producer milk was pooled in Order 6. decrease (from $16.03 to $15.90). The consolidated Florida area was This county is in the Jacksonville MSA, weighted average use value for the considered because of the existence of which is the largest population center in consolidated Florida order market is some overlap of sales, procurement of Order 6. estimated to be $15.69 per cwt. For producer milk, and dispositions of Twenty-two and one-half million October 1997, combined Class I surplus milk. However, because of the pounds of producer milk came from utilization for the three Florida markets closeness of the relationship between Hillsborough, Highlands, and Manatee was 90.6 percent based on 197.5 million the current Florida markets and the lack Counties, all part of the Order 12 pounds of producer milk used in Class of significant overlap of sales or market. However, 64 percent of this I out of 218.0 million total producer production with other order areas no milk was pooled on Order 13, with the milk pounds. basis was seen for expanding the rest pooled on Order 12. consolidation any further. Okeechobee County, located in the Other Plants Only three comments were received Order 13 marketing area about 125 miles Also located within the Florida that pertained specifically to the northwest of the Miami area, is by far marketing area during May 1997 were consolidated Florida area. These the largest milk producing county in four supply or manufacturing plants, comments, filed by the three Florida. The county had 43.8 million three of which are not associated with cooperative associations with

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Southeast Georgia’s coastline on the Atlantic With 4.3 million people, Alabama is The consolidated Southeast marketing Ocean is about 100 miles in length, the Southeast market area’s third most area is comprised of the current while western Florida, Alabama, populous state. Birmingham and Southeast (Order 7) marketing area, Mississippi, and Louisiana extend about Mobile, the state’s two largest MSA portions of the current Southwest Plains 600 miles along the Gulf of Mexico regions, are among the top eight in (Order 106) marketing area in northwest coastline. Also contiguous to the current population in the Southeast. The Arkansas and southern Missouri, and Southeast market are currently Birmingham area has a population of six southeastern Missouri counties from unregulated counties in Texas, about 900,000 and ranks 5th in size the current Southern Illinois-Eastern Missouri, Kentucky (and as of October among all Southeast area MSAs. Missouri (Order 32) marketing area. 1, 1997, the Tennessee Valley [Order 11] Birmingham is located about 150 miles Also included are 16 currently marketing area). The consolidated west of Atlanta in north central unregulated Missouri counties, 21 marketing areas would encompass all of Alabama. The Mobile area is a Gulf of currently unregulated Kentucky these counties in the Southwest, Mexico port city in southwestern counties, and 1 Kentucky county that Central, Appalachian or Southeast Alabama. With a population of 527,000, currently is part of the Louisville- marketing areas, with some currently- Mobile is the 8th largest population Lexington-Evansville (Order 46) unregulated counties in central Missouri center in the Southeast market area. marketing area. There are 572 counties remaining unregulated under this Louisiana is the second most in this consolidated area. A partial proposal. populated state in the Southeast market county in Missouri that was proposed to In terms of physical geography, the area with 4.4 million people. Two of the be included in the Southeast area has Southeast region is generally flat or Southeast’s 8 largest MSAs are located been omitted. gently rolling low-lying land. Relatively in Louisiana—New Orleans, the second Geography higher elevations which might largest MSA with 1.3 million people potentially form natural barriers or and Baton Rouge, the 6th largest MSA The Southeast market is described obstruct easy transportation exist in with almost .6 million people. New geographically as follows: all counties northwest Arkansas and northeast Orleans is located in the state’s ‘‘toe’’ in or parishes in Alabama, Arkansas, Georgia. southeastern Louisiana. Baton Rouge Louisiana, and Mississippi (67, 75, 64, Moving from the south to the north of also is located in Louisiana’s ‘‘toe,’’ and 82 counties, respectively), 4 in the Southeast market, climates range about 80 miles west of New Orleans. Florida, 152 in Georgia, 44 in Missouri, from humid subtropical in coastal areas Arkansas has a total population of 2.5 62 in Tennessee and 22 in Kentucky to warm and humid or humid million—2 million from the current (one—Logan County—currently is in continental to temperate in Tennessee Southeast marketing area and an Order 46, and 21 currently are and Kentucky. Warm, humid summers additional 500,000 from the Arkansas unregulated). Of these 21 counties, 14 and mild winters are typical in the portion of the Southwest Plains were part of the former Paducah, Southeast. These types of climates can marketing area. The Little Rock-North Kentucky (Order 99) marketing area. severely limit the production level of Little Rock, Arkansas (Little Rock) MSA, Eleven Arkansas and 22 Missouri dairy herds in the summer. in the center of Arkansas, has the 7th counties are part of the current Order Population largest population concentration in the 106 marketing area. Six Missouri Southeast market area with 552,000. counties are part of the current Order 32 According to July 1, 1997, population The portion of Tennessee in the marketing area. Sixteen southeastern estimates, the total population in the Southeast marketing area is the fourth Missouri counties currently are consolidated Southeast marketing area most populated with 3.4 million people unregulated (4 of these were part of the is 26.9 million. The 42 Metropolitan and is home to the third and fourth former Paducah Federal milk order). A Statistical Areas (MSAs) in the market largest MSAs in the Southeast. The partial Missouri county that was account for 62.3 percent of the total Nashville area, with a population of 1.1 proposed to be part of the Southeast marketing area population. Almost half million, is located in central Tennessee. area is omitted for the purpose reducing of the Southeast population is located in The Memphis, Tennessee/Arkansas/ the incidence of partially regulated the 17 most populous MSAs. Eight Mississippi MSA, also with a counties. MSAs have populations greater than population of 1.1 million, is located The Southeast market spans the 500,000 each; their total population is near these three states’ borders. southeastern area of the United States about 36 percent of the Southeast Other states or portions of states in from the Gulf of Mexico and the population. Because of the large number the Southeast marketing area do not Alabama/Georgia-Florida border north of MSAs in the Southeast market and have MSAs with greater than 500,000 to central Missouri, Kentucky, also because no large (i.e., greater than population. Mississippi, the Southeast’s Tennessee, and South Carolina, and 500,000) population centers are added 5th most populous state, has a total from the Atlantic Ocean west to Texas, to this market, only those areas with population of 2.7 million. The Missouri, Oklahoma, and Kansas. Measuring the populations greater than 500,000 are Florida, and Kentucky counties in the extreme dimensions, this market described in greater detail. Southeast market have populations of extends about 575 miles north to south Over 25 percent of the Southeast 1.3 million, 602,000 and 529,000, from central Missouri to southern market’s population is located in respectively. Louisiana and 750 miles west to east Georgia, the most populous of the from Louisiana’s border with Texas to Southeast market states, with 7.2 Fluid Per Capita Consumption the Atlantic Ocean coast in southern million people. Almost half of Georgia’s Fluid per capita consumption Georgia. population is concentrated in the estimates vary throughout the Southeast

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All of these counties currently consumption rate of 468 million pounds in the state’s ‘‘toe,’’ north of New are located in the Order 106 (Southwest of fluid milk per month for the Orleans and northeast of Baton Rouge, Plains) marketing area in southern Southeast marketing area. each bordering Mississippi. Another Missouri. Route distribution in the consolidated high production area is centered on De Other Southeast marketing area states Southeast area by handlers expected to Soto Parish in northwestern Louisiana. or areas contribute producer milk to the be regulated under the consolidated These four parishes account for over 62 Southeast marketwide pool. About 37 Southeast order (including the 3 million pounds of producer milk, with million pounds of milk were pooled on Arkansas and Missouri plants) equaled 76 percent coming from Tangipahoa and the Southeast market from 205 380 million pounds within the Washington parishes. producers in 51 Alabama counties, and Southeast marketing area in October Almost 67 million pounds of milk 25 million pounds were pooled from 1997. Other fluid milk dispositions in were pooled on the Southeast market 343 producers in 39 Arkansas counties. the consolidated Southeast marketing from 331 producers in 68 Georgia Sixteen Florida producers from 6 area came from plants expected to be counties in January 1997. Of this counties (2 in the Southeast market regulated under other orders (66.7 volume, 64 million came from 312 area) pooled 3.5 million pounds on million pounds) and from partially producers in 64 Georgia counties in the Order 7 in January 1997. In January 1997, Order 7 producer regulated, exempt and producer-handler Order 7 marketing area. The balance is milk also originated in Missouri plants (2 million pounds). associated with Georgia producers counties not included in the Southeast located in the marketing area of the Milk Production marketing area, Texas, New Mexico, former Order 11 (Tennessee Valley). Milk production data for the Indiana and Oklahoma. Large amounts Top production counties are Putnam, Southeast consolidated order area have of milk from Missouri (21 million Morgan and Macon, which pooled 27 not been updated from January 1997 to pounds in addition to the 33 million million pounds of producer milk on October 1997 as have the data for most described previously) and Texas (46 of the other consolidated order areas. As Order 7. million pounds—20 million from a result of terminating the Tennessee About 65 million pounds of milk were Hopkins and Erath Counties) were Valley order as of October 1997, three of pooled on the Southeast market from associated with the Order 7 pool. the Tennessee Valley-regulated handlers 580 producers in 46 Tennessee counties Distributing Plants became pool plants under the Southeast in January 1997. Of this volume, 62 order, on the basis of having at least million came from 562 producers in 42 Using distributing plant lists included 10% of their sales in the Southeast order Tennessee counties in the Order 7 in the proposed rule, with the pooling marketing area. These handlers will marketing area. The balance is standards adjusted to 25 percent of become regulated under the associated with Tennessee producers route disposition as in-area sales, consolidated Appalachian order when located in the marketing area of the updated for known plant closures the consolidated orders become former Federal Order 11. Two high through December 1998, 48 distributing effective. Consequently, milk production counties in the state are plants located in the consolidated production data for the consolidated Marshall and Lincoln, located in south Southeast marketing area would be Southeast order area based on October central Tennessee. These counties expected to be associated with the 1997 pool data would not be contributed over 12 million pounds of Southeast market (including the added representative of the consolidated producer milk to the Order 7 pool in territory in northwestern Arkansas and Southeast market. Available information January 1997. southern Missouri). These plants indicates that the sources of milk for the About 61 million pounds of milk were include 36 fully regulated distributing consolidated Southeast market have not pooled on the Southeast market from plants, 3 of which are currently changed significantly from the January 443 producers in 48 Mississippi regulated under the Southwest Plains 1997 data. counties in January 1997. Top order and one of which is currently In January 1997, 4,180 producers from production counties are Walthall and partially regulated. In addition, it is 388 counties pooled 477.4 million Pike, in southern Mississippi on the expected that 3 plants would be pounds of producer milk on the current state’s border with Louisiana. These two partially regulated (one of which Southeast market. Over 85 percent of counties adjoin the heavy milk currently is fully regulated and two of the Southeast’s producer milk came production area in Louisiana. The which are partially regulated), and 7 from Southeast market area counties. Of counties contributed 15 million pounds plants that are, and are expected to be, the 388 counties, 19 pooled over 5 of producer milk to the Order 7 pool in exempt—1 on the basis of size and 6 on million pounds each, accounting for 39 January 1997. the basis of institutional status. An percent of Order 7’s producer milk. Of About 32 million pounds of milk were additional currently regulated plant is these 19 counties, 2 Texas counties are pooled on the Southeast market from expected to be exempt on the basis of located outside the Southeast marketing 408 producers in 19 Kentucky counties institutional status. Of the 36 fully area. Because of the large number of in January 1997. Additionally, 116 regulated plants, 16 are located in the counties, only the locations for those producers in 15 of these counties pooled largest eight MSA regions. One top 19 production counties are almost 9 million pounds of producer distributing plant located in the described in greater detail. However, the milk on Orders 11 and 46 (Louisville- consolidated Appalachian marketing volume of producer milk, number of Lexington-Evansville). Two counties, area that has more than half of its route producers (farms) and number of Barren and Monroe, contributed over 13 disposition within the Southeast counties is provided for each state million pounds of producer milk. These marketing area would be locked into within the market area. contiguous counties are in south central regulation under the Appalachian order.

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Since October 1997, it is known that exempt on the basis of institutional those that merged to become Dairy 2 pool distributing plants have gone out status located just south of the Farmers of America (DFA), represented of business. One of these plants was Springfield MSA. members marketing 73 percent of the located in Louisiana and the other in milk pooled on the Southeast market. Utilization Missouri. This number of cooperative Of the 48 distributing plants, Georgia As in the case of milk production associations is more than twice the has 9; Louisiana, 10; Mississippi, 6; data, October 1997 data for the number (six) that pooled milk on the Alabama, 8; Arkansas, 6; Tennessee, 5; consolidated Southeast order are not Southeast order in December 1995. Of Missouri, 2; and Kentucky, 2. No used because of the termination that those six, National Farmers distributing plants are located in the month of the Tennessee Valley order. Organization (NFO) ceased marketing Florida counties included in the Instead of using October 1995 data from milk in the Southeast. Milk Marketing, Southeast market area. the proposed rule, however, September Inc., headquartered in Strongsville, In Georgia, three pool distributing 1997 data is used as representative for Ohio, and one of the cooperatives that plants and one producer-handler are this section. formed DFA, marketed a small amount located in the Atlanta area, with 3 According to September 1997 pool of milk in the Southeast in December others elsewhere in the State. Georgia statistics for handlers who are expected 1997, and two cooperatives began also has 1 partially regulated handler to be fully regulated under the marketing milk after December 1995. In and 1 government agency (state prison) Southeast order, the Class I utilization addition, 5 cooperative associations plant. for the Southeast market was 84 percent. representing Texas and New Mexico Eight of Louisiana’s 10 distributing Based on calculated weighted average producers pooled milk on the Southeast plants currently are and would continue use values for (1) the current order with order in December 1997. to be fully regulated (pool plants) in this current use of milk, and (2) the current The DFA cooperatives represented 71 consolidated marketing area. Four of order with projected use of milk in the percent of co-op milk and 52 percent of these 8 are located in either the New consolidated Southeast order, the the total milk supply pooled under the Orleans or Baton Rouge areas (2 in potential impact of this rule on Southeast order during December 1997. each). Four other pool distributing producers who supply the current For the same month, Carolina-Virginia plants are located in Louisiana. The market area is estimated to be a 3-cent Milk Producers Association, Inc., remaining two plants are affiliated with per hundredweight increase (from represented 9 percent of the milk pooled educational institutions. $13.60 to $13.63). by cooperative associations; the two Four of Mississippi’s 6 currently For September 1997, Class I new cooperatives pooled 8 percent of operational distributing plants would be utilization for the Southeast market was co-op milk; and the five Texas/New fully regulated pool plants in the 83.9 percent based on 357.2 million Mexico cooperatives pooled 7 percent. Southeast market. Two educational pounds of producer milk used in Class institutions also have plants. I out of 426 million total producer milk Criteria for Consolidation Seven of Alabama’s distributing pounds. Retention of the Southeast marketing plants are fully regulated. One is located area as a single area is based on in the Birmingham area and 2 are Other Plants overlapping route dispositions within located in the Mobile area. Of the Also located within the Southeast the marketing area to a greater extent remaining four, 2 are in northern marketing area during May 1997 were than with other marketing areas. Alabama, one is in central Alabama, and 37 supply or manufacturing plants: 1 in Procurement of producer milk also one is in the state’s southeastern corner. Kentucky, 5 in Alabama (including 1 in overlaps between states within the Four of Arkansas’ 6 currently the Birmingham area), 5 in Arkansas market. There is also a seasonal need for operational distributing plants are fully (including 1 in the Little Rock area), 7 milk from outside the marketing area. regulated; two are in the Little Rock in Georgia (including 4 in the Atlanta However, the amount of supplemental area, and the other 2 are located in area), 3 in Louisiana (including 1 in the seasonal supplies is not as great as the northwest Arkansas. Also located Baton Rouge area), 11 in Missouri, 2 in amount of milk that is actually pooled within Arkansas are 2 exempt Mississippi, and 3 in Tennessee under the order from distant areas. distributing plants—one on the basis of (including 1 each in the Memphis and There is common cooperative size and one that is a state prison plant. Nashville areas). Eight of the 37 plants association membership within the Four of Tennessee’s 5 distributing are pool plants. Of these pool plants, 2 marketing area. plants are, and are expected to be, fully primarily ship to distributing plants, 3 As noted in the proposed rule, the regulated. Three of the 4 are located in manufacture cheese, 1 manufactures addition of northwest Arkansas and the Nashville area and one fully Class II products, 1 manufactures southern Missouri to the marketing area regulated plant and one partially powder and 1 primarily manufactures is primarily in response to comments regulated plant are located in the other products. Of the Southeast received during the public comment Memphis area. marketing area’s 28 nonpool plants, 13 period. Two distributing plants that would be manufacture primarily Class II products, Discussion of Comments and fully regulated under the Southeast 3 manufacture cheese, 10 manufacture Alternatives market are located in the currently primarily other products, and 1 each unregulated Kentucky counties that are manufacture primarily butter and Prior to issuance of the proposed rule, added to this marketing area. One is cheese. One plant is a ‘‘split plant,’’ alternatives that were considered located in Fulton in the southwest with one side serving as a included incorporating all of the State of corner of Kentucky on the Tennessee manufacturing facility primarily for Kentucky in the Southeast area, border, and the other about 30 miles Class II products, while the other side dividing the Southeast area on the state east of Fulton. receives and ships Grade A milk. line between Mississippi and Alabama, Two Missouri distributing plants are combining the Florida, Carolina, located in the consolidated Southeast Cooperative Associations Tennessee Valley and Southeast order area. One is a pool plant located in In December 1997, thirteen areas, and adding the eastern part of the Springfield, and the other a plant cooperative associations, including 3 of Texas order area to the Southeast. These

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00040 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.049 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16065 alternatives were analyzed in detail for under the Southeast order, and this milk between the Mideast and Northeast the proposed rule and determined not to represents a substantial share of the marketing areas, is Pennsylvania State- result in a configuration of marketing total milk production that is pooled regulated territory and the Allegheny areas as appropriate as those proposed under the Southeast market. and Appalachian Mountains. On the for reasons discussed in the proposed Route disposition by distributing northeast border is the Western New rule. plants located within this area would York State order area. Seven comments filed in response to become in-area dispositions from The east-to-west distance across the the proposed rule specifically addressed Southeast pool distributing plants. More consolidated marketing area is the consolidated Southeast marketing than half of the dispositions from the approximately 450 miles, from locations area. A comment filed on behalf of three plants that would become on the eastern edge of the area in Piedmont Milk Sales, Inc., Hunter Southeast pool distributing plants western Pennsylvania to the border of Farms, Land O’Sun, and Milkco, Inc., would be within the consolidated Indiana and Illinois. Northwest to supported and endorsed the portion of Southeast marketing area. southeast, from Marquette, Michigan, in the proposed rule that would maintain the Upper Peninsula to the northeast separate order areas for the Southeast Mideast area of Kentucky in the marketing area and Appalachian areas. Comments filed The consolidated Mideast marketing is just over 800 miles. From the by DFA and by Carolina-Virginia Milk area is comprised of the current Ohio northern tip of lower Michigan to Producers Association favored Valley (Order 33), Eastern Ohio-Western southern Indiana the more direct north- combining the proposed Southeast and Pennsylvania (Order 36), Southern south distance is 530 miles. Appalachian order areas. In addition, Michigan (Order 40), part of the The consolidated Mideast marketing the Kentucky Farm Bureau Federation Michigan Upper Peninsula (Order 44), area is contiguous to 3 other urged that all Kentucky counties and the and Indiana (Order 49) marketing areas consolidated marketing areas. The proposed Appalachian order be plus 6 currently unregulated Indiana consolidated Central marketing area combined with the Southeast. The counties, 2 whole and 3 partial would provide the western border of the comment stated that such a currently unregulated Michigan Mideast marketing area along the configuration would make milk counties, and 3 whole and 2 partial Indiana-Illinois border, and the utilization rates more similar across the currently unregulated Ohio counties. consolidated Appalachian area would order, would facilitate and encourage There would be 301 whole and 1 partial provide the southern boundary. The milk to flow to deficit areas and county in this consolidated area. Three western end of Michigan’s Upper minimize any negative price impacts on whole and one partial currently- Peninsula, part of the consolidated producers. These comments were unregulated Ohio counties that were Upper Midwest area, would adjoin the considered in the discussion of proposed to be part of the Mideast area Mideast portion of the Upper Peninsula. comments and alternatives under the are not included. In terms of physical geography, most Appalachian area. of the consolidated Mideast marketing Comments from Carolina-Virginia Geography area is at low elevations, and relatively Milk Producers Association and The Mideast market is described flat. The climate and topography are Missouri Farm Bureau Federation geographically as follows: favorable to milk production, with dairy support the inclusion, as proposed, of Indiana—72 counties (64 currently in being the number one agricultural southern Missouri/northwest Arkansas Order 49, 2 currently in Order 33, and commodity in terms of financial receipts in the Southeast marketing area. The 6 currently unregulated on the western in the State of Michigan in 1996. Dairy Carolina-Virginia Milk Producers’ edge of the State, just south of the also ranks high in terms of financial comment noted that this area is a crucial northwest corner) Kentucky—18 receipts in the rest of the area; 3rd in part of the supply area for the southeast counties (all currently in Order 33). Ohio and West Virginia, and 5th in region, and that the exclusion of the Michigan—77 counties. Two whole Indiana. area from the consolidated Southeast and 3 partial counties currently are Population order area could have a detrimental unregulated. The rest of the area impact on the over-order premium currently is included in Orders 40, 44, According to July 1, 1997, population structure of that area. The comment 49, and 33. Of the total 83 Michigan estimates, the total population in the stated that the correction of producer counties, only 6 in the western end of consolidated marketing area is 31 blend prices and creation of a unified the Upper Peninsula are not included in million. The 34 MSAs in the marketing area in that part of the the consolidated Mideast marketing consolidated Mideast marketing area southeast region is justified. With regard area. include 79.8 percent of the area’s to southern Missouri, a representative of Ohio—84 whole and 1 partial county. population. Over 55 percent of the the Subcommittee on Livestock of the Three whole and 2 partial counties to be area’s population is contained in the 8 U.S. House of Representatives included currently are unregulated. All most populous MSAs, which each have Committee on Agriculture supported of the State currently is included in over 950,000 people. Two-thirds of the adding southeastern Missouri to the Orders 33 and 36, except for 3 partial population is located in the states of Southeast order area, as proposed. A and 6 whole counties. Michigan and Ohio. comment filed by Barber Pure Milk Pennsylvania—12 whole and 2 partial The Mideast area’s largest and 7th Company opposed adding northwest counties, currently in the Order 36 area. largest of the 34 MSAs are located in Arkansas/southern Missouri to the West Virginia—37 counties; 20 Michigan. Detroit-Ann Arbor-Flint, with Southeast marketing area on the basis of currently in Order 33, 17 currently in 5.4 million population, is the largest the minimal overlapping route Order 36. MSA, and is located in the southeast disposition and potential of diluting the The consolidated Mideast marketing portion of the state between Lakes Southeast pool. area lies directly south of the Great Huron and Erie. Grand Rapids- A substantial share of the milk Lakes, with the State of Michigan Muskegon-Holland is the 7th largest production from the portions of enclosed on the east and west sides by Mideast MSA, is located approximately Missouri and Arkansas that are added to Lakes Huron and Michigan. On the 150 miles west-northwest of Detroit, and the Southeast marketing area is pooled eastern border of the marketing area, has a population of 1 million. These two

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MSAs contain two-thirds of the Mideast area vary from 18.75 pounds area of Ohio is the northeast quadrant of population of Michigan. There are 5 per month for Michigan to 20.4 pounds the State and within 50 miles of the other MSAs in Michigan. Two have per month for Indiana. Use of 19 pounds Akron-Cleveland MSA, including 5 approximately 450,000 population each, per month as a weighted average results counties supplying over 10 million one has approximately 400,000 in an estimated 589 million pounds of pounds each during October 1997, and population, and the other two average fluid milk consumption for the Mideast 1 county pooling over 40 million approximately 160,000 apiece. Eighty- marketing area. Mideast handlers’ route pounds. A smaller production area in four percent of the population of disposition within the area during Ohio is located in the central portion of Michigan is located in these 7 MSAs, all October 1997 totaled 544 million the western edge of the State within 80 in the lower half of southern Michigan. pounds, with another 36 million miles of the Dayton MSA, and includes Four of the 8 largest Mideast MSAs distributed by 23 handlers fully two counties with over 10 million are located in the State of Ohio. These regulated under other orders. An pounds production and 1 county with are: (1) Cleveland-Akron, the second- additional 4.5 million pounds was over 20 million. The only population largest, with a population of 2.9 million, distributed by partially regulated centers of the marketing area that do not located on Lake Erie in northwestern handlers, producer-handlers, and appear to have adequate supplies of Ohio; (2) Cincinnati-Hamilton, OH–KY– handlers that would be exempt under nearby milk are Indianapolis and IN, the 4th largest, with a population of this rule on the basis of each having less Cincinnati, in the southern portion of 1.9 million, located in the southwest than 150,000 pounds of route the area. corner of Ohio; (3) Columbus, the 6th disposition per month. largest, with a population of 1.5 million, Distributing Plants located approximately midway between Milk Production Using distributing plant lists included Cincinnati and Cleveland; and (4) In October 1997, nearly 11,000 in the proposed rule, with the pooling Dayton, the 8th largest, with a producers from 335 counties in 12 states standards adjusted to 25 percent of population of .95 million. pooled 1 billion pounds of milk on route disposition as in-area sales, There are 6 additional MSAs in Ohio, Federal Orders 33, 36, 40, 44 and 49. updated for known plant closures 2 with populations of approximately .6 Over 90 percent of this producer milk through January 1998, 72 distributing million each, 1 with a population of .4 came from Mideast marketing area plants would be expected to be million, and 3 that average just over counties. The States of Indiana, associated with the Mideast marketing 150,000 each. Eighty-two percent of the Michigan, Ohio and Pennsylvania area, including 51 fully regulated population of Ohio is located in MSAs, supplied 95 percent of the milk (13%, distributing plants (all currently fully most in the northern part of the State. 39.6%, 30.6% and 11.9%, respectively), regulated), 4 partially regulated (all The third-largest MSA in the Mideast with 90 percent coming from counties currently partially regulated), 4 exempt area is Pittsburgh, Pennsylvania, with a that would be in the consolidated plants that would have less than population of 2.4 million. Pittsburgh is Mideast area. Just over two-thirds of the 150,000 pounds of total route 127 miles southeast of Cleveland. There milk pooled under these orders was disposition per month (all currently are two smaller MSAs in the produced in Michigan and Ohio fully regulated), and 13 producer- Pennsylvania portion of the counties located within the handlers (all currently producer- consolidated Mideast marketing area, consolidated marketing area. handlers). Since October 1997, 5 having an average population of about Other states pooling milk on the distributing plants (1 fully regulated 200,000 each. Eighty-seven percent of orders consolidated in the Mideast area plant in Indiana and 1 in Michigan; 2 the population of the Pennsylvania were Illinois (0.5%), Iowa (0.1%), partially regulated plants in portion of the Mideast area is located in Kentucky (0.1%), Maryland (0.4%), Pennsylvania; and a producer-handler MSAs. New York (2.7%), Virginia (0.1%), West in Pennsylvania), have gone out of Indianapolis, Indiana, is the 5th Virginia (1.0%), and Wisconsin (0.1%). business. largest MSA in the consolidated Mideast These states contributed a total of 4.9 There would be 40 distributing plants marketing area, with a population of 1.5 percent of the milk pooled on the 5 in the 8 Mideast MSA’s that each have million. Indiana contains 9 additional orders. over a million people (including MSAs, 2 with populations of .5 and .6 Sixty-two of the counties that had Dayton-Springfield which has .95 million, and 7 others that average production pooled under the five million). Twenty-seven of these plants 155,000 population. All but 2 of the 9 current orders supplied more than 5 would be pool plants—5 in the smaller MSAs are located north of million pounds of milk each during Pittsburgh area, 6 in the Detroit area, 4 Indianapolis. Seventy-four percent of October 1997. Six of the counties were in the Cleveland area, 3 each in the the population of the portion of Indiana in northern and northeast Indiana, over Grand Rapids, Indianapolis and that is in the consolidated Mideast area 100 miles from Indianapolis; 11 were in Cincinnati areas, 2 in Columbus and 1 is located in MSAs. western Pennsylvania—7 of them in Dayton. Nine of the plants in the The portion of West Virginia that is within 100 miles of Pittsburgh, and the large MSA areas would be producer- within the consolidated Mideast area others, including those with the most handlers, 3 would be exempt on the contains 4 MSAs, 3 of which are located production (10–22 million pounds), in basis of having less than 150,000 on the West Virginia-Ohio border, along the northwest corner of the state, within pounds of milk per month in Class I the Ohio River. The population of these 100 miles of Cleveland, Ohio. Twenty- route dispositions, and 1 would be MSAs averages just over 200,000. Forty- eight Michigan counties pooled more partially regulated. five percent of the population of the than 5 million pounds each under the Of the remaining 29 distributing West Virginia portion of the 5 orders, including 14 counties with plants located in the marketing area, 18 consolidated Mideast area is located in more than 10 million pounds and 4 would be located in other MSA’s as MSAs. counties with more than 20 million follows: 5 pool plants and 1 producer- pounds. All of these counties are handler in Ohio; 4 pool plants in Fluid Per Capita Consumption. located within 110 miles of Detroit or Indiana; 4 pool plants in Michigan; 2 Estimates of fluid per capita Grand Rapids, the two largest MSAs in pool plants in Pennsylvania; 1 pool consumption within the consolidated Michigan. The heaviest milk production plant in Kentucky; and 1 pool plant in

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West Virginia. The ten remaining consolidated Mideast market is percent was marketed by cooperative distributing plants located in the estimated to be $13.42 per associations. marketing area would not be located in hundredweight. Criteria for Consolidation MSA’s. Three of these pool plants and The Mideast is one of two 2 producer-handlers would be located consolidated marketing areas that has a Overlapping route disposition, in Michigan; 2 pool plants and 1 plant significantly higher-than-average overlapping production areas, natural exempt on the basis of size would be percentage of its milk used in Class II. boundaries, and multiple component located in Ohio; 2 pool plants would be Currently, the Southern Michigan, Ohio pricing are all criteria that support the located in Indiana; and 1 producer- Valley and Indiana markets have Class consolidation of these current order handler would be located in West II utilization over 20 percent. When the areas into a consolidated Mideast Virginia. markets are combined the average for marketing area. Handlers who would be There are 3 distributing plants that the consolidated market will be just fully regulated under the consolidated would be outside the marketing area. under 20 percent. order distribute approximately 90 These would be 1 partially regulated percent of their route dispositions Other Plants plant in Pennsylvania, and 1 in Virginia. within the consolidated marketing area, In addition, a small pocket of Also located within the Mideast and 93 percent of the milk distributed unregulated area within Ohio would marketing area during May 1997 were within the marketing area is from contain one partially regulated plant. 59 supply or manufacturing plants: 1 in handlers who would be regulated under The in-area route disposition Charleston, West Virginia, 4 in the order. standard, proposed to be 30 percent of Pennsylvania, 18 in Michigan, 9 in Many of the counties from which milk route dispositions, will instead be 25 Indiana and 27 in Ohio. Nine of the 59 was pooled on the individual orders percent—the same percentage as in plants are pool plants. Of these pool supplied milk to three or four of those other consolidated orders. This plants, 6 are supply plants—1 orders. For instance, milk from a percentage should not result in the full manufactures primarily Class II number of the same Michigan counties regulation of any handler not currently products, 3 manufacture primarily was pooled on the Ohio Valley, Indiana fully regulated unless they increase powder, and 2 have no primary product, and Southern Michigan orders; milk sales in the marketing area. only shipping to distributing plants. from several of the same Indiana Three pool plants are manufacturing counties was pooled on the Ohio Valley, Utilization plants, manufacturing primarily cheese. Southern Michigan and Indiana According to October 1997 pool Of the 50 nonpool plants in the Mideast counties; and milk from some of the statistics for handlers who would be marketing area, one is a supply plant same Ohio counties was pooled on the fully regulated under this Mideast order, that manufactures primarily cheese. The Ohio Valley, Indiana, and Southern the Class I utilization percentages for other 49 nonpool plants are Michigan orders. the Ohio Valley, Eastern Ohio-Western manufacturing plants. In this area of The Great Lakes serve as natural Pennsylvania, Southern Michigan, high Class II use, 28 of the nonpool boundaries on the northern edge of the Michigan Upper Peninsula, and Indiana plants manufacture primarily Class II area and on the eastern and western markets were 58, 58, 55, 89, and 70 products. In addition, 1 manufactures sides of Michigan, as do the mountains percent, respectively. Based on primarily butter, 1 manufactures in central Pennsylvania. All of the calculated weighted average use values primarily powder, 27 manufacture orders involved in the consolidated for (1) the current order with current use primarily cheese, and 2 manufacture Mideast area contain multiple of milk, and (2) the current order with primarily other products. component pricing provisions. Instead projected use of milk in the There are also two manufacturing of the Southern Michigan component consolidated Mideast order, the plants in the currently-unregulated area pricing plan, proposed for the potential impact of this consolidation of Ohio—a nonpool plant that consolidated Mideast order in the on producers who supply the current manufactures primarily Class II proposed rule, the same component market areas is estimated to be: Ohio products in the unregulated county of pricing provisions adopted for the other Valley, a 4-cent per cwt increase (from Erie, Ohio and a nonpool plant that consolidated orders have been $13.46 to $13.50); Eastern Ohio-Western manufactures primarily cheese in the incorporated in the Mideast order. Pennsylvania, a 4-cent per cwt decrease unregulated area of Sandusky, Ohio. (from $13.51 to $13.47); Southern Discussion of Comments and Michigan, a 6-cent per cwt increase Cooperative Associations Alternatives (from $13.27 to $13.33); Michigan In December 1997, 20 cooperative Prior to issuance of the proposed rule, Upper Peninsula, a 25-cent per cwt associations pooled member milk under alternatives to the consolidation of the decrease (from $13.34 to $13.09); and the 5 orders to be consolidated Ohio Valley, Eastern Ohio-Western Indiana, a 11-cent per cwt decrease (considering Milk Marketing, Inc., and Pennsylvania, Southern Michigan, (from $13.52 to $13.41). The large Mid-America Dairymen, Inc., as one Indiana, and partial Michigan Upper decrease for Michigan Upper Peninsula entity—DFA). Two of the cooperatives Peninsula marketing areas that were is a result of changing from its current pooled milk on the four principal considered included the addition of individual handler pool provisions to a orders, 3 cooperatives had member milk Pennsylvania Milk Marketing Board marketwide pool (very little reserve pooled on 3 of the principal orders, 3 (PMMB) Area 6 to the consolidated milk is pooled under Order 44—instead, cooperatives pooled milk on 2 of the Mideast area, with some consideration it is pooled on the Southern Michigan principal orders, and 12 of the being given to the addition of currently- order). For October 1997, combined cooperatives pooled milk on only one of unregulated areas of Maryland and West Class I utilization for Orders 33, 36, 40, the orders. The percentage of Virginia, and moving the southern part 44 and 49 was 58.7 percent based on cooperative member milk pooled on of Ohio and part of West Virginia to the 601.6 million pounds of producer milk each of the orders varied from 44 Appalachian order area. used in Class I out of 1.025 billion total percent under Order 36 to 86.5 percent Ten comments that pertained producer milk pounds pooled. The under Order 40. Of the total milk pooled specifically to the consolidated Mideast weighted average use value for the on the 5 orders in December 1997, 68 marketing area were filed by 8

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00043 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.053 pfrm08 PsN: 02APP2 16068 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules commenters in response to the proposed not incorporated in either the Northeast summer temperatures that average about rule. Three of the comments, from order or this order. 75 degrees; the northern and western Michigan Milk Producers Association, Independent Cooperative Milk portions average winter temperatures United Dairy, Inc., and DFA, plus a very Producers Association and Schneider’s are in the low ’teens, while the southern large number of comments that did not Dairy supported the consolidation of and more eastern portions experience specifically mention the Mideast area, order areas to form the Mideast area as average winter temperatures in the 20’s. addressed the inclusion of unregulated proposed. The far western part of the market areas in consolidated Federal order Upper Midwest predominantly grows mixed field crops, areas. The DFA comment included the with cattle and soybeans more to the signatures of 600 producers to a The consolidated Upper Midwest southwest. Both Minnesota and ‘‘Petition to Eliminate all Unregulated marketing area is comprised of the Wisconsin are included in the top five Market Areas in Pennsylvania.’’ current Upper Midwest (Order 68) and milk-producing states, and dairy is the Although the large number of comments Chicago Regional (Order 30) marketing number 1 agricultural enterprise in that did not specifically mention the areas, with the addition of the western Wisconsin, generating over half of the Mideast area were unclear about exactly portion of the Michigan Upper State’s income derived from agricultural what additional area should be added to Peninsula (Order 44) marketing area. commodities. There are 204 counties in this the marketing area, they appeared to Population favor the addition of PMMB Area 6, consolidated area. One partial Illinois with perhaps some western Maryland county proposed to be part of the According to July 1, 1997, population and West Virginia territory, to the Central order area has been added to estimates, the total population of the eastern edge of the Mideast area. this area, and another partial Illinois consolidated Upper Midwest marketing county proposed to be part of this area area is approximately 18.5 million. As stated in the introduction to the has been changed to the Central order Using Metropolitan Statistical Areas consolidation discussion, consolidation area. (MSAs), there are 3 population centers of the existing orders does not over 1 million. The Chicago-Gary- necessitate expansion of the Geography Kenosha area, primarily in northeastern consolidated orders into currently- The consolidated Upper Midwest Illinois, is the largest, with a 7.9 million unregulated areas, especially if such marketing area is described population in the marketing area. The expansion would result in the geographically as follows: 15 counties in Minneapolis-St. Paul area, located regulation of currently-unregulated Illinois (all currently in Order 30), 6 mostly in Minnesota, is next with 2.8 handlers. Therefore, PMMB Area 6 and counties in Iowa (all currently in Order million; and the third-largest MSA is the unregulated portions of Maryland 68), 6 counties in Michigan (all Milwaukee-Racine, Wisconsin, with a and West Virginia should not be added currently in Zones I and IA of Order 44), population of 1.6 million. The Chicago to the consolidated Mideast order area. 83 counties in Minnesota (all currently area is located in the southeast corner of Two comments from DFA in Order 68), 16 counties in North the marketing area, on the west side of recommended including Charleston, Dakota (all currently in Order 68), 8 the southern end of Lake Michigan, with West Virginia, and areas of West counties in South Dakota (all currently Milwaukee approximately 85 miles Virginia south of Charleston, as well as in Order 68), and 70 counties in north, also along Lake Michigan. the Ohio counties surrounding Wisconsin (43 currently in Order 30, 20 Minneapolis is located 400 miles Cincinnati and the northern counties of currently in Order 68, and 7 currently northwest of Chicago, along the Kentucky, in the Appalachian market to unregulated). This market is about 600 Minnesota-Wisconsin border. help provide an economic incentive miles east to west and about the same Approximately two-thirds of the through the expected higher blend distance north to south. population of the consolidated prices to producers to supply milk to The area described above is marketing area is within the three the plants in that area. A comment by contiguous to the consolidated Central largest MSAs, with 81 percent of the Trauth Dairy in Newport, Kentucky, market to the south, a small corner of population contained within the area’s also urged the inclusion of the northern the consolidated Mideast market to the 17 MSA’s (with the 14 smaller MSAs areas of Kentucky in the Appalachian southeast, and the eastern portion of averaging 196,000 population). area instead of the Mideast area. These Michigan’s Upper Peninsula, also part Sixty percent of the population of the comments are addressed in the of the consolidated Mideast market, to market is concentrated in the Illinois description of comments and the northeast. North of the Upper and southeast Wisconsin portion of the alternatives considered for the Midwest market is Lake Superior and marketing area. In Wisconsin, nearly 90 Appalachian order area. the Canadian border, and west of the percent of the population is located in Schneider’s Dairy suggested that a market is a large sparsely-populated and the southern two-thirds of the state, and pass-through provision similar to that of unregulated area. Most of the eastern in Minnesota 85 percent of the the current New York-New Jersey order border of the marketing area is Lake population is in the southern half of the be incorporated in the Mideast order to Michigan. state. assure that regulated handlers The consolidated Upper Midwest distributing fluid milk products in marketing area is generally low-lying, Fluid Per Capita Consumption unregulated areas where they compete with some local differences in elevation Based on the population figure of 18.5 with unregulated handlers are not in Wisconsin and the upper peninsula million and an estimated per capita disadvantaged. As discussed in the of Michigan. Natural vegetation in the fluid milk consumption rate of 20 section of this decision dealing with western part of the area is tall-grass pounds of fluid milk per month, total Northeast regional issues, Class I prices prairie, with the eastern two-thirds of fluid milk consumption in the are determined by the need to attract the northern portion being broadleaf consolidated Upper Midwest marketing milk supplies to the location of the forest, coniferous forest, and mixed area is estimated at 370 million pounds processing plant, and not by where the broadleaf and coniferous forest. Annual per month. Plants that would be fully fluid products are distributed. precipitation averages 30–35 inches per regulated distributing plants under the Therefore, a pass-through provision is year. Most of the area experiences Upper Midwest order had route

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It is area during October 1997, while pounds of total route disposition per estimated that the Class I use percentage partially regulated plants distributed 1.7 month (1 new, 1 currently partially for the consolidated order would be in million pounds. Producer-handlers and regulated, and 1 currently unregulated). the neighborhood of 20 percent. exempt plants operating in the Since October 1997, one pool Other Plants combined marketing areas during this distributing plant and one partially month had a combined route regulated plant have gone out of Located within the consolidated disposition of less than .5 million business. Upper Midwest marketing area during pounds. There would be 6 distributing plants May 1997 were 301 supply or in the Chicago area (5 pool plants and manufacturing plants: 1 in South Milk Production 1 exempt plant). The Milwaukee-Racine Dakota, 3 in Iowa, 28 in Illinois (12 in In October 1997, 2.4 billion pounds of area would have 2 pool distributing the Chicago area), 39 in Minnesota (over milk were associated with the Chicago plants. There would be 7 distributing three-quarters of which are located in Regional and Upper Midwest markets, plants in the Minneapolis-St. Paul area the southeastern quarter of the State), but only 1.6 billion pounds of milk were (6 pool plants and 1 partially regulated and 230 in Wisconsin (over 90 percent pooled because of class price plant). Of the remaining 20 distributing of which are scattered throughout the relationships. The 2.4 billion pounds plants, 16 are located in other MSAs as southern three-quarters of the state). were produced by 27,250 producers follows: 4 pool plants in Minnesota, 2 One hundred five of the plants are pool located in 13 states from Tennessee to pool plants and 2 partially regulated plants, or have a ‘‘pool side.’’ Eighty- Minnesota, and from New Mexico to plants in North Dakota, 1 pool plant in five of the 105 pool plants (1 in Iowa, Michigan. However, over 93 percent of Illinois, and 5 pool plants, 1 partially 4 in Illinois, 16 in Minnesota and 64 in the producer milk was produced within regulated plant, and 1 exempt plant in Wisconsin) are ‘‘split plants;’’ that is, the consolidated marketing area, and Wisconsin. Four of the remaining one side of a plant is a manufacturing 91.4 percent was produced within the distributing plants are not located in facility and the other side receives and states of Wisconsin and Minnesota. As MSAs: 1 pool plant and 1 exempt plant ships Grade A milk, and accounting is with population density and milk plant in Minnesota, 1 producer-handler in done separately. In most cases, the density, most milk production in Wisconsin and 1 pool plant in nonpool portion of such a plant is a Minnesota and Wisconsin occurs in the Michigan. manufacturing operation, primarily southern parts of these states. Over 85 cheese-making. Most of the other pool Utilization percent of Wisconsin milk associated plants are pool supply plants, located with the combined Chicago Regional- According to October 1997 pool primarily in Wisconsin, that ship milk Upper Midwest orders in October 1997 statistics for handlers who would be to pool distributing plants. was produced in the southern two- fully regulated under this Upper The 196 nonpool plants in the thirds of the State, while 84 percent of Midwest order, the Class I utilization consolidated Upper Midwest marketing the Minnesota milk associated with the percentages for the Chicago Regional area are manufacturing plants—103 two orders was produced in the and Upper Midwest were 29 and 19 manufacture primarily cheese, 16 southern half of Minnesota. percent, respectively. Based on manufacture primarily Class II products, Fifty-two counties, 10 in Iowa, 15 in calculated weighted average use values 15 manufacture primarily butter, 23 Minnesota, and 27 in Wisconsin for (1) the current order with current use manufacture primarily milk powders, supplied milk to both the current of milk, and (2) the current order with and 39 manufacture primarily other Chicago Regional and Upper Midwest projected use of milk in the products. orders during October 1997. The largest consolidated Upper Midwest order, the Also associated with the Upper part of the common production area is potential impact of this consolidation Midwest order, but not within the in Wisconsin, where 27 counties supply on producers who supply the current marketing area, are 2 pool supply plants 25 percent of the milk associated with market areas is estimated to be: Chicago and 6 manufacturing plants (3 Order 30, and 30 percent of the milk Regional, a 3-cent per cwt decrease manufacturing primarily cheese, 2 associated with Order 68. When data for (from $12.98 to $12.95), and Upper making Class II products, and 1 butter the 52 counties is combined, 26 percent Midwest, a 2-cent per cwt increase plant) in North Dakota. of the Chicago Regional market and 42 (from $12.89 to $12.91). The weighted Cooperative Associations percent of the Upper Midwest market is average use value for the consolidated supplied by this common production Upper Midwest market, based on In December 1997, 67 cooperative area. October 1997 data, is estimated to be associations pooled member milk on the $12.94 per hundredweight. However, a Chicago Regional and Upper Midwest Distributing Plants substantial amount of milk was omitted orders, providing 99 percent of the milk Using distributing plant lists included from both pools for October 1997 pooled under each of the two orders. in the proposed rule, with the pooling because of unusual class price Nine of the cooperatives marketed milk standards adjusted to 25 percent of relationships. Annual Class I utilization in both orders, accounting for nearly route disposition as in-area sales, percentages may be considered more half of the milk pooled in the Upper updated for known plant closures representative for these markets. For the Midwest (and 42.9 percent of the through December 1998, 35 distributing year 1997, the annual Class I utilization cooperative member milk), and 66.8 plants would be expected to be percentage for the Chicago Regional percent of the milk pooled in the associated with the Upper Midwest market was 21.5, with 18.7 for the Chicago Regional market (67.5 percent marketing area, including 27 fully Upper Midwest. The Class I use of total cooperative member milk). In regulated distributing plants (2 percentage for the entire Michigan the two markets, 16 cooperatives pooled currently partially regulated and 25 Upper Peninsula market, which has a milk only under Order 30, and 42

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00045 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.056 pfrm08 PsN: 02APP2 16070 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules cooperatives pooled milk only under Upper Midwest areas in a consolidated extensive overlap of producers, Class I Order 68. Upper Midwest order. Also considered sales, and geographic similarities was a consolidation of even more between that area and the adjoining Criteria for Consolidation marketing areas (up to 10; including consolidated Upper Midwest area. An As in the proposed rule, the Chicago Indiana, Illinois, parts of Kentucky, equivalent number of comments, most Regional, Upper Midwest, and the Missouri, and Kansas) that would from Iowa interests, argued that the western end of the Michigan Upper increase the population and Class I use consolidated Upper Midwest order Peninsula marketing areas should be of the consolidated Upper Midwest area. should remain as proposed. This issue combined into a consolidated Upper Over 160 comments received in is more fully discussed in the Midwest Federal order marketing area. response to the proposed rule concerned ‘‘Comments and Alternatives’’ section of Although these areas do not have a the proposed consolidated Upper the description of the Central order area, considerable degree of overlapping fluid Midwest marketing area. Nearly 140 of as is the assignment to consolidated milk disposition, they do have an these comments (including areas of 3 counties, each in its entirety, extensive overlapping procurement approximately 120 form letters) that currently are split between orders. area. Handlers regulated under the supported a consolidation of 10 One comment advocated the addition Chicago Regional and Upper Midwest marketing areas for the purpose of of the Gary, Indiana, area to the markets (the predominant markets in increasing the Class I utilization of the consolidated Upper Midwest area this consolidation) distribute milk into consolidated Upper Midwest order area instead of the Mideast area on the basis markets further south, and to a level closer to the U.S. national that Gary, Indiana, is part of the greater approximately 10 percent of the fluid average or, at the very least, including Chicago market. This portion of the milk distributed within the consolidated the Iowa, Eastern South Dakota, and current Indiana order area historically area is distributed by handlers regulated Nebraska-Western Iowa marketing areas has been part of the Indiana marketing under other orders. However, these in the consolidated Upper Midwest area, and there is no data supporting its other orders are more closely related to area. separation from that area. The single markets to the south than to the No justification on the basis of the pool distributing plant located in Gary consolidated Upper Midwest order area. criteria of overlapping sales and has ceased to process milk. Any On that basis, it is more appropriate to procurement areas could be found for distribution in the Gary area acquired by include them in other consolidated any increase in a consolidated Chicago handlers as a result will be marketing areas. marketing area that would be comprised pooled as Class I use under the Other aspects of the consolidation of the Chicago Regional and Upper consolidated Upper Midwest order. also fit the criteria set forth. The Midwest order areas beyond the Based on the considerations of the consolidated Upper Midwest area is addition of the Iowa, Eastern South most recent data available, comments bounded on three sides by Lakes Dakota, and Nebraska-Western Iowa received, and the stated consolidation Michigan and Superior, the marketing areas. The collection of more criteria, limiting the extent of the international border with Canada, and a detailed data concerning the overlap in consolidated Upper Midwest marketing large unregulated area. A significant route disposition and milk procurement area to the areas of the current Chicago portion of both the Chicago Regional showed clearly that those three areas are Regional and Upper Midwest marketing and Upper Midwest markets’ milk is more closely related to markets to the areas, with the addition of the western supplied by the same cooperative south than to the north, with part of the Michigan Upper Peninsula associations. The two predominant approximately 85 percent of the total marketing area, represents the most markets have identical multiple fluid milk distributed by handlers appropriate marketing area component pricing plans, and both have regulated under the three orders configuration for the north central area large reserves of milk that normally is disposed of in the consolidated Central of the U.S. used in manufactured products, market. Central primarily cheese. Approximately 90 The numerous markets recommended percent of the milk used in by upper midwest producer groups to be The consolidated Central order manufacturing in these markets is used consolidated with the Chicago Regional marketing area merges the current 9 to make cheese. The amount of cheese and Upper Midwest order areas have Federal order marketing areas of Central manufactured from milk pooled under very little distribution or procurement Illinois, most of Southern Illinois- these milk orders is enough to supply a overlap with those areas, aside from Eastern Missouri, most of Southwest population 3 times greater than that of occasional need for reserve milk Plains, Greater Kansas City, Iowa, the consolidated marketing area. Fluid supplies. When reserve supplies are Eastern South Dakota, Nebraska- milk handlers in both markets must needed by the other markets, upper Western Iowa, Western Colorado, and compete with cheese manufacturers for midwest milk can be, and is, pooled on Eastern Colorado (Federal orders 50, 32, a milk supply, and marketing order the more southern markets and shares in 106, 64, 79, 76, 65, 134, and 137, provisions for both markets must their pools. The potential gain of adding respectively). Moving to the provide for attracting an adequate areas recommended by upper midwest consolidated Southeast marketing area supply of milk for fluid use. producer groups would be much less are 6 Missouri counties currently in than the loss to producers whose milk Federal order 32 and, from Order 106, Discussion of Comments and is pooled under orders to be 11 northwest Arkansas counties and 22 Alternatives consolidated in the Central, Mideast and southern Missouri counties. Order 106 Prior to issuance of the proposed rule, Appalachian marketing areas. counties in Kansas and Oklahoma alternatives to the consolidation of the Approximately 10 comments, remain in the Central market. In order areas included in the Upper including some from cooperative addition, some counties in Colorado, Midwest marketing area that were associations representing large numbers Illinois, Iowa, Kansas, Missouri and considered included combining the of producers, advocated the addition of Nebraska that currently are not part of Iowa, Nebraska-Western Iowa, and the northeast portion of the Iowa any order area are included in the Eastern South Dakota order areas with marketing area to the consolidated consolidated Central market. There are those of the Chicago Regional and Upper Midwest area based on the 543 counties and the City of St. Louis,

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Missouri, in this consolidated area. The unregulated counties distributed around Nebraska, Kansas and Oklahoma, and marketing area has changed from the the center area proposed to remain much of Illinois; to broadleaf forest on proposed rule by the addition of the unregulated. both sides of the Mississippi River. Western Colorado marketing area and Nebraska—66 counties in the Population seven currently-unregulated Colorado southern and eastern parts of Nebraska; counties, the elimination of 6 currently- omitting the 11 counties in the According to July 1, 1997, population unregulated Missouri counties, the panhandle that currently are part of the estimates, the total population in the addition of two partial counties and the Nebraska-Western Iowa marketing area, consolidated Central marketing area is deletion of one partial county for the and adding 5 currently-unregulated approximately 21.5 million. Using purpose of eliminating the inclusion of counties in the southwest corner of the Metropolitan Statistical Areas (MSAs), partial counties. State between the Nebraska-Western there are four population centers over 1 Iowa and Eastern Colorado marketing million. The St. Louis, Missouri/Illinois, Geography areas and 3 currently-unregulated area is the largest, with over 2.6 million The consolidated Central marketing counties in the southeast corner of the population, and the Denver-Boulder- area would include the following State between the Nebraska-Western Greeley, Colorado, area is next with territory: Iowa and Greater Kansas City marketing approximately 2.3 million. Kansas City, Colorado—44 counties, including the areas. Missouri/Kansas, has a population of 30 Colorado counties currently in the Oklahoma—the entire State (77 1.7 million, and Oklahoma City, Eastern Colorado marketing area and the counties). Oklahoma, is just over 1 million. 4 Colorado counties in the Western South Dakota—the 26 eastern South Approximately thirty-five percent of the Colorado marketing area. Ten currently- Dakota counties (including the portion population of the consolidated unregulated counties, 3 in the southeast of Union County that currently is in the marketing area is within these four corner of the state between the Eastern Nebraska-Western Iowa marketing area) largest MSAs, with nearly two-thirds of Colorado and Southwest Plains that currently are in the Eastern South the population contained within the marketing areas, and 7 in the central Dakota marketing area. area’s 32 MSA’s (with the 28 smaller part of the State between the Eastern Wisconsin—the 2 southwest MSAs averaging 228,559 population). Colorado and Western Colorado Wisconsin counties that currently are in The Colorado portion of the marketing marketing areas, are added. the Iowa marketing area. area has 91.3 percent of its population Illinois—87 counties, including the 5 The consolidated Central marketing concentrated in 5 MSA’s. The Missouri of the 6 counties currently in the Iowa area is adjacent to the consolidated portion has 94.4 percent concentrated in marketing area (of the 2 partial Illinois Upper Midwest order area on the north 3 MSA’s. counties in the Iowa marketing area, all and northeast, the consolidated Mideast of Whiteside and none of Jo Daviess are and Appalachian areas on the east, and Fluid Per Capita Consumption included in the Central area), the 19 the northwest corner of the Southeast Based on the population figure of 21.5 counties currently in the Central Illinois order area and the consolidated million and a per capita fluid milk marketing area, the 49 counties Southwest area on the south and the consumption rate of 19 pounds of fluid currently in the Southern Illinois- consolidated Western order area on the milk per month (a weighted average Eastern Missouri marketing area and 8 west. The area north of approximately based on state populations in the currently-unregulated adjacent counties the western half of the consolidated marketing area and fluid per capita in southern Illinois, and 6 currently- Central area also is unregulated. The consumption estimates for each state), unregulated counties in western Illinois north-south distance covered by the area total fluid milk consumption in the located between the current Central is approximately 800 miles, from consolidated Central marketing area Illinois and Southern Illinois-Eastern Watertown, South Dakota, to Ardmore, would be approximately 408.5 million Missouri order areas and the Mississippi Oklahoma. The east-west extent of the pounds per month. Plants that would be River. area, from the Indiana-Illinois border to fully regulated distributing plants in the Iowa—93 counties, including the 68 the Colorado/Utah border, is Central order had route disposition counties currently in the Iowa approximately 1,200 miles. within the nine marketing areas marketing area, the 17 counties Geographically, the Central marketing included in the consolidated Central currently in the Nebraska-Western Iowa area includes a wide range of area of 366 million in October 1997. It marketing area, the 1 county currently topography and climate types, ranging is likely that most of the milk in the Eastern South Dakota marketing from the Colorado Plateau and the distributed within formerly unregulated area, 6 currently unregulated counties in Rocky Mountains in the west to the areas by Central order handlers would the northwestern part of Iowa, and 1 central section of the Mississippi River be distributed within the consolidated currently unregulated county in the Valley toward the eastern part of the Central marketing area. The 11 southeastern corner of Iowa. area. Precipitation ranges from less than producer-handlers and 3 exempt plants Kansas—the entire State (105 15 inches per year in Denver, Colorado, operating in the Central market during counties). to more than 30 inches at St. Louis, October 1997 had a combined in-area Minnesota—the 4 southwestern Missouri. Most of the area experiences route disposition of 3 million pounds, Minnesota counties that currently are in fairly hot summer temperatures, while partially regulated plants distributed 2 the Eastern South Dakota marketing winter temperatures vary somewhat million pounds in the marketing area, area. more than summer, with colder winter and plants that are expected to be fully Missouri—39 counties and 1 city, temperatures occurring in the northern regulated under other consolidated including 6 of the counties and 1 city and western parts of the Central area. orders distributed 59 million pounds in that currently are in the Southern The natural vegetation ranges from the Central marketing area during Illinois-Eastern Missouri marketing area, desert and desert scrub in western October 1997. the 20 counties that currently are in the Colorado through coniferous forest in Greater Kansas City marketing area, the the Rocky Mountains to short grass Milk Production 5 counties that currently are in the Iowa prairie in eastern Colorado through tall In October 1997, 996.7 million marketing area; and 8 currently- grass prairie in eastern South Dakota, pounds of milk were associated with the

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The 996.7 million Kansas; 3 pool plants in Nebraska; 1 Located within the Central marketing pounds were produced by 9,900 pool plant and 1 producer-handler in area during May 1997 were 84 supply or producers located in 17 states from Oklahoma; 1 pool plant and 1 partially manufacturing plants: 8 in Colorado (4 Idaho to Kentucky, and from Texas to regulated plant in South Dakota, and 1 in the Denver area), 15 in Illinois (2 in Minnesota. Three-quarters of the milk pool plant in Wyoming. the Decatur area), 23 in Iowa (2 in the associated with the Central market was Eighteen of the remaining distributing Des Moines area and 1 in the Dubuque produced within the consolidated plants are not located in MSAs. They area), 6 in Kansas, 7 in Missouri (5 in marketing area. The states contributing are: 1 pool plant and 1 government the St. Louis area), 7 in Nebraska, 7 in the most producer milk were, in agency plant in Colorado; 4 pool plants South Dakota (1 in the Sioux Falls area), descending order of volume, Iowa, and 1 government agency plant in 4 in Oklahoma (1 in the Tulsa area), and Colorado, Missouri, Kansas, Illinois and Illinois; 1 pool plant and 1 producer- 7 in Wisconsin. Twenty-two of the 84 Oklahoma. However, 68 percent of the handler in Iowa; 1 pool plant and 1 plants are pool plants, or have a ‘‘pool Missouri producer milk came from government agency plant in Kansas; 1 side.’’ Twelve of the 22 pool plants (6 farms in counties which are included in unregulated and 2 producer-handlers in in Iowa, 1 in Nebraska, 2 in South the consolidated Southeast marketing Missouri; 1 producer-handler in Dakota, and 3 in Wisconsin) are ‘‘split area. These 6 States accounted for 71 Nebraska; 2 pool plants in Oklahoma; plants;’’ that is, one side of a plant is a percent of the producer milk associated and 1 government agency plant in South manufacturing facility, and the other with the nine current orders to be Dakota. side receives and ships Grade A milk, consolidated. All of the states having Utilization and accounting is done separately. In substantial portions of their areas in the most cases, the nonpool portion of such consolidated Central market contribute According to October 1997 pool a plant is a manufacturing peration, producer milk to at least two of the statistics for handlers who would be primarily cheese-making. Of the pool current nine individual orders, with five fully regulated under this Central order, plants, 8 have no primary product, but of the states (Iowa, Kansas, Minnesota, the Class I utilization percentages for are only shipping to distributing plants, Missouri, and Nebraska) supplying milk the individual markets ranged from 38 and 6 are pooled manufacturing plants. to five of the order areas each. percent for the Southwest Plains market Of the 62 nonpool plants in the to 87 percent for the Central Illinois Distributing Plants consolidated Central marketing area, 59 market. Class I (and Class II) receipts are manufacturing plants—24 are plants Using distributing plant lists included and utilization data for Iowa and the that manufacture primarily Class II in the proposed rule and the pooling combination of Greater Kansas City and products, 3 manufacture primarily standards adjusted to 25 percent of Eastern South Dakota markets are butter, 6 manufacture primarily powder, route dispositions as in-area sales, restricted to protect the confidentiality 25 manufacture primarily cheese, and 1 updated for known plant closures of individual handler information. Data manufactures primarily other products. through December 1998, 57 distributing for Eastern Colorado and Western Also associated with the consolidated plants would be expected to be Colorado markets are combined in order Central order, but not within the associated with the Central marketing to mask restricted data. Combined marketing area, are 2 nonpool cheese area, including 35 fully regulated utilization for the nine markets would plants and a nonpool supply plant distributing plants (all currently pool result in a Class I percentage of 50 located in South Dakota. plants), 1 partially regulated (currently percent. partially regulated), 3 plants exempt on Based on calculated weighted average Cooperative Associations the basis of size (currently pool plants use values for (1) the current order with Twenty-five cooperative associations but have less than 150,000 pounds of current use of milk, and (2) the current pooled milk in December 1997 under total route disposition per month), 13 order with projected use of milk in the the nine orders consolidated in the producer-handlers (all currently consolidated Central order, the potential Central market. Of these cooperatives, 1 producer-handlers), 1 unregulated plant impact of this consolidation on pooled milk under 7 of the orders, 5 (located in the unregulated central producers who supply the current cooperatives associated producer milk portion of Missouri), and 4 government market areas is estimated to be: with 3 orders each, and 2 others pooled agency plants (all currently government Southern Illinois-Eastern Missouri, a 27- milk under 2 orders each. Seventeen of agency plants). Since October 1997, it is cent per cwt decrease (from $13.49 to the 25 cooperatives pooled milk under known that 1 pool distributing plant (in $13.22); Central Illinois, a 50-cent per only one order, and for 10 of these Illinois) and 1 partially regulated plant cwt decrease (from $13.56 to $13.06); organizations that was the Iowa order. (in Wyoming) have gone out of business. Greater Kansas City, a 69-cent per cwt The percentage of cooperative milk There would be 10 distributing plants decrease (from $13.91 to $13.22); pooled under the eight orders was 95, in the Denver area (7 pool plants and 3 Nebraska-Western Iowa, a 10-cent with a range of 80.7 percent cooperative producer-handlers). The Kansas City decrease (from $13.23 to $13.13); milk under the Southwest Plains order area would have 1 pool distributing Eastern South Dakota, a 32-cent to 100 percent cooperative member milk plant. The St. Louis area would have 6 decrease (from $13.33 to $13.01); Iowa, under the Central Illinois, Greater distributing plants (4 pool plants, 1 a 5-cent decrease (from $13.08 to Kansas City and Eastern South Dakota exempt plant, and one producer- $13.03); Southwest Plains, a 70-cent orders. handler). There would be 1 pool increase (from $12.94 to $13.64); distributing plant and 2 producer- Western Colorado, a 65-cent decrease Criteria for Consolidation handlers in the Oklahoma City area. Of (from $13.88 to $13.23); and Eastern Most of the criteria used in the remaining 37 distributing plants, 19 Colorado, an 11-cent decrease (from determining the optimum consolidation

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00048 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.060 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16073 of order areas apply to the Central have the effect of regulating previously- marketing area were filed by 17 marketing area. The Federal order unregulated handlers. commenters in response to the proposed markets consolidated in the Central area An additional benefit of the rule. Four of these comments advocated are strongly related to each other consolidation of these nine order areas moving the Western Colorado order area through overlapping route disposition. is that data will be able to be made from the consolidated Western order to The great majority of sales by handlers public without disclosing proprietary the consolidated Central order. These who would be regulated under the information. Four of the current Federal comments expressed concern about the consolidated Central order are order markets (Central Illinois, Greater expected reduction in the blend price to distributed within the marketing area, Kansas City, Eastern South Dakota, and Western Colorado producers under the and the consolidated markets have a Western Colorado) included in this Western order. An examination of greater relationship in terms of consolidated area have too few pool updated data on route dispositions and overlapping sales areas than with any plants to be able to publish market data bulk milk movements resulted in other markets. In addition, sales within without revealing confidential making this change which is explained the currently-unregulated areas information. In addition to these three in greater detail in the description of included in the consolidated Central markets, the number of handlers comments and alternatives under the area are overwhelmingly from handlers regulated under each of the Nebraska- section of this decision dealing with the that would be pooled under the Central Western Iowa, Iowa and Eastern Western area. order. Inclusion of these areas would Colorado orders is in the single digits. A comment filed by the American Farm Bureau Federation recommended reduce handlers’ burden of reporting Discussion of Comments and that the central area of Missouri that out-of-area sales and take in pockets of Alternatives currently-unregulated counties that was proposed to be unregulated be occur between the current order areas. Prior to issuance of the proposed rule, included in the Central order area. A As discussed above, the milk alternatives to the consolidation of the comment filed on behalf of Central procurement areas for the consolidated order areas included in the Central Dairy, the handler who is located and markets also have a significant degree of marketing area that were considered distributes milk in the unregulated overlap. included combining the Iowa, Nebraska- Missouri area opposed the addition of The Western Colorado order is Western Iowa, and Eastern South Dakota any presently unregulated territory to included because the more recent data order areas with those of the Chicago Federal order marketing areas, and collected for this final decision Regional and Upper Midwest areas in a specifically opposed the addition of six indicates that since the proposed rule consolidated Upper Midwest order. The currently-unregulated northeast the Western Colorado marketing area collection of more detailed data Missouri counties into which the has developed a closer relationship with concerning the overlap in route handler expects to expand its the Eastern Colorado market than with disposition and milk procurement distribution. any other market, even across the showed clearly that these marketing There is no intention of causing the Continental Divide. A benefit of areas are more closely related to markets regulation of this handler. As discussed combining Western Colorado with other to the south than to the north. earlier with regard to the Northeast and markets is that it is a small market Approximately 85 percent of the total Mideast marketing areas, consolidation where data cannot be released without fluid milk dispositions distributed by of the existing orders does not revealing confidential information handlers regulated under the three order necessitate expansion of the unless combined with data pertaining to areas that were suggested to be included consolidated orders into currently- another marketing area. Consolidation in the Central area in the initial unregulated areas, especially if such of the area will allow publication of Preliminary Report, and in the Upper expansion would result in the meaningful statistics without disclosing Midwest area in the Revised regulation of currently-unregulated proprietary information. In addition, Preliminary Report, are disposed of in handlers. At the same time, minimizing several comments supported the the consolidated Central market. The the extent of the unregulated counties in combination of the Western Colorado disposition by other Central marketing the middle of the consolidated area with the consolidated Central area handlers within the consolidated marketing area would help to reduce the market in view of the large negative Central area is somewhat greater than reporting burden on handlers in effect of lower producer pay prices on the proportion for the three more determining which route dispositions the small number of producers involved northern order areas. are inside, and which are outside the if the Western Colorado area were Also considered was the exclusion of marketing area. The administrative consolidated with the Southwestern 14 Nebraska counties, in addition to the burden of verifying such reporting also Idaho-Eastern Oregon and Great Basin 11 already excluded, from the Central would be eliminated. Six currently- marketing areas. marketing area to expand the unregulated northeast Missouri counties Some of the currently-unregulated unregulated area in which Gillette Dairy that were proposed to be added to the counties in western Illinois and central could distribute milk without becoming Central order area have been removed Missouri have been added to the Central regulated. There was no data indicating on the basis of comments received from marketing area. The omission from the that Gillette distributes milk in those the Jefferson City handler, who marketing area of the counties in central counties. In the early stages of the study indicated that regulation of the six Missouri that are not included in the of appropriate order consolidation, it counties may result in a change in the consolidated Central marketing area are was assumed that the southern Missouri handler’s regulatory status. No urgency based on an estimation of the marketing and northwest Arkansas portions of the on the part of regulated handlers having area of Central Dairy, located in Southwest Plains order area would sales in the unregulated area to include Jefferson City, Missouri. This handler remain with the rest of that area. This that area in the consolidated order area has not been previously regulated. As area was included with the consolidated was apparent from comments. In fact, discussed earlier, it is not the intent of Southeast order area in the proposed none of the comments received from this decision to include currently- rule, and remains there. affected handlers advocated that the unregulated area in the consolidated Eighteen comments that pertained unregulated area be included in the order areas where such inclusion would specifically to the proposed Central consolidated area.

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A comment by Gillette Dairy, a In its comments, Swiss Valley argued entirely within the consolidated Central handler located in Rapid City, South that the 2 southwest Wisconsin counties area. More than half of the sales in Jo Dakota, in the former Black Hills proposed to be included in the Daviess County are supplied by Chicago Federal order area, supported excluding consolidated Central marketing area Regional handlers (not including Swiss the 11 counties of the Nebraska were removed from the Chicago Valley), and that county will be located panhandle, currently part of the Regional area and added to the Iowa entirely within the consolidated Upper Nebraska-Western Iowa order area, from area on the basis of a formal rulemaking Midwest area. The Iowa County of the consolidated Central area. Gillette proceeding in the late 1980’s, at which Mitchell currently is located in the has some sales in this area and time it was determined that the Upper Midwest area except for the City competes there with regulated handlers, principal competition for fluid sales and of Osage, which is defined as part of the but requested that the panhandle area be milk supply in this area occurred current Iowa marketing area. All of excluded to lessen Gillette’s likelihood between Iowa handlers rather than with Mitchell County will be included in the of becoming fully regulated under the Chicago Regional handlers. It is consolidated Upper Midwest area. Central order. This area was excluded in therefore Swiss Valley’s position that After considering all comments and the proposed rule, and its exclusion was the two counties should remain with the other relevant information, it is unopposed by any interested persons rest of the Iowa area, in the consolidated determined that the territory who filed comments before the deadline Central marketing area. encompassed in the Central marketing for doing so. Although Gillette’s sales in On the basis of data gathered for this area best meets the criteria used. the panhandle area do not represent an decision, the primary source of route Southwest overwhelming majority of the total sales disposition in Grant and Crawford there, the volume of sales in this Counties, Wisconsin, and Dubuque The consolidated Southwest sparsely-populated area should not County, Iowa, is the Swiss Valley plant marketing area is comprised of the affect the competitive status of any in Dubuque, and most of the rest of the current Texas (Order 126) and New regulated handlers. Therefore, the area milk distributed in these counties is Mexico-West Texas (Order 138) will be excluded from the consolidated from handlers regulated under the marketing areas as well as 49 currently area as proposed. Chicago Regional order. The data also unregulated Texas counties. There are Several comments, from the Iowa shows that the Dubuque plant procures 290 counties in this area. This area Department of Agriculture, Wells’ Dairy, most of its milk supply from counties remains unchanged from the proposed and Anderson-Erickson Dairy, as well as that also supply milk to the Chicago rule. Swiss Valley Farms, supported the Regional and Upper Midwest orders, as Geography inclusion of the Iowa order area in the well as to other plants pooled under the consolidated Central area, stating that Iowa order. The consolidated Southwest market is the attraction of a supply of milk for One of the problems in this marketing described geographically as follows: fluid needs requires such a area has been the ability of the Swiss three counties in Colorado (currently in consolidation. Valley plant to choose the order under Order 138), all New Mexico counties Comments were received on dividing which it is regulated. As a result of (33, currently in Order 138) and all 254 the current Iowa marketing area by differences between the current pool Texas counties (162 currently in Order adding the eastern edge of the Iowa plant definitions of the two orders, 126, 43 currently in Order 138, and 49 marketing area to the proposed Swiss Valley has been able to switch currently unregulated). Two currently consolidated Upper Midwest order. regulation between the Iowa and unregulated counties are located in Such a division would result in the Chicago Regional orders as its price northeast Texas, while the remaining 47 Swiss Valley Farms distributing plant in advantage shifted, and has done so are in southwest Texas. Dubuque, Iowa, qualifying as a pool frequently during 1997 and 1998. The The Southwest market spans the plant under the consolidated Upper pool plant definitions of the south central area of the United States. Midwest order (as it now does during consolidated Upper Midwest and It is surrounded by Arizona on the west, some months under the current Chicago Central orders, which are very similar, Colorado and Oklahoma on the north, Regional order). The Swiss Valley plant will require that the Swiss Valley plant Arkansas, Louisiana and the Gulf of comprises a large majority of the Iowa be regulated under the order for the area Mexico in the northeast, east, and market sales in the Chicago Regional in which it has the greater volume of southeast, and Mexico to the south. and Upper Midwest order areas, and the route disposition. Measuring the extreme dimensions, this movement of a half-dozen counties If, under the consolidated orders, the market extends about 800 miles north to would assure its pool status in the Dubuque plant distributes a greater south from southern to northern Texas consolidated Upper Midwest order and share of its sales in the consolidated and about 875 miles east to west from its location in that order area. Upper Midwest area than in the Texas’ border with Louisiana and Comments by Lakeshore Federated consolidated Central area, the plant will Arkansas to New Mexico’s border with Dairy Cooperative argued that the be pooled under the Upper Midwest Arizona. extensive overlap of producers, Class I order. The only appropriate change to The Southwest market is contiguous sales, and geographic similarities be made to the current Iowa marketing to 3 consolidated marketing areas: between the northeast portion of the area is to eliminate the partial counties Arizona-Las Vegas to the west, Central Iowa marketing area and the adjoining from the marketing area definitions of to the north and Southeast to the east. consolidated Upper Midwest area the consolidated Central and Upper Unregulated counties in Colorado also should be considered compelling Midwest orders. form a relatively small border in the reasons for making such a change. The Illinois Counties of Jo Daviess northwest corner of the market. Texas Lakeshore’s comments were supported and Whiteside currently are split has over 350 miles of coastline on the by Prairie Farms, Foremost Farms, and between the Iowa and Chicago Regional Gulf of Mexico, while Texas and New DFA. In addition, Grande Cheese order areas. More than half of the sales Mexico share about 970 miles of Company, a Wisconsin cheesemaker, in Whiteside County are supplied by boundary with northern Mexico. filed comments supporting Lakeshore’s Iowa handlers (including Swiss Valley), In terms of physical geography, position. so Whiteside County will be located diverse topographic relief exists in the

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Southwest market area, particularly in Texas, with a population of 4.7 million; About 455 million pounds of milk New Mexico (ranging from deserts to the Houston-Galveston-Brazoria were pooled on either Order 126 or 138 high mountain ranges). Northwest New (Houston) MSA in southeastern Texas from 1,345 producers in 118 Texas Mexico is part of the Colorado Plateau, near the Gulf of Mexico, with a counties in October 1997. Three Texas an area of broad valleys and plains as population of 4.3 million; the San counties were among the top 6 in well as deep canyons and mesas. The Antonio MSA in south central Texas, volume pooled: Erath (1st), Hopkins Rocky Mountains extend into the north with a population of 1.5 million; the (4th) and Comanche (6th). Erath central area of the state. The Basin and Austin-San Marcos (Austin) MSA in County—located about 75 miles west of Range region, generally characterized by central Texas, with a population of 1 Dallas—pooled 104.5 million pounds on ranges or isolated mountains million; the El Paso MSA located in the Order 126 (and an additional 9 million interspersed with valleys, desert basins far western corner of Texas on the pounds on 3 other Federal orders). or high plains, is located in central and Texas-New Mexico-Mexico border, with Hopkins County—located about 50 southwestern New Mexico, as well as a population of 702,000; and the miles east of Dallas—pooled 34 million western Texas. The Great Plains cover McAllen-Pharr-Edinburg MSA located pounds on Order 126 and another 15 the eastern third of New Mexico and at the southern tip of Texas, with a million pounds on 4 other Federal extend through the Texas Panhandle in population of 511,000. orders. Contiguous to and lying north Texas and much of central Texas. New Mexico’s population is about 1.7 southwest of Erath County, Comanche This area is characteristically dry and million. The remaining 3 of the 26 County pooled 33 million pounds on treeless and also encompasses Texas hill Southwest market MSAs are located in Order 126 and about .5 million pounds country and the Edwards Plateau. The New Mexico. About 40 percent of the on 3 other Federal orders. Osage Plains covers the area in Texas state’s population is located in the Of the 271 million pounds of milk from the Oklahoma-Texas border into Albuquerque area, just northwest of pooled on either Order 126 or 138 from the south central part of the state and central New Mexico. 185 producers in 12 New Mexico counties, 69 percent was produced in the low and flat West Gulf Coastal Plain In the remainder of the Southwest the following three counties, all among covers the eastern two-fifths of the state. marketing area, the 3 Colorado counties Climates in this region also vary. The the top 6 in volume pooled: Chaves have a population of about 71,000. western part of the region, including (2nd), Dona Ana (3rd) and Roosevelt New Mexico, southwest Texas and the Fluid Per Capita Consumption (5th). Chaves County—located about Texas Panhandle, is semi-arid to arid 200 miles southeast of Albuquerque— Estimates of fluid per capita with wide ranges in both daily and pooled 92 million pounds on Orders consumption vary from 17.1 pounds of annual temperatures. The southern tip 126 and 138 in October 1997 and an fluid milk per month per person in of Texas and the Gulf coast are more additional 28 million pounds on 3 other Texas to 17.5 in New Mexico to 18.8 in humid and subtropical. For some of the Federal orders. Dona Ana County, Colorado. Multiplying the individual area there are few agricultural uses other located over 200 miles south of states’ consumption rate by its than dairy farming. Dairy products were Albuquerque, contiguous to El Paso the 2nd and 3rd highest revenue- population in the consolidated County, TX, and the U.S.-Mexico producing agricultural commodities in marketing area results in a fluid milk border, pooled 61 million pounds of New Mexico and Texas, respectively, in consumption rate of 364.5 million producer milk on Order 138. Contiguous 1996, accounting for nearly one-third of pounds of fluid milk per month for the to and lying northeast of Chaves County, agricultural receipts in New Mexico, but consolidated Southwest marketing area. Roosevelt County pooled 33 million less than 10 percent in Texas. In October 1997, the fully regulated pounds on Orders 126 and 138 and plants in Orders 126 and 138 had route another 6.6 million on 4 other Federal Population distribution totaling 342.5 million orders. According to July 1, 1997, population pounds. Ninety-eight percent, or 328 In October 1997, producer milk for estimates, the total population in the million pounds, was distributed within Orders 126 and 138 also originated in consolidated marketing area is 21.3 the consolidated Southwest marketing one of the Colorado counties in the million. The 26 Metropolitan Statistical area. Handlers fully regulated under Southwest marketing area, and in Areas (MSA) in the consolidated other Federal orders had about 21 counties in Arkansas and Oklahoma. Southwest market account for 81.3 million pounds of route distribution However, the combined amount of percent of the total market area into the Southwest market area. producer milk pooled from these areas population. About 55 percent of the Producer-handlers in the Southwest is less than 1 percent of the total Southwest population is located in the area distributed about 5 million pounds producer milk pooled in these Orders. 4 most populous MSAs. Seven MSAs of route distribution in the Southwest have populations greater than 500,000; marketing area in October 1997, while Distributing Plants their total population is 63.4 percent of partially-regulated plants and plants Using distributing plant lists included the Southwest population. Because of that would be exempt on the basis of in the proposed rule, with the pooling the large number of MSAs in the size distributed approximately .5 standards adjusted to 25 percent of Southwest market, only those areas with million pounds. route disposition as in-area sales, updated for known plant closures populations greater than 500,000 are Production described in detail. through December 1998, 31 distributing Almost 92 percent of the Southwest In October 1997, 1,570 producers plants located in the consolidated market’s population is located in Texas, from 144 counties in 5 states pooled 650 Southwest marketing area would be which has 19.5 million people. Twenty- million pounds of producer milk on expected to be associated with the three of the 26 Southwest market MSAs Orders 126 and 138. Over 99 percent of Southwest market, including 21 fully are in Texas. About 66 percent of Texas’ this producer milk came from counties regulated distributing plants, 2 partially population is concentrated in 6 areas, included in the consolidated Southwest regulated, 2 exempt and 6 producer- which include the Southwest area’s top marketing area. About 55 percent of the handlers. None of these plants’ 5 population centers: the Dallas-Fort combined market’s producer milk was regulatory status is expected to change Worth (Dallas) MSA in northeastern provided by producers in six counties. as a result of the consolidation process.

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Of the 21 fully regulated plants, 17 are Other Plants (Order 139) marketing area, and located in the top six MSA regions. Located within the Southwest currently unregulated counties in Since October 1997, it is known that marketing area during May 1997 were Arizona. There are 16 counties in this 3 plants (2 fully regulated and 1 17 manufacturing plants: 11 in Texas (2 consolidated marketing area. This area producer-handler) have gone out of in the Dallas MSA and 1 in the El Paso remains unchanged from the proposed rule. business. The fully regulated plants MSA) and six in New Mexico. Six of the were located in El Paso, Texas, and in 17 plants were pool plants. All of these Geography pool plants were manufacturing Albuquerque, New Mexico. The The Arizona-Las Vegas market is plants—one manufactured primarily producer-handler was located in Hobbs, described geographically as follows: All Class II products, two manufactured New Mexico. counties (15) in Arizona (6 whole and primarily powder, two manufactured 1 partial currently are part of Order 131, Of the 31 distributing plants that primarily cheese and one manufactured and 8 whole and 1 partial currently are would be located in the consolidated primarily other products. Of the 11 unregulated) and Clark County, Nevada, Southwest marketing area, 24 are in nonpool plants in the Southwest which currently is part of the Great Texas, and 7 are in New Mexico. marketing area, all were manufacturing Basin marketing area. The market Twenty of the Texas plants would be plants—one manufactured primarily extends about 400 miles north to south fully regulated. They are as follows: 6 in powder, four manufactured primarily from Arizona’s border with Utah (and the Dallas area, 3 in the Houston area, cheese, one manufactured primarily Nevada’s southernmost county) to the 2 in the San Antonio area, 1 in the other products and five manufactured U.S.-Mexico border. The market ranges Austin area, and 2 in the El Paso area, primarily Class II products. and 6 located throughout the state. One from 300 to 375 miles east to west from of the Texas distributing plants was Cooperative Associations the Arizona-New Mexico border to the associated with Order 30 (Chicago In December 1997, three cooperative Arizona/southern Nevada-California Regional) in October 1997, and is associations marketed about 95 percent border. The Arizona-Las Vegas marketing area expected to be partially regulated in the of the milk pooled under both of the is contiguous to two other consolidated Southwest market. Two producer- orders consolidated in the Southwest marketing areas, the Great Basin portion handlers are located in Texas, one in the area: Dairy Farmers of America (DFA); of the Western area to the north and the El Paso area and the other in the central and Select Milk Producers, Inc. (Select); and Elite Milk Producers, Inc. (Elite). New Mexico-West Texas portion of the part of the state. Southwest area to the east. California, Just over half of New Mexico’s 7 Criteria for Consolidation which is not part of the Federal order distributing plants are located in the Nearly all of the route disposition by system, lies to the west and Mexico is Albuquerque area. One fully regulated Order 126 and 138 handlers is south of this marketing area. handler and 3 producer-handlers are distributed within the consolidated Arizona can be divided into three located in this population center. Of the marketing area. In addition, nearly all of geographic regions—the Sonoran Desert, remaining 3 plants located in New the milk that would be pooled under the in the southwest; the Colorado Plateau, Mexico, there are 2 plants that would be consolidated order, based on October in the north; and the Mexican Highland, exempt on the basis of size (both located 1997 data, originates within the mainly in the central and southeastern in central New Mexico) and 1 producer- marketing area. Two cooperatives parts of the state. With each of these handler (located southeast of market the vast majority of milk within regions, three distinct climatic zones Albuquerque). the consolidated area. exist: The Sonoran Desert is hot in the summer but can experience frost in the Utilization Discussion of Comments and winter; the Colorado Plateau is hot and Alternatives dry in the summer and cold and windy According to October 1997 pool Prior to issuance of the proposed rule, in the winter; and the Mexican statistics, the Class I utilization alternatives to the consolidation of the Highland receives significant percentages for the Texas and New Texas and New Mexico-West Texas precipitation in both summer and Mexico-West Texas markets were 56 order areas that were considered winter. This region is cooler in both and 44 percent, respectively. Based on included the consolidation of east Texas summer and winter than the Sonoran calculated weighted average use values with the Southeast area. This alternative Desert region. for (1) the current order with current use consolidation was examined at length These topographical and climatic of milk, and (2) the current order with and found to have little overlap of either conditions apparently are conducive to projected use of milk in the fluid milk product disposition or milk production. Dairy products consolidated Southwest order, the producer milk movements. represent one of the principal potential impact of this consolidation Only one comment pertained agricultural commodities (2nd and 3rd) on producers who supply the current specifically to the consolidated in the States of Arizona and Nevada, market areas is estimated to be: Texas, Southwest marketing area. This was a respectively, representing 16.6 and 21.7 a 5-cent per cwt decrease (from $14.09 comment from DFA that discussed percent of total agricultural receipts of to $14.04), and New Mexico-West general support for the marketing areas the two States in 1996. Texas, a 10-cent per cwt increase (from proposed by USDA, with no objection to Population $13.51 to $13.61). The weighted average the Southwest marketing area, as use value for the consolidated proposed. Arizona is one the fastest-growing Southwest order market is estimated to states in the United States. According to be $13.97 per cwt. For October 1997, Arizona-Las Vegas July 1, 1997, population estimates, the combined Class I utilization for Orders The consolidated Arizona-Las Vegas total population in the consolidated 126 and 138 was 53.4 percent based on marketing area is comprised of the marketing area is 5.7 million. Using 347.0 million pounds of producer milk current Central Arizona (Order 131) Metropolitan Statistical Areas (MSAs), used in Class I out of 649.9 million total marketing area, one county in Nevada the largest population center is the producer milk pounds. which currently is in the Great Basin Phoenix-Mesa (Phoenix) area, located in

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The Las Vegas MSA is through December 1998, 8 distributing Market data indicate that there are comprised of three counties: Clark and plants would be expected to be sales into the Las Vegas area by Central Nye counties in Nevada and Mohave associated with the consolidated Arizona pool plants, and sales by both County in Arizona. Almost half of this Arizona-Las Vegas marketing area, Phoenix and Las Vegas handlers into the market’s population is in the Phoenix including 5 fully regulated distributing unregulated areas along the southern area, and over 70 percent is accounted plants (all currently pool plants), 1 part of the Nevada-Arizona border. for when Las Vegas is added. exempt plant and 2 producer-handlers. Rapid population growth in the area There are 4 distributing plants in the Fluid Per Capita Consumption between the two areas has greatly Phoenix area (all pool plants). Located increased competition between the Based on the population figure of 5.7 in the Las Vegas MSA are one pool plant handlers in Phoenix and Las Vegas. In million and an estimated per capita and a producer-handler. Another addition, both areas exchange fluid milk consumption rate of 20 producer-handler is located in the Yuma significant volumes of bulk and pounds of fluid milk per month, total area and the exempt plant is located in packaged milk with Southern California. fluid milk consumption in the Arizona- a currently-unregulated Arizona county, At the same time, the strength of the Las Vegas marketing area is estimated at and has total route disposition of less earlier relationship between the Las 114 million pounds per month. In than 150,000 pounds. All of the plants Vegas area and Utah clearly has October 1997, plants that would have that are expected to be fully regulated declined since the merger of the Lake been fully regulated distributing plants under this consolidated order are Mead and Great Basin order areas in in the Arizona-Las Vegas order had located in areas that contain over 70 1988, which was based on data route disposition within the market of percent of the market’s population. compiled up to 1986. approximately 95 million pounds, Utilization The Grand Canyon serves as a natural representing 94 percent of their route According to October 1997 pool barrier in northwestern Arizona disposition. Another 6.5 million pounds between this area and Great Basin. of milk was distributed in the statistics, the Class I utilization for the Central Arizona market was 46 percent. Although the actual consolidated order consolidated marketing area by 2 area extends to the Utah border, the handlers expected to be fully regulated Due to restricted information, this calculation excludes receipts for the Las portion of Arizona between the Grand under the consolidated Western Federal Canyon and Utah is very sparsely order and by 10 California plants that Vegas handler who currently is regulated under Order 139, but would populated, and is included in the are partially regulated under the Central consolidated marketing area primarily Arizona and Great Basin orders. be regulated under this order. Because the degree of consolidation for this for the purpose of simplifying the Milk Production market is very minor, little change in marketing area description and easing handlers’ burden of reporting out-of- In October 1997, almost 196 million the Class I utilization percentage, and thus little change in producer returns, is area sales. The Colorado River forms pounds of milk was pooled in the much of the western boundary with Central Arizona market, supplied by expected in the Arizona-Las Vegas area as a result of the consolidation. For California and Nevada. A north-south over 100 producers located in fewer October 1997, Class I utilization for the strip along the eastern edge of Arizona than 10 counties in Arizona and Central Arizona market was 46.3 constituting approximately 30 percent California. Over 95 percent of the percent based on the use of 90.8 pounds of the State’s territory is very sparsely Central Arizona milk was produced of producer milk in Class I out of 195.9 populated, containing just over 5 within the marketing area. Further, over total pounds of producer milk. The percent of the population of the 90 percent of the producer milk weighted average use value for the consolidated marketing area. This produced within the Order 131 area was Arizona-Las Vegas market is estimated lightly populated desert area can be produced in Maricopa County, Arizona, to be $13.84 per hundredweight. seen as another form of natural barrier where Phoenix, this market’s largest to the movement of bulk and packaged city, also is located. With 177 million Other Plants milk. pounds of producer milk for October For May 1997, 3 supply or Discussion of Comments and 1997, Maricopa County produces almost manufacturing plants were located Alternatives twice the amount of milk required to within the Arizona-Las Vegas marketing meet the fluid milk needs of the entire area: 2 in Arizona (both in the Phoenix Prior to issuance of the proposed rule, marketing area. Arizona producers did area) and 1 in Nevada (in the Las Vegas alternatives to the consolidation of the not supply milk to any other Federal area). One Arizona plant was a pool Central Arizona marketing area and the order; however, it is known that plant operated by the cooperative, southern Nevada portion of the Great producer milk moves from both Arizona manufacturing primarily cheese, while Basin order area included retaining the and Clark County, Nevada, to southern the other plants were nonpool plants Las Vegas area with the rest of the California. These figures do not reflect manufacturing primarily Class II current Great Basin order area in the the producer milk associated with products. consolidated Western marketing area. Anderson Dairy, the Las Vegas handler Twelve comments that pertained who has been pooled on Order 139. Cooperative Associations specifically to the proposed Arizona-Las There is only one producer located in For December 1997, the only Vegas area were filed by 10 commenters Clark County, Nevada. Anderson’s milk cooperative pooling milk under the in response to the proposed rule. supply comes from a cooperative Central Arizona order was United Anderson Dairy in Las Vegas advocated association in southern California. Dairymen of Arizona, which that Clark County, Nevada, in which Las

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Vegas is located, be left out of any route distribution in these two areas. There are 67 counties in this consolidated marketing area to better Mohave County, Arizona (currently- consolidated area. The Western enable Anderson to compete with milk unregulated), and Clark County, Colorado (Order 134) marketing area, distributed from California and from the Nevada, are two of the fastest-growing proposed to be part of the Western Salt Lake City area. Two comments from areas in the United States in terms of consolidated area, was changed to the Nevada Dairy Commission, population. These two counties adjoin become part of the Central consolidated suggesting that prices could be set each other in southern Nevada and area. within the State, and from a U.S. northwestern Arizona, and both are Geography Senator from Nevada, requested that increasing in population significantly Clark County be excluded from any faster than the growth rates for their The Western market is described Federal order marketing area. Security states. From 1990 to 1997, a period geographically as follows: 28 counties in Milk Producers Association, a during which the population of the Idaho (18 currently in Order 135 and 10 cooperative that supplies milk to United States increased by 7.6 percent, in Order 139), 3 in eastern Nevada (all Anderson, first filed a comment the population of Arizona increased by currently in Order 139), 5 in eastern supporting the proposed Arizona-Las 24.3 percent, while Mohave County’s Oregon (all currently in Order 135), all Vegas area, and then filed a later population increased by 37.8 percent. counties (29) in Utah (currently in Order comment urging that if Clark County Over the same period, Clark County, 139) and 2 in the southwest corner of cannot be deregulated and California Nevada, experienced a population Wyoming (currently in Order 139). does not become a Federal order, Clark increase of 49.2 percent, while the Measuring the extreme dimensions, this County should be reunited with the rest Nevada population increased by 39.5 market extends about 625 miles north to of the consolidated Western order area. percent. The rapidly-growing area south from Oregon and Idaho to Utah’s A commenter in the southern Nevada between Phoenix and Las Vegas boundary with Arizona. This market’s dairy industry supported the represents a growing market which can east-to-west dimension is approximately cooperative’s view. be expected to be served by both of the 550 miles from the westernmost edge in A comment from DFA suggested that major population centers. central/eastern Oregon to the the Great Basin marketing area be Ninety-five percent of the route easternmost edge of the Utah/Colorado consolidated with the proposed dispositions of handlers who would be border. Arizona-Las Vegas area rather than the regulated under this order were The consolidated Western marketing proposed Western area, arguing that the distributed within the consolidated area is contiguous to four of the price/utilization relationships of the marketing area in October 1997, and consolidated marketing areas, the Great Basin area are more similar to the approximately the same percentage of Pacific Northwest to the west and north Arizona-Las Vegas area than to the rest route disposition within the marketing of the Oregon portion of this market, of the Western area. Darigold, Inc., area was by handlers who would be Arizona-Las Vegas to the south, the urged that Las Vegas be reunited with regulated under this consolidated order. Central market on the east, and the Utah due to its proximity to the major Similarly, over 95 percent of the milk Southwest to the extreme southeast production areas in Utah. Darigold pooled under the current Central corner. Non-Federally regulated suggested that if there is a linkage Arizona order is produced within the territory borders the Western market on between the Phoenix and Las Vegas marketing area, and there is no the west-southwest (Nevada) and the markets, those areas both should be indication of movements of producer north-northeast (Idaho and Wyoming). included in the Western area. milk between Utah and Nevada, as was In terms of physical geography, the A comment filed by the American the case when the Great Basin and Lake Western marketing area has several Farm Bureau Federation recommended Mead orders were merged. regions: The Columbia Plateau in that the consolidation of the Central In addition, both areas exchange southern Idaho and northeastern Arizona and Clark County areas be significant volumes of bulk and Nevada, characterized by fertile soils; reconsidered in favor of a return to the packaged milk with Southern California, the Great Basin in southeast Idaho, consolidation of the Central Arizona a relationship that does not pertain to nearly all of Nevada and the western area with the Southwest area, suggested any of the other areas in the region. The third of Utah, described by ranges and in the Initial Preliminary Report on Las Vegas area’s earlier relationship parallel valleys; and the Colorado Order Consolidation. with southern Utah was based primarily Plateau in the eastern half of Utah, A comment filed by the Dairy on Utah as an important milk supply characterized by gorges. In general, the Institute of California supported the area for Las Vegas at the time of the Western market is quite dry, with consolidation of the Las Vegas area with merger of the Lake Mead and Great temperatures tending to be extreme and Arizona because such a combination Basin order areas in 1988. That affected by elevation. would eliminate competitive distortions relationship clearly has ceased to exist. Population between these areas and California Therefore, the assertion by commenters caused by the Las Vegas raw milk price that the Las Vegas, Nevada, area should According to July 1, 1997, population levels. The Utah Farm Bureau stated continue to be included in the same estimates, the total population in the that it does not oppose removing the marketing area with Utah or be consolidated marketing area is 3.2 Clark County, Nevada, area from the unregulated does not reflect current million. Using Metropolitan Statistical Great Basin order area and combining it marketing conditions. Areas (MSAs), the largest population with Arizona. center is the Salt Lake City-Ogden, Utah An increase in sales by Central Western area (Salt Lake City). Salt Lake City is Arizona pool plants into the Las Vegas The consolidated Western marketing located in north central Utah. The Boise area, and increased sales by both area is comprised of the current City, Idaho, area (Boise), the second Phoenix and Las Vegas handlers into the Southwestern Idaho-Eastern Oregon largest population center in this unregulated area of rapidly-increasing (Order 135) and Great Basin (Order 139) marketing area, is located about 300 population along the southern part of marketing areas, less one Nevada county miles to the northwest of Salt Lake City. the Nevada-Arizona border, are factors (Clark) in Order 139 that is added to the Provo-Orem, Utah, (Provo) the third that have greatly increased overlapping Arizona-Las Vegas marketing area. largest population center, lies 40 miles

VerDate 23-MAR-99 17:17 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00054 Fmt 4701 Sfmt 4702 E:\FR\FM\02APP2.XXX pfrm03 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16079 south of Salt Lake City. Forty percent of associated with the Great Basin order in million pounds of producer milk used the market’s population is in the Salt October 1997. in Class I out of 304.1 million total Lake City area, and over 60 percent is producer milk pounds. Distributing Plants accounted for when Boise and Provo are A substantial amount of milk was added. Using the distributing plant list omitted from the Southwestern Idaho- included in the proposed rule, with the Eastern Oregon pool for October because Fluid Per Capita Consumption pooling standards adjusted to 25 percent of unusual price relationships. The Based on the population figure of 3.2 of route disposition as in-area sales, annual Class I utilization percentage million and an estimated per capita updated for known plant closures may be considered more representative fluid milk consumption rate of 23 through December 1998, 25 distributing for this market. For the year 1997, the pounds of fluid milk per month, total plants would be expected to be annual Class I utilization for fluid milk consumption in the Western associated with the Western marketing Southwestern Idaho-Eastern Oregon was marketing area is estimated at 73.6 area, including 11 fully regulated 8.3 percent. It is estimated that the Class million pounds per month. Plants that distributing plants (all currently pool I use percentage for the consolidated would have been fully regulated plants), 2 partially regulated (currently market would be about 23 percent. distributing plants in the Western order partially regulated), 1 exempt plant had route disposition within the market based on size (currently a pool plant), 7 Other Plants of 74 million pounds in October 1997; producer-handlers, and 4 exempt plants Eighteen supply or manufacturing approximately 80 percent of this total is based on institutional status (all were plants were located within the from Order 139 pool plants. The 7 exempt as defined under current federal consolidated Western marketing area producer handlers operating during this orders). Since October 1997, it is known during May 1997: 8 in Idaho (3 in the month had a combined route that 2 distributing plants (1 fully Boise area), 9 in Utah (2 in the Salt Lake disposition of 1.6 million pounds. regulated and 1 exempt plant) in Utah City area) and 1 in Wyoming. Two of the Additionally, 1.1 million pounds of and 1 producer-handler in Arizona have 18 plants were pool plants; both route disposition came from other order gone out of business. manufacture primarily cheese. Of the 16 plants, with about .5 million from There would be 9 distributing plants nonpool plants, 12 manufacture partially regulated handlers and exempt in the Salt Lake City area (5 pool plants, primarily cheese and 5 manufacture plants. 2 producer-handlers and 2 exempt primarily soft or Class II products plants). The Boise area would have 2 Milk Production (including ice cream). Of the 8 Idaho pool distributing plants, the Provo area plants, all but one manufacture cheese, In October 1997, over 457 million would have 1 exempt plant and the while of the 9 Utah plants, 6 pounds of milk was associated with the Pocatello area would have 1 pool plant. manufacture cheese and 3 manufacture Great Basin and Southwestern Idaho- The remaining 12 distributing plants are soft products. Eastern Oregon markets, but only 304 located in Idaho (4 plants: 2 pool, 1 million pounds of this milk was pooled exempt, and 1 producer-handler), Cooperative Associations because of class price relationships. The Nevada (1 partially regulated plant), and For December 1997, four cooperatives 457 million pounds of milk were Utah (7 plants: 1 pool, 1 partial, 1 representing 77 percent of the milk produced by 952 dairy farmers located exempt, 4 producer-handlers). pooled under the two orders had in 51 counties in California, Idaho, Fully regulated distributing plants are membership in the consolidated Nevada, Oregon, Utah and Wyoming. located in MSAs containing about half Western marketing area. Western Over 95 percent of the milk associated of the consolidated market’s population, Dairymen Cooperative, Inc., a with the market was produced within including the Pocatello, Idaho, MSA, cooperative association that became part the marketing area. Four counties with 2.2 percent of this market’s of Dairy Farmers of America, Inc., had produced more than 50 percent of the population. membership in both the Southwestern milk available to be pooled. The three Idaho-Eastern Oregon and Great Basin Utilization top producing counties in Idaho, marketing areas. Magic Valley Quality Jerome, Gooding and Twin Falls According to October 1997 pool Milk Producers, Inc., also had counties, are all located in southwestern statistics, the Class I utilization membership in Orders 135 and 139; Idaho, about 130 miles southeast of percentages for the Southwestern Idaho- Darigold Farms had membership in Boise and 230 miles northwest of Salt Eastern Oregon and Great Basin markets Order 135, and Security Milk Producers’ Lake City. Jerome and Gooding counties were 16 and 41 percent, respectively. Association had membership in Order each provided approximately twice as Based on calculated weighted average 139. much milk as Twin Falls County, the use values for (1) the current order with third-largest county in terms of milk current use of milk, and (2) the current Criteria for Consolidation production in the Western market. The order with projected use of milk in the The consolidated Western market is fourth-largest production county was consolidated Western order, the composed of the current marketing areas Cache County in northeastern Utah, potential impact of this market of the Southwestern Idaho-Eastern located about 80 miles north of Salt consolidation on producers who supply Oregon and Great Basin markets, minus Lake City. the current market areas is estimated to the Clark County, Nevada, portion of the The three Idaho counties, part of the be an 11-cent per cwt increase (from Great Basin area. Sales overlap exists marketing area of the current $12.92 to $13.03) for Southwestern between Southwestern Idaho-Eastern Southwestern Idaho-Eastern Oregon Idaho-Eastern Oregon, and a 9-cent per Oregon and Great Basin, as well as a order, are the top three milk-producing cwt decrease (from $13.25 to $13.16) for significant overlap in procurement for counties for Order 135 and among the Great Basin. The weighted average use the two orders in Idaho. The two orders top seven milk-producing counties for value for the consolidated Western also share similar multiple component Order 139 in October 1997. Five order market is estimated to be $13.14 pricing plans. The Western Colorado counties in the current Southwestern per cwt. For October 1997, combined order, proposed for inclusion in the Idaho-Eastern Oregon marketing area Class I utilization for Orders 135 and Western area, was shown on the basis of supplied one-quarter of the milk 139 was 32.5 percent based on 98.8 October 1997 data to have developed a

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00055 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.068 pfrm08 PsN: 02APP2 16080 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules closer relationship with the Eastern consolidated Central area instead of the miles in the northern half of the market Colorado area than with the Great Basin Western area. (covering territory from Washington’s order, and has been included in the Five Farm Bureau organizations western boundary with the Pacific consolidated Central area instead of the (Michigan, Utah, Iowa, Ohio and Ocean to the eastern border of Idaho Western area. American), a Pennsylvania producer with Montana) to about 250 miles in the and Dairy Farmers of America filed southern half of the market (covering Discussion of Comments and eight comments opposing the approximately two-thirds of Oregon Alternatives consolidation of the Southwestern from the state’s western border with the Prior to issuance of the proposed rule, Idaho-Eastern Oregon order area with Pacific Ocean to central Oregon). alternatives to the consolidation of the the Great Basin marketing area. One The Pacific Northwest marketing area Southwestern Idaho-Eastern Oregon, DFA comment suggested combining is contiguous with the consolidated Great Basin (minus Clark County, Utah with the Arizona-Las Vegas area Western Federal order marketing area in Nevada) and Western Colorado instead of with Idaho. A primary basis eastern Oregon. The remainder of the marketing areas that were considered for opposition to the consolidation is marketing area is surrounded by included leaving the Southwestern the disparity in the two regions’ currently non-Federally regulated areas Idaho-Eastern Oregon area as a separate utilization of Class I fluid milk: The (California and northwestern Nevada to order and consolidating the Great Basin Southwestern Idaho-Eastern Oregon the south and Montana, Idaho, and one market with the Central Arizona, order has a very low percentage of Class northeastern Oregon county to the east), Western Colorado, and Eastern Colorado I use, which varies from less than 10 political boundaries (Canada to the marketing areas, leaving both the percent to over 20 percent, while the north), and the Pacific Ocean to the Southwestern Idaho-Eastern Oregon and Great Basin order’s Class I use west. Great Basin areas as separate order percentage is higher at about 35 percent. Along the Oregon and Washington areas, and combining the Western Commenters fear that the consolidation coasts lies the Coast Range. The Cascade Colorado area with the Eastern Colorado of these orders would result in lower Range is located further inland in both area and other areas to the east. These returns to producers who currently are states. Both ranges are north-south in alternative consolidations were pooled under the Great Basin order. direction, and the Cascade Range examined at length and found to be less Most of the comments suggest that the effectively divides both states into two appropriate than the marketing areas Southwestern Idaho-Eastern Oregon distinct climates: a year-round mild, delineated in the proposed rule in terms marketing area should remain under a humid climate with abundant of overlap of either fluid milk product separate order. precipitation predominates in the disposition or producer milk A major source of milk production for western part of the states, and a dry movements. both the Southwestern Idaho-Eastern climate with little precipitation but Oregon and Great Basin orders is a 5- greater temperature extremes prevails Fifteen comments that pertained county area located within the Federal east of the Cascade Range. The mild specifically to the proposed Western order 135 marketing area, supplying climate of the western portion results in marketing area were filed by 12 one-quarter of the milk pooled on the longer growing seasons. The Columbia commenters in response to the proposed Great Basin order in October 1997. The River flows south through eastern rule. Several of these comments Southwestern Idaho-Eastern Oregon Washington, turns west, and becomes objected to the separation of the Las area should be consolidated with some the western two-thirds of the border Vegas area from the Great Basin portion other order area because of the small between Oregon and Washington. The of the Western area. These comments number of handlers pooled under the portion of Idaho included in the Pacific are addressed in the discussion of order, and this close relationship with Northwest marketing area is within the comments and alternatives considered Great Basin makes that consolidation Rocky Mountains. This area has a for the consolidated Arizona-Las Vegas the only viable possibility. generally continental climate with the area. higher elevations having long and Comments filed by Dairy Farmers of Pacific Northwest severe winters. America, Southern Foods Group, and a The Pacific Northwest marketing area Much of the area is conducive to the western Colorado dairy farmer is comprised of the current Pacific production of milk and many other advocated consolidating the Western Northwest (Order 124) marketing area agricultural commodities. Although Colorado order area with the and one currently-unregulated county in dairy products ranked 2nd among consolidated Central area instead of the southwest Oregon. There are 75 receipts of agricultural commodities in Western area. DFA’s comment stated counties in this marketing area. This the State of Washington in 1996, and that the Western Colorado milkshed is area remains unchanged from the 4th in Oregon, they accounted for only more similar to the Central area than to proposed rule. 13.8 percent and 7.9 percent, the Western area. The comments filed respectively, of such receipts. Apples Geography by Southern Foods Group and the dairy (in Washington) and greenhouse/ farmer expressed concern about an The Pacific Northwest market is nursery, wheat, and cattle and calves (in expected reduction in the blend price described geographically as follows: All Oregon) ranked ahead of dairy, paid to producers supplying the counties (39) in Washington, 30 accounting for 19.8 percent and 33.8 Western Colorado area. counties in Oregon (29 currently are percent, respectively, of agricultural October 1997 data show an increased part of Order 124 and one, Curry commodity receipts. relationship between Western Colorado County, is unregulated) and six counties and Eastern Colorado, and reduced milk in northwestern Idaho. The market Population movements between Western Colorado extends about 490 miles north-to-south According to July 1, 1997, population and Great Basin. On the basis of the from Washington’s northern border with estimates, the total population in the change in the relationships between the Canadian province of British marketing area is 9 million. Seventy- Western Colorado and its two nearest Columbia to Oregon’s southern border seven percent of the marketing area neighbor order areas, the Western with California and Nevada. East-to- population is located in Metropolitan Colorado area should become part of the west, the market ranges from about 450 Statistical Areas (MSAs). The two

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Over seventy pooled in the Pacific Northwest was market is to remain separate, expected percent of the population of the State of produced outside of the marketing area, utilization changes due to the reform Washington is located west of the in Idaho and California. The largest process result only from potential Cascade Mountains, in the western third portion is from producers in two changes in plants’ regulatory status; of the State. Another 14.5% of the northern California counties who thus very little change in producer State’s population is contained in 3 pooled nearly 6 million pounds of milk returns under the Pacific Northwest MSA’s east of the Cascades. or 89.8 percent of the pooled milk order is expected as a result of The Portland-Salem (Portland) area in produced outside the Pacific Northwest consolidation. For October 1997, Class I northwestern Oregon is located on the marketing area. utilization for the Pacific Northwest Oregon-Washington border, with Distributing Plants market was 35.6 percent based on 192 Portland just south of the Columbia Using distributing plant lists included million pounds of producer milk used River. The population of this MSA is 2.1 in Class I out of 540 million total million, or 23.6% of the marketing area in the proposed rule, with the pooling standards adjusted to 25 percent of producer milk pounds. The weighted population. Ninety percent of the average use value for the Pacific route disposition as in-area sales, population of Oregon is concentrated in Northwest market is estimated to be updated for known plant closures the western one-third of the State, or in $13.33 per hundredweight. the western half of the Oregon portion through December 1998, 35 distributing of the marketing area. plants would be expected to be Other Plants associated with the Pacific Northwest Fluid Per Capita Consumption Located within the Pacific Northwest market, including 19 fully regulated marketing area in May 1997 were 27 Based on the population figure of 9 distributing plants (all currently fully supply or manufacturing plants; 12 in million and an estimated per capita regulated), 2 partially regulated plants, Oregon (5 in the Portland area), 15 in fluid milk consumption rate of 22 4 exempt plants (below 150,000 pounds Washington (7 in the Seattle area) and pounds of fluid milk per month, total in total route disposition), and 10 none in Idaho. Two of the 27 plants fluid milk consumption in the Pacific producer-handlers. It is known that 3 (both in Oregon) were Order 124 pool Northwest marketing area is estimated distributing plants (all producer- supply plants, one of which at 198 million pounds per month. For handlers) have gone out of business manufactured primarily cheese, and the October 1997, plants that would be fully since October 1997. other nonfat dry milk. Of the 10 regulated distributing plants under the There are 11 distributing plants nonpool manufacturing plants located Pacific Northwest order had route within the Portland area, including 7 in Oregon, 8 manufactured primarily disposition within the market of 170 pool plants, 2 exempt plants and 2 Class II products (including ice cream), million pounds. In addition, the 18 producer-handlers. The Seattle/Tacoma 1 manufactured butter, and the other producer-handlers operating during this MSAs have 4 pool plants, 1 partially made cheese. month had a combined route regulated plant, and 4 producer- The 15 manufacturing/supply plants disposition of 18 million pounds. handlers. In addition to these two main located in the State of Washington were Additionally, slightly over 1 million population centers, the Spokane, all nonpool plants. Three manufactured pounds of route disposition (less than Washington, MSA, located in the primarily Class II products, 3 one percent of total route disposition in eastern area of the state near the Idaho manufactured primarily butter, 2 the marketing area) came from handlers border with a population of 405,000, has manufactured primarily powder, and 7 outside the market. Because the 2 pool plants. manufactured primarily cheese. handlers associated with this market are Two smaller MSA’s in western able to fulfill the market’s Class I or Oregon contain 2 pool plants, 1 Cooperative Associations fluid needs, and because of the producer-handler, and 1 plant exempt Five cooperative associations had somewhat geographic isolation of the on the basis of size. Of the 5 distributing members in the Pacific Northwest market, maintaining the current Pacific plants that would be operating in market in December 1997. Darigold Northwest order as a separate market is Oregon outside of MSAs, 3 would be Farms is the largest, and the only appropriate. fully regulated, 1 partially regulated, cooperative that had membership affiliated with another order (Order 135) Milk Production and 1 exempt of the basis of size. All but one, in central Oregon, are located in in December 1997. Other cooperatives In October 1997, the 540 million western Oregon. in this market are Farmers Cooperative pounds of milk pooled in the Pacific One producer-handler is located in a Creamery, Tillamook County Creamery Northwest market were produced by northwest Washington MSA, and 1 pool Association, Northwest Independent 1,211 producers located in 57 counties plant, 2 producer-handlers and 1 Milk Producers Association, and in California, Idaho, Oregon, and partially regulated plant are located in Portland Independent Milk Producers Washington. Five counties produced 57 the southeast quadrant of the State of Association. These five cooperatives percent of the milk pooled. Four of Washington outside any MSA. pooled 85 percent of the total producer these counties are in Washington State. Since October 1997, three producer- milk pooled under the Pacific They are Whatcom, Skagit, and handlers are known to have gone out of Northwest order in December 1997. Snohomish counties, which are less business, two in the State of than 100 miles north of Seattle; and Washington, and one in Oregon. Criteria for Consolidation Yakima County, which is located in Distributing plants fully regulated The consolidated Pacific Northwest central Washington about 100 miles under the Pacific Northwest order are market adds one currently unregulated southeast of Seattle on the eastern side located in MSAs where 71 percent of Oregon county to the Pacific Northwest of the Cascade Range. The fifth county the market’s population is concentrated. milk order. The degree of association of

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LIST OF PLANTS AND REGULATORY STATUS

Plant name City State October 1997 Order/ Expected status 1 status 1

Northeast

ARMSTRONG, DAVID F. (SUNSET DAIRY) ...... WHITESBORO ...... NY NY±NJ ...... 1 1 ARRUDA, GEORGIANNA (ESTATE OF) ...... TIVERTON ...... RI New England ...... 4 4 BANGMA, LEONARD & DONALD ...... UXBRIDGE ...... MA New England ...... 4 4 BECHTEL DAIRIES, INC ...... ROYERSFORD ...... PA Mid Atlantic ...... 1 OOB 4/98 BOICE BROS. DAIRY (RICHARD P. BOICE) ...... KINGSTON ...... NY NY±NJ ...... 1 1 BRIGGS, ROBERT A ...... WEST MEDWAY ...... MA New England ...... 4 4 BROOKSIDE DAIRY ...... FITCHBURG ...... MA New England ...... 4 4 BYRNE DAIRY, INC ...... SYRACUSE ...... NY NY±NJ ...... 1 1 CAMPHILL VILLAGE ...... KIMBERTON ...... PA Mid Atlantic ...... 4 4 CHRISTIANSEN DAIRY CO., INC ...... NO. PROVIDENCE ...... RI New England ...... 1 1 CHROME DAIRY FARMS ...... OXFORD ...... PA Mid Atlantic ...... 1 1 CIENIEWICZ, JOSEPH ...... BERLIN ...... CT New England ...... 4 4 CLINTON MILK CO ...... NEWARK ...... NJ NY±NJ ...... 1 OOB 10/98 CLOVER FARMS DAIRY COMPANY ...... READING ...... PA NY±NJ ...... 1 1 CLOVERLAND/GREEN SPRING DAIRY ...... BALTIMORE ...... MD Mid Atlantic ...... 1 1 CLOVERLAND/GREEN SPRING DAIRY ...... BALTIMORE ...... MD Mid Atlantic ...... 1 OOB 2/98 COOPER'S HILLTOP DAIRY FARM ...... ROCHDALE ...... MA New England ...... 4 4 CORNELL UNIVERSITY ...... ITHACA ...... NY ...... 6A 6B CRESCENT RIDGE DAIRY, INC ...... SHARON ...... MA New England ...... 4 4 CROWLEY FOODS, INC ...... ALBANY ...... NY NY±NJ ...... 1 1 CROWLEY FOODS, INC ...... BINGHAMTON ...... NY NY±NJ ...... 1 1 CROWLEY FOODS, INC ...... CONCORD ...... NH New England ...... 1 1 CUMBERLAND DAIRY, INC ...... BRIDGETON ...... NJ Mid Atlantic ...... 2 2 CUMBERLAND FARMS, INC ...... CANTON ...... MA New England ...... 1 OOB 8/98 DAIRY MAID DAIRY, INC ...... FREDERICK ...... MD Mid Atlantic ...... 1 1 DUNAJSKI DAIRY, INC ...... PEABODY ...... MA New England ...... 4 4 DUTCH VALLEY FOOD CO., INC ...... SUNBURY ...... PA Mid Atlantic ...... 1 1 DUTCH WAY FARM MARKET ...... MYERSTOWN ...... PA Mid Atlantic ...... 4 4 EDWARDS, CHARLES & KURT & KEITH (MODEL GLOVERSVILLE ...... NY NY±NJ ...... 4 4 DAIRY FARM). ELMHURST DAIRY, INC ...... JAMAICA ...... NY NY±NJ ...... 1 1 EMBASSY DAIRY, INC ...... WALDORF ...... MD Mid Atlantic ...... 1 OOB 3/98 EMMONS WILLOW BROOK FARM, INC ...... PEMBERTON ...... NJ Mid Atlantic ...... 4 4 FAIRDALE FARMS, INC ...... BENNINGTON ...... VT New England ...... 2 1 FARMLAND DAIRIES, INC. &/OR FAIRDALE MILK WALLINGTON ...... NJ NY±NJ ...... 1 1 COMPANY, INC. FISH FAMILY FARM, INC ...... BOLTON ...... CT New England ...... 4 4 FLINT, PETER ...... CHELSEA ...... VT New England ...... 1 1 FREDDY HILL FARM DAIRY ...... LANSDALE ...... PA Mid Atlantic ...... 4 4 FRIENDSHIP DAIRIES, INC ...... FRIENDSHIP ...... NY NY±NJ ...... 1 2 GARELICK FARMS, INC. WAS: CUMBERLAND EAST GREENBUSH ...... NY NY±NJ ...... 1 1 FARMS, INC. GARELICK FARMS, INC. WAS: CUMBERLAND FLORENCE ...... NJ NY±NJ ...... 1 1 FARMS, INC. GARELICK FARMS, INC ...... FRANKLIN ...... MA New England ...... 1 1 GIANT FOOD, INC ...... LANDOVER ...... MD Mid Atlantic ...... 1 1 GRANT'S DAIRY, INC ...... BANGOR ...... ME New England ...... 2 2 GRATERFORD STATE ...... GRATERFORD ...... PA Mid Atlantic ...... 6A 6B GUERS DY., INC ...... POTTSVILLE ...... PA Mid Atlantic ...... 2 2 GUIDA-SEIBERT DAIRY CO ...... NEW BRITAIN ...... CT New England ...... 1 1 HALO FARM, INC ...... TRENTON ...... NJ Mid Atlantic ...... 1 1 HARRISBURG DAIRIES ...... HARRISBURG ...... PA Mid Atlantic ...... 1 1

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LIST OF PLANTS AND REGULATORY STATUSÐContinued

Plant name City State October 1997 Order/ Expected status 1 status 1

HATCH, HOWARD ...... N. HAVERHILL ...... NH New England ...... 1 1 HATCHLAND DAIRY ...... N. HAVERHILL ...... NH New England ...... 4 4 HERITAGE'S DAIRY, INC ...... THOROFARE ...... NJ Mid Atlantic ...... 1 OOB 5/98 HERMANY FARMS, INC ...... BRONX ...... NY NY±NJ ...... 1 1 HIGHLAWN FARM ...... LEE ...... MA ...... 5 3B HILL FARM OF VERMONT ...... PLAINFIELD ...... VT ...... 5 3B HILLCREST DAIRY, INC. (MICHAEL J. JANAS) .... MORAVIA ...... NY NY±NJ ...... 4 4 HINE, FREDRICK DBA: FIELD VIEW DAIRY ORANGE ...... CT New England ...... 4 4 FARM. HOGAN, FRANCIS J. & ANDREW J. & SEAN P.Ð HUDSON FALLS ...... NY NY±NJ ...... 4 OOB 5/97 HOGAN'S DAIRY. HOMESTEAD DAIRIES, INC ...... MASSENA ...... NY ...... 5 OOB 6/98 HOOVER DAIRY ...... SANBORN ...... NY ...... 5 5 HY POINT DAIRY FARMS, INC ...... WILMINGTON ...... DE Mid Atlantic ...... 1 1 H.E.A., INC ...... CRANSTON ...... RI New England ...... 1 1 H.P. HOOD, INC ...... AGAWAM ...... MA New England ...... 1 1 H.P. HOOD, INC. WAS: BOOTH BROTHERS BARRE ...... VT New England ...... 2 1 DAIRY, INC. H.P. HOOD, INC ...... BURLINGTON ...... VT New England ...... 2 OOB 10/97 H.P. HOOD, INC ...... NEWINGTON ...... CT New England ...... 2 2 H.P. HOOD, INC ...... ONEIDA ...... NY NY±NJ ...... 2 1 H.P. HOOD, INC ...... PORTLAND ...... ME New England ...... 1 1 KEMPS FOODS, INC ...... LANCASTER ...... PA Mid Atlantic ...... 1 1 KOLB'S FARM STORE ...... SPRING CITY ...... PA Mid Atlantic ...... 4 4 KREIDER DAIRY FARMS, INC ...... MANHEIM ...... PA NY±NJ ...... 2 4 KRISCO FARMS, INC ...... CAMPBELL HALL ...... NY NY±NJ ...... 4 OOB 5/98 LAPP VALLEY FARM ...... NEW HOLLAND ...... PA Mid Atlantic ...... 4 4 LEESBURG STATE PRISON FARM ...... LEESBURG ...... NJ Mid Atlantic ...... 6A 6B LEONARD, STEWART J ...... NORWALK ...... CT New England ...... 1 1 LEWES DAIRY, INC ...... LEWES ...... DE Mid Atlantic ...... 1 1 LEWIS COUNTY DAIRY CORP ...... LOWVILLE ...... NY NY±NJ ...... 1 1 LONGACRE'S MODERN DAIRY, INC ...... BARTO ...... PA NY±NJ ...... 1 1 MANINO, ROSE (DARI-DELL) ...... FRANKFORT ...... NY NY±NJ ...... 2 3B MAPLE HILL FARMS, INC ...... BLOOMFIELD ...... CT New England ...... 1 OOB 9/97 MAPLEHOFE DAIRY, INC ...... QUARRYVILLE ...... PA Mid Atlantic ...... 4 4 MARCUS DAIRY, INC ...... DANBURY ...... CT NY±NJ ...... 1 1 MCNAMARA, PATRICK ...... WEST LEBANON ...... NH New England ...... 4 4 MEADOW BROOK FARMS, INC ...... POTTSTOWN ...... PA Mid Atlantic ...... 1 1 MERCERS DAIRY, INC ...... BOONVILLE ...... NY NY±NJ ...... 2 3B BMERRYMEAD FARM ...... LANSDALE ...... PA Mid Atlantic ...... 4 4 MOHAWK DAIRY (Z & R CORP.) ...... AMSTERDAM ...... NY NY±NJ ...... 1 1 MONUMENT FARMS, INC ...... MIDDLEBURY ...... VT ...... 5 1 MOUNT WACHUSETT DAIRY, INC ...... W. BOYLSTON ...... MA New England ...... 1 OOB 12/98 MOUNTAINSIDE FARMS, INC ...... ROXBURY ...... NY NY±NJ ...... 1 1 MUNROE, A B DAIRY, INC ...... EAST PROVIDENCE ...... RI New England ...... 1 1 NEW ENGLAND DAIRIES, INC ...... HARTFORD ...... CT New England ...... 1 1 NICASTRO FARMS, INC. DBA: RIVERSIDE FRANKFORT ...... NY NY±NJ ...... 4 4 FARMS. NICHOLS, DAVID ...... CHESTERFIELD ...... MA New England ...... 4 4 NIP N TUCK FARMS ...... VINEYARD HAVEN ...... MA ...... 5 4 OAK TREE FARM DAIRY, INC ...... EAST NORTHPORT ...... NY NY±NJ ...... 1 1 OAKHURST DAIRY ...... PORTLAND ...... ME New England ...... 2 2 OREGON DAIRY FARM MKT ...... LITITZ ...... PA Mid Atlantic ...... 4 4 PARMALAT WELSH FARMS, INC. WAS: WELSH LONG VALLEY ...... NJ NY±NJ ...... 1 1 FARMS, INC. PARMALAT WEST DAIRIES, INC ...... SPRING CITY ...... PA Mid Atlantic ...... 2 OOB 5/97 PEACEFUL MEADOWS ICE CREAM, INC ...... WHITMAN ...... MA New England ...... 4 4 PEARSON, ROBERT L ...... WEST MILLBURY ...... MA New England ...... 4 4 PEDRO, JOSEPH ...... FALL RIVER ...... MA New England ...... 4 4 PENNVIEW FARMS ...... PERKASIE ...... PA Mid Atlantic ...... 4 4 PERRYDELL FARMS ...... YORK ...... PA Mid Atlantic ...... 4 4 PINE VIEW ACRES, INC ...... LANCASTER ...... PA Mid Atlantic ...... 4 4 PIONEER DAIRY, INC ...... SOUTHWICK ...... MA New England ...... 1 1 POTOMAC FARMS DAIRY, INC ...... CUMBERLAND ...... MD Mid Atlantic ...... 2 2 PULEO'S DAIRY ...... SALEM ...... MA New England ...... 1 3B QUALITY MILK, INC ...... WARE ...... MA New England ...... 1 3B QUEENSBORO FARM PRODUCTS,INC ...... CANASTOTA ...... NY NY±NJ ...... 1 2 READINGTON FARMS, INC ...... WHITEHOUSE ...... NJ NY±NJ ...... 1 1 READY FOODS, INC ...... PHILADELPHIA ...... PA Mid Atlantic ...... 2 3B RICHARDSON FARMS, INC ...... MIDDLETON ...... MA New England ...... 4 4 RICHARDSONS G. H. DAIRY ...... DRACUT ...... MA New England ...... 3A 3B

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LIST OF PLANTS AND REGULATORY STATUSÐContinued

Plant name City State October 1997 Order/ Expected status 1 status 1

RICHFOOD DAIRY ...... RICHMOND ...... VA Mid Atlantic ...... 1 1 RIDGE VIEW FARMS ...... ELIZABETHTOWN ...... PA Mid Atlantic ...... 4 4 RITCHEY'S DAIRY ...... MARTINSBURG ...... PA Mid Atlantic ...... 2 2 RONNYBROOK FARM DAIRY, INC ...... ANCRAMDALE ...... NY NY±NJ ...... 4 4 ROSENBERGER'S DAIRY, INC ...... HATFIELD ...... PA Mid Atlantic ...... 1 1 RUDOLPH STEINER EDUCATION & FARMING GHENT ...... NY NY±NJ ...... 4 4 ASSOC., INC. RUTTER BROS. DAIRY, INC ...... YORK ...... PA Mid Atlantic ...... 1 1 SALEM VALLEY FARMS, INC ...... SALEM ...... CT New England ...... 4 4 SARATOGA DAIRY, INC. (STEWART'S PROC- SARATOGA SPRINGS ... NY NY±NJ ...... 1 1 ESSING CORP.). SCHNEIDER/VALLEY FARMS, INC ...... WILLIAMSPORT ...... PA NY±NJ ...... 2 2 SEWARD DAIRY, INC ...... RUTLAND ...... VT New England ...... 2 OOB 8/98 SHAW FARM DAIRY, INC ...... DRACUT ...... MA New England ...... 4 4 STEARNS, WILLARD J. & SONS, INC ...... STORRS ...... CT New England ...... 4 4 STOP & SHOP COMPANIES, INC ...... READVILLE ...... MA New England ...... 1 1 SULOMAN'S MILK ...... GILBERTSVILLE ...... PA Mid Atlantic ...... 4 4 SUNNYDALE FARMS, INC ...... BROOKLYN NY ...... NY±NJ ...... 1 1 SYNAKOWSKI WALTER J (VALLEY SIDE FARM) REMSEN ...... NY NY±NJ ...... 4 4 TANNER BROS. DAIRY ...... WARMINSTER ...... PA Mid Atlantic ...... 4 4 THOMAS, ORIN & SONS, INC ...... RUTLAND ...... VT New England ...... 2 1 TRINITY FARM ...... ENFIELD ...... CT New England ...... 4 4 TURKEY HILL DAIRY, INC ...... CONESTOGA ...... PA Mid Atlantic ...... 1 1 TURNER'S DAIRY, INC ...... SALEM ...... NH New England ...... 1 1 TUSCAN DAIRY FARMS, INC ...... FRASER ...... NY NY±NJ ...... 2 2 TUSCAN DAIRY FARMS, INC ...... UNION ...... NJ NY±NJ ...... 1 1 TUSCAN/LEHIGH DAIRIES, LP WAS: LEHIGH LANSDALE ...... PA Mid Atlantic ...... 1 1 VALLEY DAIRIES, INC. TUSCAN/LEHIGH DAIRIES, LP WAS: LEHIGH SCHUYLKILL HAVEN .... PA NY±NJ ...... 2 2 VALLEY DAIRIES, INC. UPSTATE MILK COOPERATIVES, INC ...... BUFFALO ...... NY NY±NJ ...... 2 1 UPSTATE MILK COOPERATIVES, INC ...... JAMESTOWN ...... NY ...... 5 5 UPSTATE MILK COOPERATIVES, INC ...... ROCHESTER ...... NY NY±NJ ...... 2 2 VALLEY OF VIRGINIA COOP. DBA SHEN- MT. CRAWFORD ...... VA Mid Atlantic ...... 2 2 ANDOAH'S PRIDE. VALLEY OF VIRGINIA COOP. DBA SHEN- SPRINGFIELD ...... VA Mid Atlantic ...... 1 1 ANDOAH'S PRIDE. VAN WIE, CHARLES F. (MEADOWBROOK CLARKSVILLE ...... NY NY±NJ ...... 4 4 FARMS DAIRY). WALSH, WILLIAM ...... SIMSBURY ...... CT New England ...... 4 4 WAWA DAIRY FARMS ...... WAWA ...... PA Mid Atlantic ...... 1 1 WAY-HAR FARMS ...... BERNVILLE ...... PA NY±NJ ...... 3A 3B WENDTS DAIRY DIV NIAGARA CO ...... NIAGARA FALLS ...... NY ...... 5 5 WENGERTS DAIRY, INC ...... LEBANON ...... PA Mid Atlantic ...... 1 1 WEST LYNN CREAMERY, INC ...... LYNN ...... MA New England ...... 1 1 WHITTIER CREAMERY COMPANY, INC ...... SHREWSBURY ...... MA New England ...... 1 1 WINSOR, S. B. DAIRY, INC ...... JOHNSTON ...... RI New England ...... 1 3B WRIGHT'S DAIRY FARM, INC ...... NORTH SMITHFIELD ..... RI New England ...... 4 4

Appalachian

BROADACRE DAIRIES ...... POWELL ...... TN ...... 5 1 CAROLINA DAIRIES ...... KINSTON ...... NC Carolina ...... 1 OOB 5/98 COBURG DAIRY, INC ...... N. CHARLESTON ...... SC Carolina ...... 1 1 DAIRY FRESH, LP ...... WINSTON-SALEM ...... NC Carolina ...... 1 1 DEAN MILK CO ...... LOUISVILLE ...... KY Louis-Lex-Evans ...... 1 1 FLAV-O-RICH, INC ...... BRISTOL ...... VA Carolina ...... 2 1 FLAV-O-RICH, INC ...... FLORENCE ...... SC Carolina ...... 1 1 FLAV-O-RICH, INC ...... LONDON ...... KY Louis-Lex-Evans ...... 1 1 FLAV-O-RICH, INC ...... WILKESBORO ...... NC Carolina ...... 1 1 GOLDEN GALLON, INC ...... CHATTANOOGA ...... TN Southeast ...... 1 1 HOOSIER DAIRY, INC. WAS: HOLLAND DAIRIES, HOLLAND ...... IN Louis-Lex-Evans ...... 1 1 INC. HUNTER FARMS ...... CHARLOTTE ...... NC Carolina ...... 1 1 HUNTER FARMS ...... HIGHPOINT ...... NC Carolina ...... 1 1 IDEAL AMERICAN DAIRY ...... EVANSVILLE ...... IN Louis-Lex-Evans ...... 1 1 JACKSON DAIRY ...... DUNN ...... NC Carolina ...... 1 3B JERSEY RIDGE DAIRY, INC ...... KNOXVILLE ...... TN ...... 5 3B LAND-O-SUN DAIRIES, INC ...... KINGSPORT ...... TN Carolina ...... 1 1 LAND-O-SUN DAIRIES, INC ...... PORTSMOUTH ...... VA Carolina ...... 2 2 LAND-O-SUN DAIRIES, INC ...... SPARTANBURG ...... SC Carolina ...... 1 1

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LIST OF PLANTS AND REGULATORY STATUSÐContinued

Plant name City State October 1997 Order/ Expected status 1 status 1

MAOLA MILK & ICE CREAM CO ...... NEW BERN ...... NC Carolina ...... 1 1 MAPLEVIEW FARMS ...... HILLSBORO ...... NC Carolina ...... 1 3B MARVA MAID DAIRY ...... NEWPORT NEWS ...... VA Carolina ...... 2 2 MAYFIELD DAIRY FARMS, INC ...... ATHENS ...... TN Southeast ...... 1 1 MILKCO, INC ...... ASHEVILLE ...... NC Carolina ...... 1 1 NORTH CAROLINA ST. UNIV...... RALEIGH ...... NC Carolina ...... 6A 6B PEELER JERSEY FARMS, INC ...... GAFFNEY ...... SC Carolina ...... 1 OOB 10/98 REGIS MILK CO ...... CHARLESTON ...... SC Carolina ...... 1 1 SOUTHERN BELLE DAIRY, INC ...... SOMERSET ...... KY Southeast ...... 1 1 SUPERBRAND DY. PRODS., INC ...... GREENVILLE ...... SC Carolina ...... 1 1 SUPERBRAND DAIRY, INC ...... HIGHPOINT ...... NC Carolina ...... 1 1 U C MILK CO ...... MADISONVILLE ...... KY Louis-Lex-Evans ...... 1 1 WESTOVER DAIRIES ...... LYNCHBURG ...... VA Carolina ...... 1 1 WINCHESTER FARMS DAIRY ...... WINCHESTER ...... KY Louis-Lex-Evans ...... 1 1

Florida

BORDEN, INC. (TRI-STATE DAIRY) ...... MIAMI ...... FL Southeast Florida ...... 1 OOB 4/97 FARM STORES, INC. (REW JB DAIRY PLANT MIAMI ...... FL Southeast Florida ...... 1 OOB 10/98 ASSOCIATES dba FARM STORES). GOLDEN FLEECE DAIRY ...... LECANTO ...... FL Tampa Bay ...... 4 4 GUSTAFSON'S DAIRY, INC ...... GREEN COVE ...... FL Upper Florida ...... 1 1 M&B DAIRY PRODUCTS, INC ...... TAMPA ...... FL Tampa Bay ...... 1 3B MCARTHUR DAIRY, INC ...... MIAMI ...... FL Southeast Florida ...... 1 1 PUBLIX SUPER MKTS., INC ...... DEERFIELD BEACH ...... FL Southeast Florida ...... 1 1 PUBLIX SUPER MKTS., INC ...... LAKELAND ...... FL Tampa Bay ...... 1 1 RYAN FOODS COMPANY, WAS: LONGLIFE JACKSONVILLE ...... FL Southeast ...... 2 2 DAIRY PRODUCTS, INC. SUPERBRAND DAIRY PRODUCTS, INC ...... MIAMI ...... FL Southeast Florida ...... 1 1 SUPERBRAND DAIRY PRODUCTS, INC ...... PLANT CITY ...... FL Tampa Bay ...... 1 1 T.G. LEE FOODS, INC., WAS: LIFE STYLE/DIV ORANGE CITY ...... FL Upper Florida ...... 1 1 TG LEE FOODS. T.G. LEE FOODS, INC ...... ORLANDO ...... FL Tampa Bay ...... 1 1 VELDA FARMS, INC ...... MIAMI ...... FL Southeastern Florida ...... 1 1 VELDA FARMS, INC ...... ST. PETERSBURG ...... FL Tampa Bay ...... 1 1 VELDA FARMS, INC ...... WINTER HAVEN ...... FL Tampa Bay ...... 1 1 WIGGINS DAIRY PRODUCTS, INC ...... PLANT CITY ...... FL Tampa Bay ...... 1 1

Southeast

ALCORN STATE UNIVERSITY ...... LORMAN ...... MS Southeast ...... 6A 6B ARKANSAS DEPT. OF CORREC ...... GRADY ...... AR Southeast ...... 6A 6B AVENT'S DAIRY NC ...... OXFORD ...... MS Southeast ...... 1 1 BARBER PURE MILK CO ...... BIRMINGHAM ...... AL Southeast ...... 1 1 BARBER PURE MILK CO ...... MOBILE ...... AL Southeast ...... 1 1 BARBER PURE MILK CO ...... MONTGOMERY ...... AL Southeast ...... 1 1 BARBE'S DAIRY, INC ...... WESTWEGO ...... LA Southeast ...... 1 1 BORDEN, INC ...... BATON ROUGE ...... LA Southeast ...... 1 OOB 10/98 BORDEN MILK PRODUCTS, LLC ...... LAFAYETTE ...... LA Southeast ...... 1 1 BORDEN MILK PRODUCTS, LLC ...... MONROE ...... LA Southeast ...... 1 1 BROWNS VELVET DAIRY PRODUCTS (SOUTH- NEW ORLEANS ...... LA Southeast ...... 1 1 ERN FOODS GROUP, LP). CENTENNIAL FARMS DAIRY, INC ...... ATLANTA ...... GA Southeast ...... 1 1 COLLEGE OF THE OZARKS ...... POINT LOOKOUT ...... MO Southwest Plains ...... 1 6B COUNTRY DELITE FARMS, INC ...... NASHVILLE ...... TN Southeast ...... 1 1 DAIRY FRESH CORP ...... BAKER ...... LA Southeast ...... 1 1 DAIRY FRESH CORP ...... COWARTS ...... AL Southeast ...... 1 1 DAIRY FRESH CORP ...... HATTIESBURG ...... MS Southeast ...... 1 1 DAIRY FRESH CORP ...... PRICHARD ...... AL Southeast ...... 1 1 DASI PRODUCTS, INC ...... DECATUR ...... AL Southeast ...... 2 2 ETOWAH MAID DAIRIES, INC ...... CANTON ...... GA Southeast ...... 4 4 FLAV-O-RICH, INC ...... CANTON ...... MS Southeast ...... 1 1 FOREMOST DAIRY, INC ...... SHREVEPORT ...... LA Southeast ...... 1 1 GEORGIA STATE PRISON ...... REIDSVILLE ...... GA Southeast ...... 6A 6B GOLD STAR DAIRY ...... LITTLE ROCK ...... AR Southeast ...... 1 1 HERITAGE FARMS DAIRY ...... MURFREESBORO ...... TN Southeast ...... 1 1 HILAND DAIRY CO ...... FAYETTEVILLE ...... AR Southwest Plains ...... 1 1 HILAND DAIRY CO ...... FORT SMITH ...... AR Southwest Plains ...... 1 1 HILAND DAIRY CO ...... SPRINGFIELD ...... MO Southwest Plains ...... 1 1 HUMPHREY DAIRY ...... HOT SPRINGS ...... AR Southeast ...... 3A 3B KINNETT DAIRIES, INC ...... COLUMBUS ...... GA Southeast ...... 1 1

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LIST OF PLANTS AND REGULATORY STATUSÐContinued

Plant name City State October 1997 Order/ Expected status 1 status 1

KLEINPETER DAIRY, INC ...... BATON ROUGE ...... LA Southeast ...... 1 1 LOUISIANA STATE PENITENTIARY ...... ANGOLA ...... LA Southeast ...... OOB 12/95 LOUISIANA TECH ...... RUSTON ...... LA Southeast ...... 6A 6B LUVEL DAIRY PRODUCTS, INC ...... KOSCIUSKO ...... MS Southeast ...... 1 1 MAYFIELD DAIRY ...... BRASELTON ...... GA Southeast ...... 1 1 MEADOW GOLD DAIRIES, INC. (SOUTHERN HUNTSVILLE ...... AL Southeast ...... 1 1 FOODS GROUP, LP). MID-AMERICA DAIRYMEN, INC ...... LEBANON ...... MO Southwest Plains ...... 1 OOB 8/98 MISSISSIPPI STATE UNIVERSITY ...... MISS. STATE ...... MS Southeast ...... 6A 6B NEW ATLANTA DAIRIES, INC ...... ATLANTA ...... GA Southeast ...... 1 1 PEELER JERSEY FARMS, INC ...... ATHENS ...... GA Southeast ...... 1 1 PUBLIX SUPERMARKETS, INC ...... LAWRENCEVILLE ...... GA Southeast ...... 1 1 PURITY DAIRIES, INC ...... NASHVILLE ...... TN Southeast ...... 1 1 RYAN FOODS COMPANY ...... MURRAY ...... KY Southeast ...... 2 1 SAVANNAH MANUFACTURING COMPANYÐA SAVANNAH ...... GA Southeast ...... 2 2 HERSHEY FOODS COMPANY. SOUTHERN UNIVERSITY ...... BATON ROUGE ...... LA Southeast ...... 6A 6B SUPERBRAND DY. PRODS., INC ...... HAMMOND ...... LA Southeast ...... 1 1 SUPERBRAND DY. PRODUCTS, INC ...... MONTGOMERY ...... AL Southeast ...... 1 1 TURNER HOLDINGS, LLC ...... COVINGTON ...... TN Southeast ...... 1 2 TURNER HOLDINGS, LLC ...... FULTON ...... KY Southeast ...... 1 1 TURNER HOLDINGS, LLC WAS: COLEMAN LITTLE ROCK ...... AR Southeast ...... 1 1 DAIRY, INC. TURNER HOLDINGS, LLC WAS: FOREST HILL MEMPHIS ...... TN Southeast ...... 1 1 DAIRY.

Mideast

ARPS DAIRY, INC ...... DEFIANCE ...... OH Ohio Valley ...... 1 1 BAREMAN DAIRY, INC ...... HOLLAND ...... MI Southern Michigan ...... 1 1 BARKER'S FARM DAIRY, INC ...... PECKS MILL ...... WV Ohio Valley ...... 4 4 BROUGHTON FOODS CO ...... MARIETTA ...... OH Ohio Valley ...... 1 1 BRUNTON DAIRY ...... ALIQUIPPA ...... PA E Ohio-W Penn ...... 4 4 BURGER DAIRY CO ...... NEW PARIS ...... IN Indiana ...... 1 1 BURGER, C.F., CREAMERY, INC ...... DETROIT ...... MI Southern Michigan ...... 2 2 CALDER BROTHERS DAIRY ...... LINCOLN PARK ...... MI Southern Michigan ...... 1 1 COLTERYAHN DAIRY, INC...... PITTSBURGH ...... PA E Ohio-W Penn ...... 1 1 CON-SUN FOOD INDUSTRIES, INC ...... ELYRIA ...... OH E Ohio-W Penn ...... 1 1 COOK'S FARM DAIRY, INC ...... ORTONVILLE ...... MI Southern Michigan ...... 4 4 COUNTRY DAIRY ...... NEW ERA ...... MI Southern Michigan ...... 4 4 COUNTY FRESH, INC ...... GRAND RAPIDS ...... MI Southern Michigan ...... 1 1 CROOKED CREEK FARM DAIRY ...... ROMEO ...... MI Southern Michigan ...... 4 4 DEAN DAIRY PRODUCTS CO ...... SHARPSVILLE ...... PA E Ohio-W Penn ...... 1 1 DEAN FOODS COMPANY ...... ROCHESTER ...... IN Indiana ...... 1 1 DIXIE DAIRY CO ...... GARY ...... IN Indiana ...... 1 OOB 4/98 EASTSIDE JERSEY DAIRY, INC ...... ANDERSON ...... IN Indiana ...... 1 1 ELMVIEW DAIRY ...... COLUMBUS ...... PA E Ohio-W Penn ...... 4 OOB 1/97 EMBEST, INC ...... LIVONIA ...... MI Southern Michigan ...... 1 1 FIKE, R BRUCE & SONS DAIRY ...... UNIONTOWN ...... PA E Ohio-W Penn ...... 1 1 FISHER'S DAIRY, R.V. FISHER ...... PORTERSVILLE ...... PA E Ohio-W Penn ...... 4 4 FLEMINGS DAIRY ...... UTICA ...... OH Ohio Valley ...... 1 1 GALLIKER DAIRY CO ...... JOHNSTOWN ...... PA E Ohio-W Penn ...... 2 2 GLEN EDEN FARM-DIANNE TEETS ...... ROCHESTER ...... PA E Ohio-W Penn ...... 4 OOB 11/98 GOSHEN DAIRY COMPANY ...... NEW PHILADELPHIA ..... OH E Ohio-W Penn ...... 1 1 GREEN VALE FARM ...... COOPERSVILLE ...... MI Southern Michigan ...... 4 4 GREEN VALLEY DAIRY ...... GEORGETOWN ...... PA E Ohio-W Penn ...... 1 3B GUERNSEY FARMS DAIRY ...... NORTHVILLE ...... MI Southern Michigan ...... 1 1 HARTZLER FAMILY DAIRY ...... WOOSTER ...... OH E Ohio-W Penn ...... 1 3B HILLSIDE DAIRY CO ...... CLEVELAND HGHTS ..... OH E Ohio-W Penn ...... 1 1 HUTTER FARM DAIRY ...... MT. PLEASANT ...... PA E Ohio-W Penn...... 4 4 INVERNESS DAIRY, INC ...... CHEBOYGAN ...... MI Michigan U P ...... 1 1 JACKSON FARMS ...... NEW SALEM ...... PA E Ohio-W Penn ...... 4 4 JILBERT DAIRY, INC ...... MARQUETTE ...... MI Michigan U P ...... 1 1 JOHNSON'S DAIRY, INC ...... ASHLAND ...... KY Ohio Valley ...... 1 OOB 5/97 KERBER'S DAIRY ...... N. HUNTINGDON ...... PA E Ohio-W Penn ...... 1 3B KROGER COMPANY, THE ...... INDIANAPOLIS ...... IN Indiana ...... 1 1 LANSING DAIRY, INC (MELODY FARMS, INC.) ... LANSING ...... MI Southern Michigan ...... 1 1 LIBERTY DAIRY CO ...... EVART ...... MI Southern Michigan ...... 1 1 LONDON'S FARM DAIRY, INC ...... PORT HURON ...... MI Southern Michigan ...... 1 1 MAPLEHURST FARMS, INC ...... INDIANAPOLIS ...... IN Indiana ...... 1 1 MARBURGER FARM DAIRY, INC ...... EVANS CITY ...... PA E Ohio-W Penn ...... 1 1

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LIST OF PLANTS AND REGULATORY STATUSÐContinued

Plant name City State October 1997 Order/ Expected status 1 status 1

MCDONALD DAIRY COMPANY ...... FLINT ...... MI Southern Michigan ...... 1 1 MCMAHONS DAIRY, INC ...... ALTOONA ...... PA ...... 5 OOB MEADOW BROOK DAIRY ...... ERIE ...... PA E Ohio-W Penn ...... 1 1 MEYER H & SONS DAIRY ...... CINCINNATI ...... OH Ohio Valley ...... 1 1 MICHIGAN DAIRY ...... LIVONIA ...... MI Southern Michigan ...... 1 1 ALBERT MIHALY & SON DAIRY ...... LOWELLVILLE ...... OH E Ohio-W Penn ...... 4 4 OBERLIN FARMS DAIRY, INC ...... CLEVELAND ...... OH E Ohio-W Penn ...... 1 1 OSBORN DAIRY ...... SAULT STE MARIE ...... MI Michigan U P ...... 4 4 PLEASANT VIEW DAIRY CORP ...... HIGHLAND ...... IN Indiana ...... 1 1 PRAIRIE FARMS DAIRY, INC ...... FT. WAYNE ...... IN Indiana ...... 1 1 PRAIRIE FARMS DAIRY, INC WAS: ROELOF GALESBURG ...... MI Southern Michigan ...... 1 1 DAIRY. QUALITY CREAMERY, INC ...... COMSTOCK PARK ...... MI Southern Michigan ...... 1 OOB 7/98 QUALITY DAIRY CO B.T.U ...... LANSING ...... MI Southern Michigan ...... 1 1 REITER DAIRY CO ...... SPRINGFIELD ...... OH Ohio Valley ...... 1 1 REITER DAIRY, INC ...... AKRON ...... OH E Ohio-W Penn ...... 1 1 SANI DAIRY ...... JOHNSTOWN ...... PA E Ohio-W Penn ...... 2 OOB 1/99 SCHENKEL'S ALL-STAR DAIRY, INC ...... HUNTINGTON ...... IN Indiana ...... 1 1 SCHIEVER FARM DAIRY ...... HARMONY ...... PA E Ohio-W Penn ...... 1 3B SCHNEIDERS DAIRY, INC ...... PITTSBURGH ...... PA E Ohio-W Penn ...... 1 1 SMITH DAIRY PRODUCTS CO ...... ORRVILLE ...... OH Ohio Valley ...... 1 1 SMITH DAIRY PRODUCTS CO ...... RICHMOND ...... IN Ohio Valley ...... 1 1 STERLING MILK CO ...... WAUSEON ...... OH Ohio Valley ...... 1 1 SUPERIOR DAIRIES, INC ...... SAGINAW ...... MI Southern Michigan ...... 1 1 SUPERIOR DAIRY, INC ...... CANTON ...... OH E Ohio-W Penn ...... 1 1 TAMARACK FARMS ...... NEWARK ...... OH Ohio Valley ...... 1 1 TAYLOR MILK CO., INC ...... AMBRIDGE ...... PA E Ohio-W Penn ...... 2 OOB 11/98 THE SPRINGHOUSE ...... EIGHTY FOUR ...... PA E Ohio-W Penn ...... 4 4 TOFT DAIRY INC ...... SANDUSKY ...... OH Ohio Valley ...... 2 2 TOLEDO MILK PROCESSING, INC. (COUNTRY MAUMEE ...... OH Ohio Valley ...... 1 1 FRESH OF OHIO). TRAUTH, LOUIS DAIRY ...... NEWPORT ...... KY Ohio Valley ...... 1 1 TURNER DAIRY FARMS, INC ...... PITTSBURGH ...... PA E Ohio-W Penn ...... 1 1 UNITED DAIRY FARMERS ...... CINCINNATI ...... OH Ohio Valley ...... 1 1 UNITED DAIRY, INC ...... CHARLESTON ...... WV Ohio Valley ...... 1 1 UNITED DAIRY, INC ...... MARTINS FERRY ...... OH E Ohio-W Penn ...... 1 1 VALLEY RICH DAIRY ...... ROANOKE ...... VA Ohio Valley ...... 2 2 WHITE KNIGHT PACKAGING CORP. (PARMA- WYOMING ...... MI Southern Michigan ...... 1 1 LAT WHITE KNIGHT PKG. CORP.). YOUNG'S JERSEY DAIRY, INC ...... YELLOW SPRINGS ...... OH Ohio Valley ...... 4 4

Upper Midwest

AYSTA DAIRY, INC ...... VIRGINIA ...... MN Upper Midwest ...... 1 1 CASS-CLAY CREAMERY, INC ...... FARGO ...... ND Upper Midwest ...... 1 1 CASS-CLAY CREAMERY, INC ...... GRAND FORKS ...... ND Upper Midwest ...... 1 1 CASS-CLAY CREAMERY, INC ...... MANDAN ...... ND Upper Midwest ...... 2 2 CENTRAL MINNESOTA ...... SAUK CENTRE ...... MN Upper Midwest ...... 1 1 COUNTRY LAKE FOODS, INC. (LAND O'LAKES, BISMARCK ...... ND Upper Midwest ...... 2 2 INC.). COUNTRY LAKE FOODS, INC. (LAND O'LAKES, THIEF RIVER FALLS ..... MN Upper Midwest ...... 1 1 INC.). COUNTRY LAKE FOODS, INC. (LAND O'LAKES, WOODBURY ...... MN Upper Midwest ...... 1 1 INC.). DEAN FOODS CO ...... HARVARD ...... IL Chicago Regional ...... 1 1 DEAN FOODS CO ...... HUNTLEY ...... IL Chicago Regional ...... 1 1 FOREMOST FARMS USA ...... DEPERE ...... WI Chicago Regional ...... 1 1 FOREMOST FARMS USA ...... WAUKESHA ...... WI Chicago Regional ...... 1 1 FOREMOST FARMS USA ...... WAUSAU ...... WI Chicago Regional ...... 1 1 FRANKLIN FOODS ...... DULUTH ...... MN Upper Midwest ...... 1 1 HANSENS DAIRY, INC ...... GREEN BAY ...... WI Chicago Regional ...... 2 OOB 1/99 HASTINGS COOPERATIVE ...... HASTINGS ...... MN Upper Midwest ...... 1 1 KOHLER MIX SPECIALTIES, INC ...... WHITE BEAR LAKE ...... MN Upper Midwest ...... 2 2 KWIK TRIP DAIRY ...... LA CROSSE ...... WI Chicago Regional ...... 1 1 LAMERS DAIRY, INC ...... KIMBERLY ...... WI Chicago Regional ...... 2 1 LIFEWAY FOODS, INC ...... SKOKIE ...... IL Chicago Regional ...... 2 1 MARIGOLD FOODS, INC ...... CEDARBURG ...... WI Chicago Regional ...... 1 1 MARIGOLD FOODS, INC ...... MINNEAPOLIS ...... MN Upper Midwest ...... 1 1 MARIGOLD FOODS, INC ...... ROCHESTER ...... MN Upper Midwest ...... 1 1 MEYER BROTHERS DAIRY ...... WAYZATA ...... MN Upper Midwest ...... 1 1 MOM'S DAIRY ...... GIBBON ...... MN Upper Midwest ...... 2 3B

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LIST OF PLANTS AND REGULATORY STATUSÐContinued

Plant name City State October 1997 Order/ Expected status 1 status 1

MULLER-PINEHURST, INC ...... ROCKFORD ...... IL Chicago Regional ...... 1 1 NORTH BRANCH DAIRY, INC ...... NORTH BRANCH ...... MN Upper Midwest ...... 1 OOB 7/98 OAK GROVE DAIRY ...... NORWOOD ...... MN Upper Midwest ...... 1 1 OBERWEIS DAIRY, INC ...... AURORA ...... IL Chicago Regional ...... 1 1 POLLARD DAIRY, INC ...... NORWAY ...... MI Michigan U P ...... 1 1 SCHROEDER MILK CO., INC ...... ST PAUL ...... MN Upper Midwest ...... 1 1 STAR SPECIALTY FOODS, INC. (MORNING- MADISON ...... WI Chicago Regional ...... 1 2 STAR FOODS, INC.). SWISS VALLEY FARMS CO ...... CHICAGO ...... IL Chicago Regional ...... 1 1 TETZNER DAIRY ...... WASHBURN ...... WI Upper Midwest ...... 4 4 UNITED WORLD IMPORTS ...... CHICAGO ...... IL Chicago Regional ...... 2 3B VERIFINE DAIRY PRODUCTS CO ...... SHEBOYGAN ...... WI Chicago Regional ...... 1 1 WEBERS, INC ...... MARSHFIELD ...... WI ...... 5 3B

Central

ALBERS DAIRY ...... BARTELSO ...... IL S Ill-E Missouri ...... 2 4 ANDERSON-ERICKSON DAIRY CO ...... DES MOINES ...... IA Iowa ...... 1 1 W.H. BRAUM, INC ...... TUTTLE ...... OK Southwest Plains ...... 1 1 CENTRAL DAIRY & ICE CREAM ...... JEFFERSON CITY ...... MO ...... 5 5 CHESTER DAIRY CO ...... CHESTER ...... IL S Ill-E Missouri ...... 1 1 DAIRY GOLD FOODS CO ...... CHEYENNE ...... WY Eastern Colorado ...... 1 1 DEPT. OF CORRECTIONS ...... CANON CITY ...... CO Eastern Colorado ...... 4 6B DILLON DAIRY CO ...... DENVER ...... CO Eastern Colorado ...... 1 1 ELDON MOSS ...... IOWA CITY ...... IA Iowa ...... 4 4 FARM FRESH DAIRY, INC ...... CHANDLER ...... OK Southwest Plains ...... 1 1 GALESBURG CORR. CENTER ...... GALESBURG ...... IL Central Illinois ...... 6A 6B GILLETTE DAIRY OF BLACK HILLS ...... RAPID CITY ...... SD ...... 2 2 GRAFF DAIRY, LLC ...... GRAND JUNCTION ...... CO Western Colorado ...... 1 3B GRAVES DAIRY ...... BELLVUE ...... CO Eastern Colorado ...... 4 4 HILAND DAIRY CO ...... NORMAN ...... OK Southwest Plains ...... 1 1 HILAND DAIRY CO ...... WICHITA ...... KS Southwest Plains ...... 1 1 JACKSON ICE CREAM CO ...... HUTCHINSON ...... KS Southwest Plains ...... 1 1 KANSAS STATE UNIV ...... MANHATTAN ...... KS Greater Kansas City ...... 6A 6B KARL'S FARM DAIRY, INC ...... NORTH GLENN ...... CO Eastern Colorado ...... 4 4 LAESCH DAIRY CO ...... BLOOMINGTON ...... IL S Ill-E Missouri ...... 1 OOB 6/98 LAND O'LAKES, INC. FLUID DAIRY DIVISION ...... SIOUX FALLS ...... SD E South Dakota ...... 1 1 LAND±O±SUN DAIRIES, INC ...... O'FALLON ...... IL S Ill-E Missouri ...... 1 1 LENZ DAIRY ...... PRAIRIE HOME ...... MO Greater Kansas City ...... 4 4 LONGMONT DAIRY FARM ...... LONGMONT ...... CO Eastern Colorado ...... 4 4 LOWELL±PAUL DAIRY, INC ...... GREELEY ...... CO Eastern Colorado ...... 4 4 MARTIN DAIRY, INC ...... HUMANSVILLE ...... MO S Ill-E Missouri ...... 2 4 MEADOW GOLD DAIRIES, INC ...... DELTA ...... CO Western Colorado ...... 1 1 MEADOW GOLD DAIRIES, INC ...... ENGLEWOOD ...... CO Eastern Colorado ...... 1 1 MEADOW GOLD DAIRIES, INC ...... GREELEY ...... CO Eastern Colorado ...... 1 1 MEADOW GOLD DAIRIES, INC ...... LINCOLN ...... NE Nebraska-W Iowa ...... 1 1 MEADOW GOLD DAIRIES, INC ...... TULSA ...... OK Southwest Plains ...... 1 1 MID±STATES DAIRY COMPANY ...... HAZELWOOD ...... MO S Ill-E Missouri ...... 1 1 PATKE FARM DAIRY ...... WASHINGTON ...... MO S Ill-E Missouri ...... 1 3B PEVELY DAIRY CO ...... ST LOUIS ...... MO S Ill-E Missouri ...... 1 1 PRAIRIE FARM DAIRIES, INC ...... CARLINVILLE ...... IL S Ill-E Missouri ...... 1 1 PRAIRIE FARMS DAIRY, INC ...... GRANITE CITY ...... IL S Ill-E Missouri ...... 1 1 PRAIRIE FARMS DAIRY, INC ...... OLNEY ...... IL S Ill-E Missouri ...... 1 1 PRAIRIE FARMS DAIRY, INC ...... PEORIA ...... IL Central Illinois ...... 1 1 PRAIRIE FARMS DAIRY, INC ...... QUINCY ...... IL S Ill-E Missouri ...... 1 1 RADIANCE DAIRY ...... FAIRFIELD ...... IA Iowa ...... 4 4 ROBERTS DAIRY CO ...... DES MOINES ...... IA Iowa ...... 1 1 ROBERTS DAIRY CO ...... IOWA CITY ...... IA Iowa ...... 1 1 ROBERTS DAIRY CO ...... KANSAS CITY ...... MO Greater Kansas City ...... 1 1 ROBERTS DAIRY CO ...... OMAHA ...... NE Nebraska-W Iowa ...... 1 1 ROBINSON DAIRY, INC ...... DENVER ...... CO Eastern Colorado ...... 1 1 ROYAL CREST DAIRY, INC ...... DENVER ...... CO Eastern Colorado ...... 1 1 SAFEWAY STORES, INC ...... DENVER ...... CO Eastern Colorado ...... 1 1 SCHRANT ROADSIDE DAIRY (ROADSIDE WINSIDE ...... NE Nebraska-W Iowa ...... 4 4 DAIRY). SHOENBERG FARMS, INC. DBA FARM FRESH, ARVADA ...... CO Eastern Colorado ...... 1 1 INC. SINTON DAIRY FOODS CO., LLC ...... COLORADO SPRINGS .. CO Eastern Colorado ...... 1 1 SOUTH DAKOTA STATE UNIV ...... BROOKINGS ...... SD E South Dakota ...... 6A 6B STAR DAIRY, INC ...... MULHALL ...... OK Southwest Plains ...... (2) 4 SWAN BROS. DAIRY, INC ...... CLAREMORE ...... OK Southwest Plains ...... 4 4

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LIST OF PLANTS AND REGULATORY STATUSÐContinued

Plant name City State October 1997 Order/ Expected status 1 status 1

SWISS VALLEY FARMS CO ...... CEDAR RAPIDS ...... IA Chicago Regional ...... 1 3B SWISS VALLEY FARMS CO ...... DUBUQUE ...... IA Chicago Regional ...... 1 1 WELLS DAIRY, INC ...... LE MARS ...... IA Nebraska-W Iowa ...... 1 1 WELLS DAIRY, INC ...... OMAHA ...... NE Nebraska-W Iowa ...... 1 1 WESTERN DAIRYMEN COOP, INC ...... RIVERTON ...... WY Eastern Colorado ...... 2 OOB 11/97 WILD'S BROTHER'S DAIRY ...... EL RENO ...... OK Southwest Plains ...... 4 4

Southwest

BELL DAIRY PRODUCTS, INC ...... LUBBOCK ...... TX New Mex-W Texas ...... 1 1 CREAMLAND DAIRIES ...... ALBUQUERQUE ...... NM New Mex-W Texas ...... 1 1 DAVID'S SUPERMARKETS, INC ...... GRANDVIEW ...... TX Texas ...... 1 1 FARMERS DAIRIES ...... EL PASO ...... TX New Mex-W Texas ...... 1 1 HOBBS DRIVE IN DAIRY ...... HOBBS ...... NM New Mex-W Texas ...... 4 OOB 8/98 HYGEIA DAIRY ...... CORPUS CHRISTI ...... TX Texas ...... 1 1 H. E. BUTTS GROCERY CO ...... HOUSTON ...... TX Texas ...... 1 1 H. E. BUTTS GROCERY CO ...... SAN ANTONIO ...... TX Texas ...... 1 1 LAND O' PINES ...... LUFKIN ...... TX Texas ...... 1 OOB 3/97 LANE'S DAIRY ...... EL PASO ...... TX New Mex-W Texas ...... 4 4 LILLY DAIRY PRODUCTS, INC ...... BYRAN ...... TX Texas ...... 1 1 LOS LUNAS DAIRY ...... ALBUQUERQUE ...... NM New Mex-W Texas ...... 4 4 MICKEY'S DRIVE IN DAIRY ...... ALBUQUERQUE ...... NM New Mex-W Texas ...... 4 4 MIDWEST MIX CO ...... SULPHUR SPRINGS ..... TX Texas ...... 2 2 MILK PRODUCTS, LLC WAS: BORDEN, INC ...... ALBUQUERQUE ...... NM New Mex-W Texas ...... 1 OOB 6/98 MILK PRODUCTS, LLC WAS: BORDEN, INC ...... AUSTIN ...... TX Texas ...... 1 1 MILK PRODUCTS, LLC WAS: BORDEN, INC ...... CONROE ...... TX Texas ...... 1 1 MILK PRODUCTS, LLC WAS: BORDEN, INC ...... DALLAS ...... TX Texas ...... 1 1 MILK PRODUCTS, LLC WAS: BORDEN, INC ...... EL PASO ...... TX New Mex-W Texas ...... 1 OOB 7/87 MORNINGSTAR SPECIALTY ...... SULPHUR SPRINGS ..... TX Texas ...... 2 2 MOUNTAIN GOLD DAIRY ...... CARRIZOZO ...... NM New Mex-W Texas ...... 3A 3B NATURE'S DAIRY, INC ...... ROSWELL ...... NM New Mex-W Texas ...... 4 4 OAK FARMS DAIRIES ...... DALLAS ...... TX Texas ...... 1 1 OAK FARMS DAIRIES ...... HOUSTON ...... TX Texas ...... 1 1 OAK FARMS DAIRIES ...... SAN ANTONIO ...... TX Texas ...... 1 1 OAK FARMS DAIRIES WAS: PURE MILK COM- WACO ...... TX Texas ...... 1 1 PANY. PLAINS CREAMERY ...... AMARILLO ...... TX New Mex-W Texas ...... 1 1 PRICES CREAMERY, INC ...... EL PASO ...... TX New Mex-W Texas ...... 1 1 PROMISED LAND DAIRY ...... FLORESVILLE ...... TX Texas ...... 4 4 RANCHO LAS LAGUNAS ...... SANTA FE ...... NM New Mex-W Texas ...... 3A 3B RASBAND DAIRY ...... ALBUQUERQUE ...... NM New Mex-W Texas ...... 4 4 SCHEPPS DAIRY, INC ...... DALLAS ...... TX Texas ...... 1 1 SOUTHWEST DAIRY ...... TYLER ...... TX Texas ...... 1 1 SUPERBRAND DAIRY PRODS, INC ...... FT WORTH ...... TX Texas ...... 1 1 VANDERVOORTS DAIRY ...... FT WORTH ...... TX Texas ...... 1 1

Arizona-Las Vegas

ANDERSON DAIRY, INC ...... LAS VEGAS ...... NV Great Basin ...... 1 1 GOLDEN WEST DAIRIES ...... WELLTON ...... AZ Central Arizona ...... 4 OOB 9/98 HETTINGA, HEIN & ELLEN ...... YUMA ...... AZ Central Arizona ...... 4 4 JACKSON & COMPANY ...... PHOENIX ...... AZ Central Arizona ...... 1 1 MEADOWWAYNE DAIRY ...... COLORADO CITY ...... AZ Central Arizona ...... 5 4 SAFEWAY STORES, INC ...... TEMPE ...... AZ Central Arizona ...... 1 1 SHAMROCK FOODS COMPANY ...... PHOENIX ...... AZ Central Arizona ...... 1 1 SMITH'S FOOD & DRUG CENTERS, INC ...... TOLLESON ...... AZ Central Arizona ...... 1 1 SUNRISE DAIRY ...... TAYLOR ...... AZ ...... 5 3B

Western

BRIGHAM YOUNG UNIVERSITY ...... PROVO ...... UT Great Basin ...... 6A 6B BROWN DAIRY, INC ...... HOYTSVILLE ...... UT Great Basin ...... 4 4 CHURCH OF JESUS CHRIST OF LATTER-DAY SALT LAKE CITY ...... UT Great Basin ...... 6A 6B SAINTS. COUNTRY BOY DAIRY ...... OGDEN ...... UT Great Basin ...... 4 4 CREAM O'WEBER DAIRY, INC ...... SALT LAKE CITY ...... UT Great Basin ...... 1 1 DARIGOLD, INC ...... BOISE ...... ID SW Idaho-E Oregon ...... 1 1 FALCONHURST DAIRY, INC ...... BUHL ...... ID Great Basin ...... 1 1 FARM FRESH ...... SALEM ...... UT Great Basin ...... 1 OOB 8/98 GOSSNER FOODS, INC ...... LOGAN ...... UT Great Basin ...... 1 1 IDEAL DAIRY, INC ...... RICHFIELD ...... UT Great Basin ...... 4 4

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LIST OF PLANTS AND REGULATORY STATUSÐContinued

Plant name City State October 1997 Order/ Expected status 1 status 1

JOHNNY'S DAIRY ...... SOUTH WEBER ...... UT Great Basin ...... 4 4 JONES DAIRY & HEALTH FOODS ...... TAYLORSVILLE ...... UT Great Basin ...... 3A OOB 12/98 KDK, INC ...... DRAPER ...... UT Great Basin ...... 1 1 MEADOW GOLD DAIRIES, INC ...... BOISE ...... ID SW Idaho-E Oregon ...... 1 1 MEADOW GOLD DAIRIES, INC ...... POCATELLO ...... ID Great Basin ...... 1 1 MEADOW GOLD DAIRIES, INC ...... SALT LAKE CITY ...... UT Great Basin ...... 1 1 MODEL DAIRY ...... RENO ...... NV Great Basin ...... 2 2 REED'S DAIRY, INC ...... IDAHO FALLS ...... ID Great Basin ...... 4 4 ROSEHILL DAIRY ...... MORGAN ...... UT Great Basin ...... 4 4 SLADES DAIRY WAS: DALE BARKER ...... MOUNT PLEASANT ...... UT Great Basin ...... 4 4 SMITH FOOD & DRUG CENTERS, INC ...... LAYTON ...... UT Great Basin ...... 1 1 SMITH'S DAIRY ...... BUHL ...... ID SW Idaho-E Oregon ...... 1 3B STOKER WHOLESALE, INC ...... BURLEY ...... ID SW Idaho-E Oregon ...... 1 1 UTAH STATE PRISON ...... DRAPER ...... UT Great Basin ...... 6A 6B UTAH STATE UNIVERSITY ...... LOGAN ...... UT Great Basin ...... 3A 6B WESTERN QUALITY FOOD PRODUCTS ...... CEDAR CITY ...... UT Great Basin ...... 2 2 WINDER DAIRY ...... SALT LAKE CITY ...... UT Great Basin ...... 1 1 Pacific Northwest

ALLISON HARDY ...... ELMA ...... WA Pacific Northwest ...... 4 OOB 5/98 ALPENROSE DAIRY ...... PORTLAND ...... OR Pacific Northwest ...... 1 1 ANDERSEN DAIRY, INC ...... BATTLE GROUND ...... WA Pacific Northwest ...... 1 1 BRANDSMA, EDWARD & AILEEN ...... LYNDEN ...... WA Pacific Northwest ...... 4 4 CURLY'S DAIRY, INC ...... SALEM ...... OR Pacific Northwest ...... 1 1 DARIGOLD, INC ...... MEDFORD ...... OR Pacific Northwest ...... 1 1 DARIGOLD, INC ...... PORTLAND ...... OR Pacific Northwest ...... 1 1 DARIGOLD, INC ...... SEATTLE ...... WA Pacific Northwest ...... 1 1 DE JONG, WALTER ...... MONROE ...... WA Pacific Northwest ...... 4 OOB 8/98 EBERHARD CREAMERY, INC ...... REDMOND ...... OR Pacific Northwest ...... 1 1 ECHO SPRING DAIRY, INC ...... EUGENE ...... OR Pacific Northwest ...... 1 1 EVERGREEN DAIRY, INC. (WEIKS) ...... OLYMPIA ...... WA Pacific Northwest ...... 4 OOB 5/96 FAITH DAIRY, INC ...... TACOMA ...... WA Pacific Northwest ...... 4 4 FRED MEYER, INC ...... PORTLAND ...... OR Pacific Northwest ...... 1 1 GILBERT, GERALD, ET AL ...... OTHELLO ...... WA Pacific Northwest ...... 4 4 GRAAFSTRA DAIRY, INC ...... ARLINGTON ...... WA Pacific Northwest ...... 4 4 HARVEY, MIKE ...... VANCOUVER ...... WA Pacific Northwest ...... 4 4 INLAND NORTHWEST DAIRIES, LLC ...... SPOKANE ...... WA Pacific Northwest ...... 1 1 KROPF, ROY ...... HALSEY ...... OR Pacific Northwest ...... 4 OOB 9/98 LOCHMEAD FARMS, INC ...... JUNCTION CITY ...... OR Pacific Northwest ...... 4 4 MALLORIE'S DAIRY, INC ...... SILVERTON ...... OR Pacific Northwest ...... 4 4 PACIFIC FOODS OF OREGON, INC ...... CLACKAMAS ...... OR Pacific Northwest ...... 1 3B SAFEWAY 85, INC ...... MOSES LAKE ...... WA Pacific Northwest ...... 1 1 SAFEWAY STORES, INC ...... BELLEVUE ...... WA Pacific Northwest ...... 1 1 SAFEWAY STORES, INC ...... CLACKAMAS ...... OR Pacific Northwest ...... 1 1 SMITH BROTHERS FARMS, INC ...... KENT ...... WA Pacific Northwest ...... 4 4 SPRINGFIELD CREAMERY ...... EUGENE ...... OR ...... 3A 3B STATE OF OREGON DEPARTMENT OF COR- SALEM ...... OR Pacific Northwest ...... 2 3B RECTIONS. STATE OF WASHINGTON DEPARTMENT OF MONROE ...... WA Pacific Northwest ...... 4 2 CORRECTIONS. STRATTON, WARD ...... PULLMAN ...... WA Pacific Northwest ...... 4 4 SUNSHINE DAIRY, INC ...... PORTLAND ...... OR Pacific Northwest ...... 1 1 TILLAMOOK COUNTY CREAMERY ASSN ...... TILLAMOOK ...... OR Pacific Northwest ...... 1 2 UMPQUA DAIRY PRODUCTS CO., INC ...... ROSEBURG ...... OR Pacific Northwest ...... 1 1 VENN, WILLIAM (TIMOTHY & SUSAN BERNDT) .. NORTH BEND ...... WA Pacific Northwest ...... 4 4 VITAMILK DAIRY, INC ...... SEATTLE ...... WA Pacific Northwest ...... 1 1 WAGNER, PAUL B. & SHARON ...... PORT ORFORD ...... OR ...... 5 3B WILCOX DAIRY FARMS, LLC ...... CHENEY ...... WA Pacific Northwest ...... 1 1 WILCOX DAIRY FARMS, LLC ...... ROY ...... WA Pacific Northwest ...... 1 1 WINEGAR, GARY & MARGO ...... ELLENSBURG ...... WA Pacific Northwest ...... 1 OOB 7/97 PALMER ZOTTOLA DBA VALLEY OF THE GRANTS PASS ...... OR Pacific Northwest ...... 1 1 ROGUE DAIRY. 1 Distributing plant status (as determined from October 1997 Data): 1: Pool. 2: Partially Regulated. 3: Exempt based on size: A. As defined under current federal orders. B. As defined under proposed rule; with route disposition less than 150,000 lbs. per month. 4: Producer-Handler. 5: UNREGULATED. 6: Exempt based on institutional status:

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A. As defined under current Federal orders. B. As defined under proposed orders (Government, university, and charitable). 2 NewÐNo data for October 1997: Information not included in analysis.

2. Basic Formula Price Replacement basis for re-calculating the prices is dairy price discovery techniques in and Other Class Price Issues described later in this discussion. Madison, Wisconsin, and considered Provisions for Federal milk orders over 1,600 comments submitted by This rule closely follows the pricing regulating the handling of milk in areas interested persons relative to the basic plan described in the proposed rule by for which a multiple component pricing formula price in response to the May replacing the current basic formula system has not been adopted will 1996 invitation to comment on Federal price (BFP) with a multiple component maintain a hundredweight skim/ Order restructuring. The Committee pricing system that derives component butterfat pricing system instead of the conducted extensive study and analysis, values from surveyed prices of component pricing plan. The worked with a University Study manufactured dairy products. The hundredweight prices will be Committee (USC) commissioned to adopted pricing system determines determined by using the component conduct objective analysis of the butterfat prices for milk used in Class II, price formulas contained in this performance of numerous alternatives to Class III and Class IV products from a decision to compute corresponding the current basic formula price, and butter price; protein and other solids hundredweight prices using standard issued a preliminary report on BFP prices for milk used in Class III products component levels. replacement in April 1997. The from cheese and whey prices; and Background Committee studied the comments nonfat solids prices for milk used in responding to the preliminary report, as Class II and Class IV products from The proposed rule described in some well as those received earlier, in the nonfat dry milk product prices. detail the development in the early development of the BFP replacement The calculation of the Class I skim 1960’s of the Minnesota-Wisconsin portion of the proposed rule, which was milk and butterfat prices for each order, manufacturing grade milk price series published in January 1998. determined in the proposed rule by (M–W) as a means of identifying a price The goals and criteria to be met by a computing a six month declining determined by supply and demand for replacement for the basic formula price average of the higher of the Class III or milk used in manufactured dairy were discussed in detail in the proposed Class IV skim milk prices for the second products. Also described were the rule. Briefly, the goals are: (a) Meet the preceding month and adding a fixed developments that have made the M–W supply and demand criteria set forth in Class I differential to the result, has less representative of the value of milk the Agricultural Marketing Agreement been changed to reflect more closely the used in manufactured products. The Act of 1937 (the Act), (b) not deviate value of milk used in manufacturing. two primary trends making the M–W greatly from the general level of the The Class I skim price for a month will less representative over the last four current BFP, and (c) demonstrate the be determined by adding the fixed Class decades are the declining volume of ability to change in reaction to changes I differential for each order to the higher Grade B (manufacturing grade) milk and in supply and demand. of a Class III or IV skim value, the declining numbers of plants from The criteria established to evaluate calculated from product prices reported which payments could be reported to the various alternatives were: (a) by NASS for the most recent two-week update the base month price. Stability and predictability; (b) period for which prices are available on The problem of the declining number simplicity, uniformity, and the 23rd day of the previous month. of plants from which payments could be transparency; (c) sound economics— Similarly, the Class I butterfat price will reported to update the base month M– e.g., consistency with market be calculated by adding the fixed Class W survey of two months previous was conditions; and (d) reduced regulation. addressed in 1995 by using an updating I differential divided by 100 to a Comments butterfat value computed by using formula that uses changes from the base product prices for the same two-week month to the next month in prices paid Of the more than 1,600 comments period. for butter, nonfat dry milk, and cheese. received relative to the basic formula However, the problem of using a price in response to the May 1996 The price of Class II skim milk for a declining volume of Grade B milk to invitation to comment on Federal Order month will be computed by the sum of accurately represent the value of milk restructuring, most favored one or more a Class IV skim price per used for manufacturing was not solved of five categories of alternatives to the hundredweight, calculated from product with the implementation of the current current BFP. These five alternatives prices reported by NASS for the most BFP. The decision based on the basic were: Economic formulas, futures recent two-week period for which prices formula price hearing recognized that markets, cost of production, competitive are available on the 23rd day of the ‘‘the adoption of the base month M–W pay price, and product price and previous month, and the 70-cent Class price, or any Grade B milk series, is only component formulas. In addition, II differential. The Class II butterfat a short term solution, since the amount numerous comments were received price will be determined from the of Grade B milk production is expected relative to the use of National Cheese NASS-reported butter price, as in to continue declining.’’ Exchange prices in particular and Classes III and IV, plus .7 cents per exchange prices in general in the pound to incorporate the Class II Process determination of a basic formula price. differential. This price will be The Basic Formula Price Replacement After publication of the proposed rule announced on the 5th day of the month Committee was one of several in January 1998, nearly 600 comments and apply to butterfat in Class II during committees formed to deal with specific were received relating to some aspect of the previous month. issues involved in restructuring the the basic formula price replacement. A table showing current and re- Federal milk order system pursuant to Approximately 450 of these comments calculated prices for the period 1994 the 1996 Farm Bill. The Committee were form letters or very general in through 1997 appears at the end of this established goals and criteria for a new nature. For the most part, comments discussion of the BFP replacement. The BFP, hosted a July 1996 public forum on that related specifically to the proposal

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00067 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.072 pfrm08 PsN: 02APP2 16092 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules supported the use of product price participants can unduly influence the aspects of the reduced price level and formulas and the use of surveyed price. In addition, the price cannot be a the uncertainty of being able to identify product prices to calculate component Federal- or State-regulated price, such prices paid to producers that are not prices in determining the value of milk. as the price for Grade A milk currently influenced by regulated prices, the USC Many of the comments, however, priced under Federal milk orders. analysis found that two competitive pay suggested modifications to the proposed Identification of a competitive pay price series that passed the USC’s level rule. These comments are addressed in price in today’s dairy industry, where one criteria were questionable in their the discussion of each of the individual 70 percent of the milk is currently ability to reflect the manufactured milk topics involved in these pricing issues. covered under Federal milk marketing market. Neither performed well when The only alternative previously orders, appears to be an tested using the level two criteria and considered that retained considerable unsurmountable challenge. After therefore were dropped from further support from producer organizations accounting for state regulations, only consideration. was a competitive pay price. In about two percent of Grade A milk is addition, many individual producer unregulated, and it is unlikely that even Product Price Formulas and Component comments continued to advocate cost of this small amount of milk is not affected Pricing production or a floor for the BFP by regulated prices. Only about five Most comments filed in response to ranging from $14.50 to $18.00. Some percent of the total milk marketed in the the proposed rule supported adoption of producers also suggested letting the U.S. is Grade B or unregulated, and 42 the use of product price formulas to market determine prices, and a few percent of that milk is located in derive multiple component prices for suggested supply management to ensure Minnesota and Wisconsin. The most markets as a viable market- that farmers receive fair milk prices. remainder is scattered among 23 states oriented alternative to the current basic One processor opposed product price in amounts too small and delivered to formula price. Favorable comments formulas, suggesting that futures are the too few processing plants to generate a expressed the opinion that a price preferred tool used by markets to competitive pay price. In areas where determined from the national finished manage risk. Several producers alternative markets exist, the price for product markets more accurately supported basing producer prices on unregulated milk likely is not below the reflects the value of milk for retail prices, while a state senator from price paid for regulated milk, since manufacturing than other methods of Wisconsin suggested paying producers producers would prefer to sell their determining a milk price. The price on the quality and quantity of their milk to regulated handlers to receive the handlers can afford to pay for milk is milk. higher regulated price. Thus, determined by the price for which the As noted in the proposed rule, the unregulated handlers are compelled to finished product can be sold. Therefore, reason the USC dropped cost of meet the regulated price in order to a pricing system that translates finished production from consideration was that attract sufficient supplies of milk. The product prices to a price for raw milk cost of production represents only the circular result is that the regulated price results in a representative raw milk supply side of the market, ignoring ultimately becomes the competitive price for both producers and handlers. factors underlying demand or changes price. This process does not lead to a Component pricing, with prices in demand for milk and milk products. representative competitive pay price for determined for butterfat, protein, nonfat milk. solids, and ‘‘other solids’’ (solids other Competitive Pay Price The concept of a competitive pay than protein), can best be accomplished Although some producer groups price has appeal from the standpoint of through product price formulas, to submitted comments on the proposed sound economics. However, serious reflect the value of each component in rule that continued to support use of a concerns must be raised about the finished product prices. The product competitive pay price for determining degree of competition reflected in a price formulas adopted in this rule are the BFP replacement, a number of these price based on the declining volume of relatively easy to use and understand, comments stated that the pricing Grade B milk produced and purchased, and the value of milk may be computed proposal contained in the proposed rule or the introduction of Grade A milk that, on an on-going basis by everyone in the was one they could support. Other even if unregulated, is significantly dairy industry by following commodity commenters continued to express the influenced by minimum order prices markets. view that a competitive pay price is the and therefore suspect as a ‘‘competitive’’ Because milk used in manufactured best indicator of the national supply and price. products obtains its value from the demand for milk and that continuing to The proposed rule contained a components of milk, it is the use such a price would provide a description of a BFP Replacement components that should be priced; simple, economically defensible method Committee attempt to determine a particularly butterfat and protein, and to of calculating the true value of milk competitive pay price series that a lesser extent the other solids used in manufactured dairy products. included nine states’ pay prices for contained in the milk. Several proponents suggested Grade A milk used in manufacturing, Opposition to product price formulas including a competitive pay price for with the prices adjusted for protein was directed primarily at the need for Grade A milk, with some adjustments, content, performance premiums, over- establishing product yields and make as a way to improve the size and order premiums, and hauling subsidies. allowances in determining a milk price representativeness of the competitive The nine states accounted for or component prices. Opponents pay price. approximately 75% of the Grade A milk expressed the view that yields and make As described in the proposed rule, a used for manufacturing in the U.S. allowances would not reflect actual competitive pay price to be used as a The reduced price level that resulted processing yields and costs in BFP must represent the result of open from the study was explained in terms manufacturing plants, and therefore market negotiation between dairy of currently effective pay prices in the would not yield an accurate price for farmers (or their cooperatives) and milk states included in the survey and the milk. Opponents further explained that processors. Competition requires heavier weighting of milk used in when yields and make allowances are sufficient numbers of buyers and sellers butter/powder production than in the determined, they would be difficult to so that no one participant or group of current BFP. In addition to the negative adjust and would not react to changes

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00068 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.073 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16093 in manufacturing conditions. indication that the prices gathered by and the moisture content of barrel Opponents also argued that when an the survey process are not cheese when it is sold. Intra-company incorrect make allowance is established, representative, the very significant sales, forward pricing sales, resales, plants are guaranteed a return, or profit, increase in regulation required to audit transportation charges, clearing charges, to the detriment of dairy farmers. Some those prices and the steps that would and block cheese that will be aged comments even described the make need to be taken to make participation should not be included. allowance as an unfair charge paid by mandatory would be excessive and are At the time the proposed rule was dairy farmers to processors to have their not anticipated to be undertaken at this published the NASS survey included milk made into products. Other time. prices for cheddar cheese only. Since opponents explained that an incorrect Several alternatives to a NASS price publication of the proposed rule, NASS yield or make allowance may force survey were considered. There is a has begun surveys of Grade AA butter payment for milk at a level that would weekly cash butter contract trading on prices, dry whey prices, and nonfat dry not allow a return to the manufacturing the Chicago Mercantile Exchange milk prices. These surveys incorporate plant. (CME). This contract is currently used to input from the dairy industry on The USC tested several product price establish the butterfat differential and appropriate types of products, formulas, including a one-class multiple butterfat price in all federal milk orders. packaging, and package sizes to be component pricing formula and a set of This price series has been criticized due included for the purpose of obtaining formulas similar to the formulas to the ‘‘thinness’’ of trading. Dairy unbiased representative prices. A sale is recommended in this decision. Based on Market News (DMN) publishes regional considered to occur when a transaction the results of the USC analysis wholesale butter prices. However, since is completed, the product is shipped out measured against several criteria, the DMN price series cover cash or short- or title transfer occurs. In addition, all multiple component pricing formulas term contract transactions, they may not prices are f.o.b. the processing plant/ had the best overall performance of any be representative of the predominant storage center, with the processor of the alternatives considered. long-term contracts. Criticism of cheese reporting total volume sold and total exchange trading, including inaccurate dollars received or price per pound. Commodity Prices representation of cheese prices and Butter prices are for USDA Grade AA As recommended in the proposed rule accusations of market manipulation, butter with 80 percent butterfat, salted, and contained in this final decision, reached the point that the National fresh or ‘‘storage,’’ in 25-kilogram and commodity prices determined by Cheese Exchange (NCE) discontinued 68-pound boxes. Processors are surveys conducted by the USDA’s trading, and cash trading of cheese instructed not to include transportation National Agricultural Statistics Service moved to the CME. The CME also has charges, unsalted butter, Grade A butter, (NASS) will be used in the formulas that received some criticism for thinness of intra-company sales, forward pricing replace the BFP. A considerable number trading. sales, and resales. of comments were received concerning There is very limited exchange Nonfat dry milk prices are for USDA the use of commodity prices in trading of nonfat dry milk. Other Extra Grade or USPH Grade A non- determining prices for milk used in alternatives to a NASS survey for nonfat fortified dry milk in 25-kilogram bags, manufactured dairy products. Most of dry milk and dry whey are limited to 50-pound bags, or ‘‘totes,’’ and tanker those commenting supported use of a prices published by Dairy Market News sales. Several commenters suggested price survey, but many commenters (DMN). The prices reported by DMN are excluding nonfat dry milk processed urged that participation be mandatory generally considered to be with high heat treatment since such and reported prices audited, with the representative of the dry product product is a higher-cost specialty survey enlarged to include plants markets. However, the prices are product, making its price representing the entire nation so that the reported as a range. A simple average of unrepresentative of the nonfat dry milk prices are truly representative. the prices is used to compute a monthly market. As a result of the comments, it Proponents of the NASS surveys price and may not reflect the weighted was determined that only low and explained that the NASS data is average price at which the product medium heat process nonfat dry milk unbiased and would yield accurate moved. The DMN prices are not should be included in the price survey. representative prices of the products intended to establish prices but are The instructions inform processors to that are being marketed. Several provided for market information. exclude transportation charges, sales of comments contained specific The NASS ‘‘Dairy Products Prices’’ product more than 180 days old, instant recommendations for product categories reports wholesale cheese prices which nonfat dry milk, dry buttermilk, intra- to be surveyed to obtain the most are used to compute the current BFP. company sales, forward pricing sales, accurate representative result. The NASS survey requests prices for and resales. NASS data traditionally have been cheddar cheese. The instructions for the Dry whey prices are for USDA Extra collected via a survey with voluntary survey specify what should and should Grade edible nonhygroscopic dry whey participation. The price information in not be included in the reported prices. in 25-kilogram bags, 50-pound bags, the current cheese price survey, like The instructions state that a sale occurs ‘‘totes,’’ and tanker sales. As is the case most NASS data, is not audited. NASS when a transaction is completed, cheese with the other commodities, applies various statistical techniques is ‘‘shipped out’’, or title transfer occurs. transportation charges, intra-company and cross-checking with other sources Prices for cheddar cheese only are to be sales, forward pricing sales, and resales to provide the most reliable information reported f.o.b. the processing plant/ are to be excluded as well as sales of available. storage center. Prices should be for product more than 180 days old. At the present time there appears to ‘‘bare’’ or ‘‘naked’’ cheese with only the Several comments expressed concern be no need for the suggested changes to minimum packaging required for 40- about the ‘‘circularity’’ of survey pricing the proposed surveys. The scope of the pound blocks. Processors are asked to that could be caused by including sales surveys that have been undertaken by include all sales transactions of 40- whose price is based on previous survey NASS, and their geographic pound blocks and barrel cheese 4–30 information. According to this view, representation, appears to be days old, the total volume sold, the total NASS-reported prices would cease to comprehensive. Unless there is some dollars received, or price per pound, reflect market supply and demand, with

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00069 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.075 pfrm08 PsN: 02APP2 16094 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules market prices reflecting NASS-reported contrasts with the present BFP market saturation as more cheese plant prices instead. These comments stated computation in which the base month capacity materializes and consumer that the current pricing system relies on Minnesota-Wisconsin price is not tastes and preferences change. Cheese the market (in the form of the base reported until the actual basic formula consumption patterns are based on month M-W survey) to correct survey price is announced. many factors outside the dairy results. Product price formulas are industry’s control. Health concerns Under any method of discovering transparent, since the information to relating to changing demographics, prices, whether those paid to producers compute the price is available, and the changes in pizza consumption and or those paid for manufactured dairy effect of a change in commodity prices income growth, as well as retail and products, prices currently known will or one of the other factors may be wholesale inventory decisions, etc., will be used as one of the determinants of observed and quantified. impact consumption and prices. A prices for the following period. Under This final rule replaces the current recent report by the Food and the current pricing system, it is BFP with a multiple component pricing Agricultural Policy Research Institute inconceivable that handlers paying (MCP) system which will determine noted that ‘‘anything that results in Grade B producers for their milk used butterfat, protein, and other solids demand weakness for cheese will likely in manufactured products do not prices for milk used in Class III products result in a markedly different outlook consider the most recently announced and butterfat and nonfat solids prices for the entire dairy sector.’’ The adopted prices as a starting point for determining for milk used in Class IV products. pricing system will allow other what prices to pay their producers. Numerous comments were received, manufactured products (i.e. Class IV) to When butter and cheese prices are primarily before issuance of the move Class I prices, helping to reduce determined at an exchange, both buyers proposed rule, concerning whether the the volatility in milk prices. revised orders should keep Class III–A and sellers use the exchange prices in Over the last six years cheese prices, (i.e. a four class market) or whether all arriving at the prices at which products and to a lesser extent butter prices, have hard manufactured products should be will move. Ultimately, prices move in shown considerable fluctuation while priced in Class III. The opposition to response to supply and demand the nonfat dry milk price remained Class III–A centered around two issues: conditions in the marketplace. relatively stable. Price changes for these (1) The integrity of the classified pricing finished products are indicative of Basic Formula Price Replacement system, and (2) the perception that a varying supply/demand situations over Application of the BFP and USC butter/nonfat dry milk class would time. The stable nonfat dry milk prices Committees’ criteria for BFP reduce producer pay prices. The and the butter prices prior to the fall of replacement to the various BFP supply/demand for butter and nonfat 1995 were a reflection of large stocks alternatives and consideration of dry milk is sufficiently different from being carried in storage and flat comments received in response to the the supply/demand for cheese to justify demand. Prices for nonfat dry milk and proposed rule resulted in the separate classification and pricing. In butter became more volatile once determination that the component addition, the decision to use the higher government inventories were depleted pricing product price formulas of the Class III or Class IV price for and were no longer a factor in contained in this final rule best meet the determining the Class I price, and base stabilizing prices. Butter prices stated goals and criteria for the the Class II price on the Class IV price, increased during May and June of 1997 replacement of the BFP. should more accurately reflect the value A BFP based on commodity prices is of these different categories of use. in response to demand for cream, while subject to the same problems of stability Changes in the cheese market have a both cheese and nonfat dry milk prices as the underlying commodity prices. For major impact on the dairy industry. The remained relatively flat. These the most part product price formulas do cheese industry has evolved from differences in price movements indicate not reduce the volatility in producer cheese production being a means of separate supply and demand balances milk prices. surplus milk storage and removal to a for different manufactured dairy Product price formulas are relatively competitive consumer demand-driven products. simple to compute and understand, and industry. More milk is used in cheese Research cited in the proposed rule may be applied uniformly, or on a production nationally than is used in supports the conclusion that the regional basis, accommodating Class I. The nonfat dry milk industry is different supply and demand differences in yields or make now one which balances surplus milk characteristics for the cheese and butter/ allowances. Product prices established storage and removals. This category is nonfat dry milk market segments in a relatively free and open interaction also evolving, with increasing warrant separate classification and between supply and demand directly commercial uses for nonfat dry milk, prices. This pricing plan will allow the translate the value of the finished and dry milk products formulated for market-clearing price level of each of products to the value of milk and its specific needs. Increasing quantities of these manufactured products to be components. Therefore, they have a nonfat dry milk are being produced for achieved independent of the other sound economic underpinning. use in other dairy products and the food products. As a result, dairy farmers will Product price formulas can require and pharmaceutical industries. be paid a price which is more increased data collection, particularly if The separation of manufacturing milk representative of the level at which the industry insists that data used in the into two classes will assure that shifts market values their milk in its different formulas be audited. in demand for any one manufactured uses. The predictability of prices computed product will not lower the prices for The importance of using minimum from product price formulas should be milk used in all other classifications, prices that are market-clearing for milk reasonably good, or at least no worse including Class I prices. Recent milk used to make cheese and butter/nonfat than predictability of the underlying price increases have been attributed to dry milk cannot be overstated. The commodity prices. Short run increased cheese values. Many people prices for milk used in these products predictability may improve since all expect that per capita cheese must reflect supply and demand, and information needed to compute prices is consumption will continue to grow. must not exceed a level that would reported on an ongoing basis. This However, some warn of impending require handlers to pay more for milk

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00070 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.076 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16095 than needed to clear the market and Class II, and other classes) but no commenters expressed the view that the make a profit. butterfat differential. The separate Class proposed product price formulas did The current BFP serves two functions: I butterfat price should present no not meet the requirements of the Act, (1) A fixed differential is added to the administrative or verification problems and that an updated competitive pay current BFP to establish the Class I and since Class I butterfat testing and price resembling the current BFP would Class II prices for the second succeeding reporting currently exists. be the appropriate replacement for the month; and (2) the current BFP serves The prices for butterfat, protein, and current BFP. For a price to be as the Class III price. In some Federal other solids used in Class III will be competitively established there must be milk orders, a seasonal adjuster is added computed as follows: a large number of willing buyers and to the BFP to determine the Class III Butterfat price = ((NASS AA Butter sellers. The current base month price is price. The BFP replacement will survey price—0.114)/0.82) established from a survey of pay prices function in a similar fashion, using Protein price = ((NASS cheese survey for Grade B or manufacturing grade milk component prices. Class IV (butter and price—0.1702) × 1.405) + ((((NASS in Minnesota and Wisconsin. Whether dry milk products) will be priced on a cheese survey price—0.1702) × prices paid for Grade B milk are butterfat and nonfat solids basis. Class 1.582)—butterfat price) × 1.28) representative of the value of Grade A III (hard cheese) will be priced on a Other solids price = ((NASS dry whey milk is debatable. In addition, the butterfat, protein, and other solids basis. survey price—.137)/0.968). volume of Grade B milk involved The price of butterfat will be the same For milk used in Class IV products the represents a declining production base in Class III and Class IV. Class II will use butterfat price is the same as the Class from which to gather pay prices, and the the same butterfat price as Class III and III butterfat price, while the nonfat number of plants buying manufacturing Class IV with an adjustment to reflect solids price will be computed as grade milk is continuing to decline, the addition of the Class II differential. follows: with many plants refusing to buy Payments to producers under MCP will manufacturing grade milk even when Nonfat solids price = ((NASS nonfat dry be based on butterfat, protein, and other they need milk and Grade A milk is milk survey price—0.137)/1.02). solids contained in the producers’ milk, more expensive. In other situations the in addition to the producer price This system of pricing best fits the manufacturing grade milk is procured differential. Most Federal milk orders three established goals and criteria, because the seller of the milk is a with MCP will also contain an discussed previously, for a replacement member of the cooperative purchasing adjustment to producer pay prices for to the BFP. the milk and the cooperative will not the somatic cell counts of producers’ The first goal, that a replacement for deny market access to its member. Such milk. the basic formula price meet the supply/ a situation clearly is not competitive. The producer price differential demand criteria set forth in the Act, may The Act stipulates that the price of reflects the collective value of be the most difficult to evaluate feeds and the availability of feeds be participation in the marketwide pool. definitively since the Act specifically taken into account in the determination Primarily, it represents the producer’s mentions minimum prices to producers. of milk prices. This requirement pro rata share of the additional value of The BFP, as part of a classified pricing currently is fulfilled by the BFP. If the Class I and Class II use in the market. system, does contribute to minimum price of feed increases the quantity of The butterfat, protein, and other solids prices to producers. However, the basic milk produced would be reduced due to prices are component prices based on formula price does not need to be set at lower profit margins. As the milk the value of the use of milk in a level to ‘‘assure an adequate supply of supply declines, plants buying manufacturing. wholesome milk’’ since the BFP makes manufacturing milk would pay a higher The Class I price will consist of a up only a portion of the minimum price price to maintain an adequate supply of Class I butterfat price and a Class I skim paid to farmers. The minimum price to milk to meet their needs. As the milk price. As modified from the farmers is a weighted average of the resulting farm profit margins increase, proposed rule, the Class I butterfat price value of all of the milk in the market so should the supply of milk. Likewise, will be determined by adding a fixed place, of which the BFP is a part. The the reverse would occur if the price of Class I differential divided by 100 to an BFP replacement meets the supply and feed declines. The price of feed is not advanced butterfat price computed demand criteria for milk used in butter/ directly included in the determination using product prices for the most recent nonfat dry milk and cheese even though of the price for milk, but rather causes two-week period for which prices are the component prices are established a situation in which the price of milk available on the 23rd day of the month from finished product commodity may increase or decrease. A change in and will apply to the following month. prices. The commodity prices are based feed prices may not necessarily result in The Class I skim milk price will be on a competitive marketplace and a change in milk prices. For instance, if determined by adding the fixed Class I reflect the supply and demand for those the price of feed increases but the differential for each order to the higher products (Class III and Class IV) that demand for cheese declines, the milk of an advanced Class III or IV skim milk utilize approximately 50% of the Grade price may not increase since milk plants price, calculated by using product A milk supply. would need less milk and therefore prices for the same two-week period. The supply and demand for Grade A would not bid the price up in response The calculation of Class I prices will be milk is not limited to one category of to lower milk supplies. the same for both MCP and non-MCP products. The same milk may be used The pricing system contained in this markets. for fluid or soft manufactured products decision will function in the same Announcement of Class I butterfat as well as the Class III and Class IV manner as the current pricing system by and skim milk prices in advance products used to determine the BFP. As accounting for changes in feed costs and eliminates current problems caused by a result, the minimum prices feed supplies indirectly. The product calculating the butterfat differential after established for Class III and Class IV price formulas adopted in this rule the month for which it is effective. reflect supply and demand for the milk should reflect accurately the market Handlers will have true advance Class I used in all products. values of the products made from pricing. There will be three different In several comments received in producer milk used in manufacturing. butterfat prices each month (Class I, response to the proposed rule, As feed costs increase with a resulting

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00071 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.077 pfrm08 PsN: 02APP2 16096 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules decline in production, commodity which has exhibited changes over time alternative, various sources were used to prices would increase as a result of in response to existing price levels, determine appropriate make allowances manufacturers attempting to secure rather than marketing conditions that for the basic formula price replacement. enough milk to meet their needs. Such would have occurred under the BFP Research by Stephenson and Novakovic increases in commodity prices would replacement. Additionally, the current of Cornell University indicates that mean higher prices for milk. The BFP may have a greater tendency to results obtained by using an economic opposite would be true if feed costs reflect supply and demand conditions engineering approach can be were declining. Additionally, since in Minnesota and Wisconsin rather than comparable to a survey of plants. Federal order prices are minimum national supply/demand conditions. Resources may need to be devoted to prices, handlers may increase their pay The formulas in this decision use developing an economic engineering prices in response to changing supply/ national commodity price series, model, a survey, or a combination of the demand conditions even when Federal thereby reflecting the national supply two. order prices do not increase. and demand for dairy products and the The make allowances contained in the The second goal for a BFP national demand for milk. proposed rule were developed primarily replacement is that it should not deviate The basic formula price replacement from make allowance studies conducted greatly from the price level of the also meets the third primary goal. The at and published by Cornell University current BFP. In effect, prices established formulas have the ability to respond to and an analysis of manufacturing plant by the current BFP formula in the past supply/demand changes. The Class III size in relationship to the data were used as a benchmark to compare and Class IV prices should respond contained in the Cornell studies. how well the product price formulas appropriately since the formulas use Audited cost of production data adopted in this decision tracked the NASS-surveyed commodity prices that published by the California Department supply and demand conditions reflect national supply and demand for of Food and Agriculture was also used exhibited by the BFP. Several these commodities. in determining a reasonable level of comparisons of the basic formula price Overall, the BFP replacement make allowances. replacement were made to the current formulas (for Class III and Class IV) The proposed rule make allowances BFP to determine whether the price meet the established criteria necessary used in computing the component computation formulas result in a price for a BFP replacement. The formulas are prices for Class III and Class IV resulted level for milk used in manufactured relatively simple to use and can be in per hundredweight prices which did products that is reasonably close to the applied uniformly. The formulas are not deviate greatly on average from the current BFP. It must be recognized that transparent and the Class III and Class current BFP over the period analyzed, after the initial implementation of the IV formulas meet the sound economics one of the criteria for a basic formula revised prices, supply and demand criterion. price replacement. During the factors will interact to adjust the actual In the near term, the use of NASS September 1991 through May 1997 price level to reflect the market for milk survey prices may reduce the ability to period on which the analysis in the used in manufactured dairy products. predict Federal order class prices since proposed rule was based, the proposed Protein, butterfat, and other solids there is a limited history of using NASS Class III price level would have values were combined to compute a survey prices. Predictability should averaged $0.26 per hundredweight Class III hundredweight price using improve over time as the relationship above the current BFP, with Class IV standard factors of 3.1 for protein and between the survey prices and easily- prices averaging $0.22 per 5.9 for other solids contained in skim tracked exchange prices becomes hundredweight below. milk, and 3.5 for butterfat. The resulting apparent to industry observers. Nearly all comments received relating price averaged $0.47 or 3.7 percent The formulas used in the basic to make allowances asserted that the below the current BFP for the 60-month formula price replacement likely will proposed rule allowances were period of January 1994 through result in prices that are less stable than understated. Both handler and producer December 1998. The Class IV the current BFP. Unlike the current BFP, interests argued that failure to cover hundredweight price, computed from in which commodity updates are used processors’ costs of converting milk to the butterfat price times 3.5 and the to adjust the producer pay price survey, finished products results in a nonfat solids price using a standard changes in product prices will be the disincentive to produce finished dairy factor of 9 for nonfat solids contained in sole determinants of changes in products. They expressed concern that skim milk, averaged $0.50 or 3.9 percent component prices. Past observation of the disincentive would discourage below the current BFP during the same competitive pay prices and commodity investment in the manufacturing sector, period. The replacement Class III and prices indicates that generally leading to reduced manufacturing Class IV prices were both highly competitive pay prices do not move as capacity and reduced outlets for correlated with the current basic quickly as commodity prices. Since the producers’ milk. A few commenters formula price. The Class III price had a current BFP is based primarily on the stated that make allowances should .981 correlation coefficient while the base month survey price, the cover the costs of only the most efficient Class IV price had a .744 correlation commodity-driven price series adopted processors, and others objected to the coefficient. in this rule will react more quickly to inclusion of any make allowances, The above comparisons are based on changes in the commodity markets than which they characterized as a charge applying the component pricing the current BFP reacts. against producers to pay processors for formulas to commodity prices that were processing milk. in effect during the period examined. Make Allowances Producers objected to the inclusion of Therefore, price level comparisons can Use of an economic engineering manufacturing allowances for milk only provide an indication of how the approach to determine appropriate processors while no allowance is made BFP replacement prices may have make allowances was investigated. for producers to recognize any fixed behaved. The current BFP has been Neither the time nor the resources are recovery of the cost of producing milk. responding to changing market available to construct models for The current pricing system, using the conditions, while the replacement determining appropriate make BFP, also does not assure producers a formulas are applied to historic data allowances at this time. As an fixed rate of return. However, because

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00072 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.078 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16097 the BFP is based on a competitive pay procedure could and should be III and Class IV products will be price of what manufacturers pay dairy implemented in Federal orders. computed using the following formula: farmers for milk, the manufacturers’ At this time the use of the RCBS study Butterfat price = ((NASS AA Butter make allowance has, in effect, been and the California data are deemed to be survey price¥0.114)/82). deducted from prices received from the adequate for determining the initial The make allowance of $0.114 per sale of manufactured products before make allowances contained in this pound of butter is determined by adding the pay prices are reported. Therefore decision. Several problems exist with to the RCBS survey make allowance a the differences between the current auditing make allowances. First, the marketing cost of $0.015 and a return on pricing system using the BFP and the Federal milk order system currently is investment of $.0068, which is the same pricing system contained in this not equipped to handle the type of return on investment included with the decision with respect to make audits necessary for determining California butter processing cost. The allowances deals with the level and appropriate make allowances. An RCBS make allowance included stability of make allowances rather than increase in market administrator packaging costs for print butter; their existence. administrative fees would be required to therefore, $0.0175 was deducted from National Milk Producers Federation acquire and train auditors to conduct the make allowance to adjust for the (NMPF) supported use of a survey of the make allowance audits, since these difference between print and bulk butter dairy product manufacturing costs that audits would have to be done in packaging. The California butter has been conducted by the Rural addition to the current audit program. processing cost was also adjusted by the Cooperative Business Service (RCBS), Since most Class III and Class IV $0.015 marketing cost. A weighted with some modifications, to establish manufacturing is done in plants that average make allowance was then Federal order make allowances. Many currently are unregulated, authority to computed using the adjusted RCBS other comments supported the NMPF audit these plants to obtain make make allowance and pounds of butter position. NMPF suggested adding a allowance data would need to be contained in the RCBS survey and the marketing cost allowance of $0.015 per obtained. In addition, the industry may adjusted California butter processing pound of product to the manufacturing request a hearing on an expedited basis cost and the pounds of butter costs. NMPF explained that the addition and present relevant data to justify represented by the California butter of the marketing allowance was changing make allowances. Therefore, plant audit. The resulting make necessary since the NASS price data there is no current plan to begin allowance of $0.114 is $0.035 greater that will be used in the formulas auditing manufacturing plants for the than the $0.079 make allowance includes the marketing costs covered by purpose of obtaining make allowance contained in the proposed rule. An the $0.015. data. increase in the butter price formula The RCBS survey contains data for six The level of the make allowances make allowance will allow plants to cheese plants, six nonfat dry milk plants included in this decision is based on recover a larger percentage of the costs and five butter plants. In addition, the input by all sectors of the dairy of producing butter than under the survey results include manufacturing industry. If the make allowances are proposed rule. data from three dry whey plants. The established at too low a level, Comments on the computation of a plants included in the survey represent manufacturers will fail to invest in nonfat solids price included suggestions a wide geographic representation of the plants and equipment, and reduced by NMPF that the nonfat dry milk make United States. Given the limited number production capacity will result. If the allowance level should be $.1245 plus of plants involved in the study, make allowances are established at too the $.0015 marketing cost, or $.126, and however, regional information is high a level there will be unwarranted by IDFA that $.137 would be an unavailable. The survey results also incentive to increase capacity above the appropriate level, compared to the $.125 represent a range of packaging types needs of the industry, leading to used in the proposed rule. Several other which can affect the final make overcapacity and resulting losses to commenters favored the California make allowance. manufacturers. Either scenario would allowance, suggesting something in the International Dairy Foods Association not be in the best interest of the dairy $.135–$.14 per pound range for nonfat (IDFA) suggested that make allowances industry. Manufacturing plant operators dry milk. be determined by computing weighted who find the level of make allowances The formula for computing the nonfat averages of the results of the RCBS inadequate compared to their actual solids prices for milk used in Class IV survey and the California audited make costs also have the alternative to not will be as follows: allowances. IDFA also included a participate in a Federal order Nonfat solids price = ((NASS nonfat dry $0.015 marketing cost adjustment as marketwide pool. milk survey price¥0.137)/1.02). well as adjusting the RCBS make Most commenters agreed with NMPF As in the case of computing the allowance to incorporate the same and IDFA that the make allowances butterfat make allowance, the nonfat return on investment that is included in proposed to be used for the butterfat and solids make allowance is a weighted the California make allowance. IDFA nonfat solids prices were too low, and average of the RCBS survey and the and numerous other commenters the resulting prices too high. NMPF California processing costs. A marketing explained that a return on investment is suggested that a make allowance of cost of $0.015 and a return on necessary for manufacturers to continue $.1327 per pound of butter (plus the investment of $0.0159 was added to the to invest in plants and equipment. $.0015 marketing cost, or $.1342) would RCBS survey while the $0.015 A number of comments were filed be appropriate for use in the butterfat marketing cost was added to the urging that make allowances be price calculation, and IDFA favored a California price. The resulting make determined by auditing manufacturing make allowance of $.114, compared to allowance of $0.137 per pound of nonfat plants in the same manner practiced by the proposed make allowance of $.079. dry milk is $0.012 more than the the State of California. Proponents Several commenters suggested use of proposed rule make allowance of explained that California has had long California make allowances. $0.125. The resulting increase in the and successful experience with auditing The formula for determining the make allowance will allow plants to make allowances and that a similar butterfat price for butterfat used in Class recover a larger percentage of the cost of

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00073 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.079 pfrm08 PsN: 02APP2 16098 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules producing nonfat dry milk than they making none of the cheese made in multiplying the pounds of cheese would have using the make allowance California. The Dairy Institute of represented in each study by the included in the proposed rule. California advocated make allowances respective prices. The resulting total In addition to revising the make of at least $.17 for blocks and $.14 for was divided by the total pounds of allowance for computing the nonfat barrels. cheese represented by the studies. solids price, the yield factor is also Many commenters insisted that barrel The factors used in the formulas for adjusted. In the proposed rule a yield cheddar cheese prices should be computing component prices are factor of .96 was used in the nonfat included in a weighted average with determined by the quantity of the solids formula. The .96 was intended to block cheddar prices since much more component in the commodity, except represent the 96 pounds of solids in 100 barrel cheese is produced than block for protein, for which the Van Slyke pounds of nonfat dry milk. Most parties, cheese. NMPF urged that the barrel yield formula is used. In the protein including IDFA and NMPF, commented price not be included because barrels formula, the 1.405 and 1.582 are yield that the .96 was inappropriate and that don’t have uniform composition, and factors derived from the Van Slyke a factor of 1.02 was more appropriate. because the use of such prices would cheese yield formula. Both the 1.405 Since buttermilk powder is also a have the effect of unnecessarily and 1.582 factors are determined by product of manufacturing butter and reducing prices to producers. Other calculating the change in cheese yield if nonfat dry milk, its value needs to be commenters suggested that if barrel an additional tenth of a pound of addressed. Because the proposed rule prices are included, they should be protein or butterfat is contained in the did not account for the yield of increased by 3 cents per pound to make milk, holding everything else constant. buttermilk, the .96 factor was up for the difference in packaging costs. The proposed rule used a 1.32 factor appropriate. However, failing to account Still other commenters argued that all times the cheese price for use in for buttermilk powder resulted in varieties of cheese should be included computing the protein price. The overstating the nonfat solids price since in the NASS price survey to assure that change to a factor of 1.405 reflects the the pounds of nonfat solids were all cheese value is captured. use of true protein as the basis for understated. Use of the 1.02 factor The formula for computing the payments for protein rather than using allows the nonfat solids contained in protein price for milk used in Class III a measurement of ‘‘total nitrogen’’ for nonfat dry milk and buttermilk powder is as follows: the protein content of milk. The resulting protein price will be for a to be accounted for, and the value of all Protein price = ((NASS cheese survey pound of ‘‘true protein.’’ nonfat solids to be accurately reflected ¥ × price 0.1702) 1.405) + ((((NASS Total nitrogen protein content and in the nonfat solids price. cheese survey price ¥ 0.1702) × The results of the revisions made to true protein content both result from 1.582) ¥ butterfat price) × 1.28) the butterfat and nonfat solids formulas chemical (Kjeldahl) testing methods yield a Class IV hundredweight price The NASS cheese survey price will be approved for determining the protein that would have averaged four cents determined by adding three cents to the content of dairy products by the below the current Class III–A price and moisture-adjusted barrel price and then Association of Official Analytical fourteen cents above the California 4a computing a weighted average price Chemists. When expressing protein price over the period of January 1994 using the block cheese price and the based on total nitrogen, the protein through December 1998. These results adjusted barrel price times the pounds percentage is over-stated by the amount address the major concern of many of of each cheese type in the NASS survey of non-protein nitrogen (which has little the comments that the Class IV prices in and dividing by the total pounds of or no effect on dairy product yields) the proposed rule were too far out of block and barrel cheese in the NASS present in the milk. Therefore, when alignment with California 4a prices for survey. Including both block and barrel milk is priced on the basis of its true Federal order plants to be competitive. cheese in the price computation protein content rather than its content of The more important criteria of reflecting increases the sample size by about 150 protein measured by total nitrogen, the supply and demand is also met by the percent, giving a better representation of price per pound of protein should be revised formulas. Research by Knutson, the cheese market. Since the make higher. Anderson, Awokuse, and Siebert allowance of $0.1702 is for block Currently, nearly all testing of milk showed that the formulas contained in cheese, the barrel cheese price must be for payment purposes is performed the proposed rule outperformed the adjusted to account for the difference in using infrared electronic testing current basic formula price in reflecting cost for making block versus barrel equipment. At the wave-length filter at supply and demand. Under the revised cheese. The three cents that is added to which protein is measured, only true formulas the level of prices will be the barrel cheese price is generally protein is detectable. To calibrate for changed, but not their relationship to considered to be the industry standard total nitrogen a bias factor has to be supply and demand. cost difference between processing used to compensate for the non-protein Nearly all comments on the cheese barrel cheese and processing block nitrogen. It is also likely that the level make allowance proposed for use in cheese. of non-protein nitrogen will vary in computation of the protein price The make allowance used in every set of calibration samples, creating described the proposed $ .127 make computing the protein price, $0.1702, more problems in accurately calibrating allowance as too low, resulting in a too- was established by computing a electronic infrared instruments. high protein price. NMPF supported use weighted average make allowance using Calibration for the true protein content of the RCBS survey results ($ .1421), the RCBS survey and the California of milk is more accurate than the which were somewhat higher than the processing costs. The RCBS survey was calibration for total nitrogen protein. proposal. IDFA supported using an adjusted by adding a marketing cost of Because the accuracy of testing for true average of the RCBS survey and $0.015 and a return on investment of protein is higher than for total nitrogen California make allowances, which $0.0104 for a total of $0.1540 while the protein, which has relatively little generally are higher still ($ .152). A California processing costs were value, Federal milk orders should price number of other commenters argued increased by a marketing cost of $0.015 milk on the basis of its true protein that the proposed cheese make for a total of $0.1855. The weighted content rather than its total nitrogen allowance would cover the cost of average was then computed by protein content.

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Comments on the proposed rule manufacturing plants. The resulting protein concentrate make allowances. included discussion of the proposal to increased accounting, reporting, and The Cornell study was used since incorporate the difference in butterfat administrative costs were determined to California does not audit dry whey value between cheese and butter within not be warranted when viewed against manufacturing costs and the RCBS the protein price. NMPF suggested that the small gain from having an additional survey has very limited data on dry the .90 factor that results in a 1.582 butterfat price. whey manufacturing costs. The data on multiplier should, instead, be .91 and Use of the protein price formula dry whey in the RCBS study expresses result in a 1.60 multiplier because that adopted in this decision will increase the costs on a per pound of cheese basis factor more closely reflects the current the protein price by approximately 15 rather than on a per pound of dry whey retention of butterfat in cheddar cheese cents per pound when compared with basis. The $0.137 figure is slightly above manufacturing. The IDFA comment calculating the protein price on the the average cost of the model plants in argued that using the 1.60 multiplier basis of total nitrogen protein. However, the Cornell study and the same as was would increase an already-high protein the increase is almost entirely negated used for nonfat solids. price. Another comment urged that the by the lower content of true protein than A value for other solids is included in Grade A butter price be used instead of of total nitrogen protein in milk. On a Class III to assure that the Class III price the AA price, because the value of hundredweight basis, the change to true reflects most of the value of milk used butterfat in cheese shouldn’t be protein results in an increase to the in Class III products. In the Federal milk increased over its value in butter. Class III price of an average of 2 cents orders currently pricing three Further, the comment argued that the when compared to the formula using components, the other solids price is additional value of butterfat in cheese is total nitrogen protein. determined by subtracting the value of added by the cheesemakers, and Use of true protein instead of total butterfat and protein from the BFP. In shouldn’t be used to increase prices to nitrogen protein for determining this final rule the other solids price is producers. payments to producers should have a established independently of the Since Class III includes other types of minimal impact on producer revenues. butterfat and protein price. Even though cheese, such as mozzarella that has a Producers with relatively high levels of there is not a market for other solids as lower fat retention than cheddar cheese, non-protein nitrogen in their milk could such, the dry whey price was increasing the value attributed to that see a slight drop in their revenue determined to be the best indicator of retention is not appropriate. Increasing derived from the protein content of their value for other solids and provides a the protein price for all milk used in milk. method of accounting for and Class III based on only a portion of the In addition to changing the distributing the value in Class III milk products included in Class III would put coefficients in the protein price formula that is not accounted for in the protein the other Class III products at a to adjust for the use of true protein, the and butterfat components. Other competitive disadvantage. Calculation fixed protein and other solids values potential price series that could be used of a minimum price will enable used in computing a per hundredweight to determine the value of other solids handlers to adjust prices paid to Class III price must be adjusted. were whey protein concentrate and producers to account for additional Accordingly, the Class III price will be lactose. Under present market value above the minimum Federal order computed by multiplying the butterfat conditions, dry whey offers more market prices. Therefore, the 1.582 factor will price by 3.5 and adding the result of activity with less specialization than be used in the protein price formula multiplying .965 times the sum of 3.1 either whey protein concentrate or contained in this decision. times the protein price and 5.9 times the lactose, and therefore constitutes a Since Class III and Class IV use the other solids price. better price series for determining a same butterfat price, accounting for the In comments filed in response to the minimum Federal order price. difference in value of butterfat in cheese proposed rule, NMPF suggested a Comments filed by several parties versus the value of butterfat in butter is $.1575 whey make allowance plus the supported the use of dry whey for the necessary. This difference in value is $.0015 marketing cost, for $.1590, rather determination of the other solids price. included with the protein price than the $.10 proposed. IDFA argued The 0.968 factor in the formula calculation as a means of quantifying that a $.171 make allowance would be represents the pounds of solids the amount by which the value of more appropriate. Wisconsin contained in a pound of dry whey. butterfat in cheese varies from the value Since the make allowances are Cheesemakers indicated that the Class of butterfat in butter. Attributing the applied on a component basis rather III price should not include a value for additional value to protein is possible than on a hundredweight of milk basis whey, as it frequently represents a cost because it is the casein in protein that comparisons to traditional make to manufacturers. The Dairy Institute of forms the molecular matrix that retains allowances may be difficult. Also, a California agreed that a whey factor the butterfat in cheese. Without enough make allowance that may seem protein in milk to retain the butterfat in should not be included, but that if it is, reasonable when applied to a cheese, the butterfat would have a lower the yield factor (divisor) should be .98 component may be seen as value in whey butter in most months. (instead of .968). inappropriate when combined with the The ratio of butterfat to protein, 1:1.28, The formula used for computing the other components in the finished is calculated from the protein and other solids price is: product. To evaluate the make butterfat yield factors of 1.405 and Other solids price = ((NASS dry whey allowances on a per hundredweight 1.582. survey price¥.137)/0.968). basis the Class III and Class IV milk An alternative to incorporating the The determination of the $0.137 make prices were compared to the value of butterfat value in cheese with the allowances was based on several factors. cheese and butter/powder using the protein price is to compute a separate Whereas the other make allowances CCC yield factors. These results were butterfat price for Class III. This would were based on a weighted average of the compared to the same calculation using be a relatively simple formula to RCBS study and California make the current BFP and the CCC yield compute. However, having multiple allowances, the other solids make factors. A comparison over time butterfat prices would require full plant allowance is based primarily on the between the current level of class prices accountability of components in all Cornell study of dry whey and whey paid for producer milk and the value of

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00075 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.082 pfrm08 PsN: 02APP2 16100 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules the manufactured products made from positive make allowance change for substitutes for historical price survey that price class of milk shows a nonfat dry milk will result in a decline data in this analysis include a cheese reasonably stable difference between the in the nonfat solids price. A one-cent price computed by comparing the two levels. This difference is the change in the nonfat dry milk make current NASS cheese price series to the implied make allowance. allowance will result in a $0.0098 per comparable NCE/CME price series for The implied make allowance for pound or $0.0882 per hundredweight the purpose of determining a historical butter/powder using the current BFP for opposite change in the nonfat solids protein price. The NCE/CME series was the period January 1994 through July price. A one-cent change in the protein then adjusted by means of a regression 1998 was $0.83 per hundredweight, make allowance will cause an opposite analysis to reflect the differences while the implied make allowance for change in the protein price by $0.0322 between the NASS prices and the butter/powder versus the Class III–A per pound or $0.1014 per exchanges. The resulting price series price was $1.37 per hundredweight. The hundredweight for milk with 3.15 simulates the use of the NASS series for implied make allowance calculated for percent protein. Finally, a one-cent the time period studied. For the butter the Class IV price, based on historical change in the other solids (dry whey) price, the data from the ‘‘BFP prices, would have been $1.41 per make allowance will change the other Committee Commodity Price Study’’ hundredweight. With the implied make solids price by $0.0103 per pound or was compared to the CME Grade AA allowance for the Class IV price being $0.0567 per hundredweight in the cash butter price series. The CME Grade only $0.04 from the actual implied Class opposite direction. AA price series was then adjusted III–A make allowance, the butter make This pricing system eliminates the accordingly to make it more comparable allowance and the nonfat dry milk make need for regional yields based on with the Committee Price Study. allowance, in combination, appear to regional differences in milk Available survey prices used were approximate the current implied make composition. The value of milk will be nonfat dry milk prices and dry whey allowance. adjusted automatically based on the prices, both of which are published Determination of the make allowance level of components contained in the monthly by NASS in ‘‘Dairy Products’’. for Class III is more difficult than for milk in each order even though the While a nonfat dry milk price and dry Class IV, in which butterfat and skim component prices are the same whey price are published in ‘‘Dairy solids make two unique finished nationally. This automatic adjustment Products’’ at the beginning of each products. In cheese manufacture, most means that handlers will pay the same month for the second previous month, of the butterfat remains in the cheese price per pound of component but may the new weekly NASS survey discussed with most of the protein, and a portion have differing per hundredweight earlier is necessary to determine prices of the protein, butterfat and remaining values based on the milk component on a more current basis. nonfat solids are contained in the whey, levels, creating equity in the minimum One of the initial requirements of a which can be made into various cost of milk used for manufacturing basic formula price replacement, based products. The combination of the purposes. on the assumption that the national butterfat, protein, and other solids make Several comments were received supply and demand for manufacturing allowances resulted in an implied make suggesting that regional BFP milk as reflected in the current BFP is allowance of $2.72 for Class III (cheese) replacement prices be used rather than in relatively good balance, is that the compared to the implied make a national BFP replacement. The price level not deviate greatly from the allowance of $2.21 for the current BFP. commenters explained that cheese, current basic formula price. The Even though the implied make butter, and nonfat dry milk have examples contained in the proposed allowance using the Class III formulas in different values in different regions of rule resulted in the Class III portion of this decision is greater than the current the country, and that the Cornell study the BFP replacement averaging $0.45 implied make allowance it is described a price surface for milk used per hundredweight above the current appropriate since the CCC formula is in manufactured products across the Class III price, and the Class IV portion basically a cheddar cheese yield formula United States. Therefore, they of the BFP replacement averaging $0.13 whereas Class III contains multiple concluded, the replacement BFP also per hundredweight above the current varieties of cheese and certain other should be determined regionally. Class III price, both for the 48-month products. A slightly larger make This decision replaces the current period January 1994 through December allowance in Class III will not place BFP with a national Class III price and 1997. makers of products that have a national Class IV price. Although there In addition to comparing the Class III significantly different cost structures may be some justification for regional and Class IV price series to the current than cheddar cheese at a competitive pricing, there are two principal reasons BFP, the Class III price was also disadvantage when participating in for using national pricing. First, pricing compared to the California 4b price, Federal orders relative to handlers who milk on the basis of the pounds of while the Class IV price was compared do not participate in the Federal orders. components contained in the milk to the Class III–A price and to the Changes in make allowances will eliminates some of the regional California 4a price. Comparisons to the affect component prices and per differences in milk prices. Second, California prices are included because hundredweight milk values. A one-cent regional commodity price data, and for many commenters expressed the view per pound change in the butter make that matter regional competitive pay that the proposed rule resulted in prices allowance will affect the butterfat price price data, are unavailable. Resulting that put plants regulated by Federal in the opposite direction by $0.0122 per attempts to estimate regional orders at a competitive disadvantage to pound. This would be $0.0427 per differences, with the ensuing regional California plants and that alignment hundredweight for milk at 3.5 percent differences of opinion, would yield with California pricing was essential. butterfat. The butterfat price also is used minimal benefits. Most commenters did not express the in the computation of the protein price. An analysis of the basic formula price view that Federal order prices should The protein price will change inversely replacement requires several equal California prices, but that Federal to the butter make allowance by $0.0146 assumptions. Historical commodity order prices should be in alignment, i.e. per pound or $0.046 per hundredweight price surveys are not available for all of ‘‘reasonably close’’. For comparison for milk with 3.15 percent protein. A the commodities. Prices used as purposes all prices are expressed on a

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00076 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.083 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16101 per hundredweight basis with 3.5 during 1993 and 1994 the price of butter on the proposed rule and to address percent butterfat. The Class III price was and nonfat dry milk was relatively low class price inversion that occurred determined by using 3.1 pounds of and stable compared to the price of during the second half of 1998. protein and 5.9 pounds of other solids cheese. The degree of variability of Comments relating to replacement of in 100 pounds of skim milk. To individual months’ prices from the the BFP as a Class I price mover that compute a 3.5 percent hundredweight average for the year is expressed by a were filed before issuance of the price the skim milk value was standard deviation. A lower standard proposed rule ranged from favoring multiplied by .965 and added to the deviation indicates that individual continuation of the current system to butterfat price that was multiplied by observations (in this case, monthly establishment of the Class I price 3.5. The same procedure was used for product prices) vary less from the mean independently of the basic formula the Class IV price, with 9 pounds of than would be indicated by higher price(s) for milk used in manufactured nonfat solids in a hundred pounds of standard deviations. These statistical products. One comment suggested skim milk. descriptions indicate the difference in eliminating the basic formula price and For the period January 1994 through variability of prices between butter/ pooling only the Class I and Class II December 1998, the Class III price powder and cheese in 1993 and 1994. differentials. These comments were averaged $0.47 below the current BFP During 1994 the Class IV price would fully considered in the proposed rule. and $0.20 above the California 4b price, have averaged $10.26 with a standard Numerous comments received in while the Class IV price averaged $0.50 deviation of $0.11, compared to the response to the proposed rule favored cents below the current BFP, $.04 cents 1994 BFP average of $12.00 with a advance pricing of Class I skim and below the current Class III–A price, and standard deviation of $0.57, and the butterfat separately. However, a number $0.15 above the California 4a price. average Class III price of $11.47 with a of commenters expressed concern that In addition to comparing the value standard deviation of $0.69. For 1998, use of the higher of the Class III or Class differences between the Class III and when the economic conditions for IV prices in the calculation of the Class Class IV prices and the current BFP, it butter and nonfat dry milk had changed I price mover would result in undue is important to compare the relationship and prices became more volatile, the enhancement of Class I prices. The most in price movements between the Class Class IV price would have averaged controversial aspect of the Class I price III and Class IV prices and the current $14.79 with a standard deviation of mover proposal was the use of a 6- basic formula price. Correlation $2.13 versus the 1998 BFP average of month declining average. Many of the coefficients were computed to $14.20 with a standard deviation of comments received concerning the Class statistically test the relationships $1.97, and the Class III average price I mover expressed the view that the between the Class III and Class IV calculation of $13.84 with a standard Class I price must be closely and prices, the current basic formula price, deviation of $2.14. and the California prices. The The Class III and Class IV prices directly linked to the manufacturing correlation coefficient between the Class clearly reflect the value of the milk used price in the same manner that occurs III price and the current basic formula in the respective manufactured currently. Commenters expressed the price is above .98 while the correlation products, whereas the current basic view that the current system, two-month coefficient between the Class IV price formula price reflects primarily the advance pricing, closely links the and the current basic formula price is value of milk used to manufacture manufacturing value of milk to Class I approximately .74. The correlation cheese in a particular region of the U.S. and therefore gives appropriate price between the Class IV price and the (Minnesota and Wisconsin). signals to producers. They opposed the current Class III–A price is .99. The six-month declining average on the Class I correlations between the Class III and basis that the delay in linkage with the Class IV prices and California prices are As in the proposed rule and currently, Class I price would be too long and that also quite high, with the Class III price the basic formula price replacement will Class I pricing would be counter and the California 4b price having a act as a mover for the Class I price in cyclical. Some who opposed the time correlation coefficient of .97 while the addition to establishing prices for milk lag built into the 6-month declining Class IV price and the California 4a used in Class III and Class IV. Also as average suggested that a 3-month price show a correlation coefficient of proposed, the Class I value will be average would do as well at attaining .99. These relationships are expected separated into two parts: skim milk and some stability without as much ‘‘de- since the current basic formula price is butterfat. However, instead of the linking.’’ weighted more heavily on milk used for proposed six-month declining average Several commenters opposed building the manufacture of cheese than on the of the higher of each month’s Class III less volatility into Class I prices than value of milk used in the manufacture and Class IV skim and butterfat prices, into manufacturing class prices. Among of butter and nonfat dry milk. the Class I price mover will be the reasons given were that added The Class III and Class IV formulas determined by the most recent stability for Class I would mean greater are computed from product prices manufacturing product prices available. volatility in prices for manufactured representing the use of milk in each The advanced price aspect of the Class products, and that added stability class. That is, the Class III price is I price mover will also be shortened would favor producers in high Class I derived from the value of cheese while from the current and proposed timing of markets. the Class IV price is derived from the the Class I price announcement. Both Other comments on the proposed rule value of butter and nonfat dry milk. the Class I skim and butterfat supported variations of a 12-month Therefore the Class III and Class IV components will be announced on the rolling average Class I price mover, prices can be expected to vary 23rd day of the preceding month using some with seasonal adjustments. A significantly from the current BFP in advance pricing factors based on number of comments favored the individual months, reflecting the product prices for the most recent two stability of the longer-term basis for economic (supply and demand) weeks. The Class II skim milk price will Class I prices. One graph submitted conditions for cheese, butter, and nonfat be announced similarly. This change shows a very close relationship between dry milk. This situation is particularly from the proposed rule is being made to the 6-month declining average mover true of the Class IV price. For example, respond to numerous handler comments and the current BFP.

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There are several conflicting issues inversion occurs when a markets’s advance pricing, the effective Class I that must be balanced when establishing regulated price for milk used in differential—that is, the actual the Class I price mover. First, the retail manufacturing exceeds the Class I difference between the Class I and demand for Class I milk is independent (fluid) milk price in a given month, and manufacturing use prices in a month— of the demand for manufactured dairy causes serious competitive inequities is not the same as the Class I differential products. Second, the raw material used among dairy farmers and regulated stated in an order. While the effective in both Class I products and handlers. Advanced pricing of Class I Class I differential varies monthly, it manufactured dairy products is the milk actually causes this situation when generally has remained positive. Recent same and therefore the separate uses manufactured product prices are increased volatility in the manufactured must compete for the given supply of increasing rapidly. product markets has resulted in more milk. Third, the elasticity of demand for Since the Class I price is announced instances in which the effective Class I the various dairy products is in advance, in a rapidly changing differential has been negative, especially significantly different, creating different market the Class I price may not reflect in markets with low minimum Class I consumer responses to the changing the value needed to compete for the differentials. prices for various dairy products. The necessary raw milk supply or the Class In the past when price inversions Federal milk orders have attempted to I price may be overvalued relative to the have occurred, the industry has address these issues through classified raw milk price. Undervaluing Class I contended with them by taking a loss on pricing. This system allows a higher milk is a particular problem since it the milk that had to be pooled because price to be applied to milk used for reduces producers’ pay prices at a time of commitments to the Class I market, Class I uses due to inelastic demand for when the producers should be receiving and by choosing not to pool large Class I products. This higher price also a positive price signal. As an example, volumes of milk that normally would allows Class I uses of milk to compete in July 1998 the Class I price in every have been associated with Federal milk for the raw milk supply against Federal order market except one was order pools. When the effective Class I manufactured dairy products. At the below the Class III price. Although July differential is negative, it places fluid same time, marketers of Class I products is not a period of very high Class I milk processors and dairy farmers or support some degree of forward pricing, demand, it is a time when Class I cooperatives who service the Class I requiring processors of Class I products demand is starting to increase in some market at a competitive disadvantage to know the Class I price in advance. regions relative to total milk production. relative to those who service the Most of those commenting on the At this same time producers in these manufacturing milk market. proposed rule and the Department regions received lower pay prices. Many Milk used in Class I in Federal order perceive the need to reflect changes in Federal milk orders also experienced a markets must be pooled, but milk for the prices for milk used in Class I price below the Class III price in manufacturing is pooled voluntarily and manufactured products in the price of August as a result of two-month will not be pooled if the returns from milk used in fluid products. Since Class advance pricing of Class I. Demand for manufacturing exceed the blend price of I handlers must compete with Class I milk increases substantially in the marketwide pool. Thus, an manufacturing plants for a supply of August. While producer prices rose in inequitable situation has developed milk, the Class I price must be related August, the increase would have been where milk for manufacturing is pooled to the price of milk used for larger had Class I prices been based on only when associating it with a manufacturing. more current Class III prices. Under marketwide pool increases returns. It is apparent from the price patterns these pricing relationships, the Class I Illustrative of the worsening class of a large part of 1998 that the current handler may have a more difficult time price inversion problem are the growing two-month lag between manufacturing acquiring milk as the minimum Federal volumes of milk that, while normally and fluid pricing does not establish as order Class I price puts the handler at associated with Federal milk orders, are close a relationship between the two a disadvantage to handlers demanding not being pooled due to price inversion price levels as is desirable. Indeed, from milk for manufacturing purposes. Since problems. When the Class II, III, and/or an analysis of the differences between Class I handlers must compete with III–A prices are higher than a handler’s prices generated by a six-month manufacturing plants for a supply of blend price adjusted for location, it declining average and the current milk, the Class I price must be related becomes disadvantageous for handlers pricing system, it is clear that the to the price of milk for manufacturing. processing soft and hard manufactured current two-month lag does not Another problem inherent in the products to pool milk. That is, instead accomplish any closer relationship current method of announcing Class I of drawing money out of the pool, they between manufacturing and fluid prices prices in advance is that the price for have to pay money into the pool. In than would the six-month declining milk established in advance is for milk 1995, the volume of milk not pooled average. containing 3.5 percent butterfat. The due to class price inversion was 5.3 When manufactured dairy product current system does not determine the billion pounds. In 1997, nearly 7.8 prices are relatively stable the advance price of butterfat in advance, therefore billion pounds were not pooled for this pricing of Class I milk works quite well. the Class I handler does not know the reason. In 1998, 14.1 billion pounds However, since 1988 the volatility in the value of milk at butterfat contents other were not pooled due to class price manufactured dairy product market has than 3.5, until the butterfat differential inversions. During each of five of the caused problems with the advance is announced in the month following seven months of June through December pricing of Class I milk. The first problem sale of the processed product. Under 1998, the volume of milk not pooled is readily evident in class price this final decision, Class I handlers will exceeded 2 billion pounds. In July 1998, relationships during the latter part of have advanced price information for class price inversion occurred in all 1998. The frequent occurrence of price both the skim and butterfat portions of Federal order markets except inversions during that period indicates the Class I price. Southeastern Florida, and in 19 markets that some alteration to both the The purpose of the minimum Class I some milk was not pooled due to class proposed and current methods of differential is to generate enough price inversion. computing and announcing Class I revenue to assure that the fluid market Since volatility in the manufactured prices may be necessary. Class price is adequately supplied. As a result of product markets is expected to

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00078 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.086 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16103 continue, the Class I price mover adopted in this decision, for markets uniformity in pricing between developed as part of this Federal milk with a Class I differential of $1.60 per marketing areas that is a goal of this order reform process should address cwt., price inversion would have pricing plan. The seasonal patterns of this disorderly marketing situation. occurred in only two of the last seven milk production and consumption are The advanced pricing procedure months of 1998. The range of the price not the same between regions, and it provided in this final decision results in inversion would have been $.02 to $.86. would be difficult, if not impossible, to a Class I price that is based on a more The shortened period of advance pricing attempt to work out seasonal pricing as recent manufacturing use price, thus reduces both the occurrences and level a part of the BFP replacement. reducing (but not eliminating) the time of price inversion. As discussed previously, the price lag that contributes to class price To further illustrate that the advance link between Class I use and Grade A inversion. For example, the January pricing procedure in this final decision milk used to manufacture Class III and 1999 Class I price for each market provides a Class I price level that is less Class IV products should be maintained would be announced on December 23, likely to be below the manufacturing since Grade A milk can be used for fluid 1998 and would be based on product use price, the following analysis was uses as well as for manufacturing uses. prices reported on December 10 and 17. done. Averages of the 1998 NASS Because handlers compete for the same (The prices reported on these dates are product prices for the current month, milk for different uses, Class I prices for the weeks ending December 4 and the second preceding month, and the should exceed Class III and Class IV 11.) Under the current procedure, the two-week period available on the 23rd prices to assure an adequate supply of January Class I price was announced on of the preceding month were computed milk for fluid use. Federal milk orders December 3, 1998 and was based on and compared. For all four products, the traditionally have viewed fluid use as product prices reported for weeks preceding month two-week average having a higher value than ending November 6, 13, 20, and 27. provided a better estimate of the current manufacturing use. The replacement While the advance pricing procedure month average than did the average for Class I price mover reflects this in this decision reduces the time period the second preceding month. Looking at philosophy by using the higher of the of advance notice by about 18 days, the the Cheddar cheese price series, the Class III or Class IV price for computing reduction in advance notice of Class I two-week preceding month price was the Class I price. and II prices should not add significant $.03 closer to the current month on a In some markets the use of a simple risk or burden to handlers. The pricing simple average basis, and $.04 closer on or even weighted average of the various formulas are based solely on product an absolute average basis. This means manufacturing values may inhibit the prices which are announced weekly; that using preceding month two-week ability of Class I handlers to procure therefore, handlers can update formulas average Cheddar cheese price would milk supplies in competition with those on a weekly basis to estimate what the result in a Class III skim milk price that plants that make the higher-valued of Class I price will be before the price is would be about $.40 per cwt. closer to the manufactured products. Use of the announced. Also, as more NASS the following month’s Class III skim higher of the Class III or Class IV price product price survey observations milk price than if the second preceding will make it more difficult to draw milk become available, basis differences from month’s price is used. away from Class I uses for earlier traded/issued product price As stated earlier, advance pricing manufacturing. For example, if the Class surveys such as those from the Chicago affects the function of the minimum IV price were used as the Class I price Mercantile Exchange or Dairy Market Class I differential. The advance pricing mover there would be months in which News will be more predictable and, procedure in this decision reduces the the Class III price would be more than therefore, should provide for more difference between the manufacturing two dollars above the Class IV price. As accurate predictions of future price use price used to establish the Class I a result, the Class I differential would levels. In addition, futures markets have price and the manufacturing use price have to be well over two dollars for the been established for the four dairy in the current month. This procedure Class I price to remain above the Class products in the NASS price surveys. will result in an effective Class I III price. If the Class III price is used as While trading to date in these contracts differential that would be closer to the the Class I price mover, the reverse has not been large, interest in these Class I differential stated in each order. situation of having the Class IV price markets may increase as the industry Thus, reducing the time lag of the Class well above the Class III price would learns to use them as effective hedges to I pricing advance improves the result in the same problem. The the component values determined under functionality of the minimum Class I potential of having a Class III or IV price this final decision. These markets also differential. in excess of the Class I price is not will assist handlers in estimating the Comments filed by some southern entirely eliminated by using the higher Class I price. interests indicated that stability in of the Class III or Class IV price because Using the current two-month advance pricing in the southeast U.S. should of the advance Class I pricing feature. pricing system, but substituting for the incorporate seasonal price incentive However, reducing the time period for current BFP the higher of the Class III programs as a necessary part of which Class I pricing is advanced or IV prices as defined under this rule, adequately supplying the fluid markets should reduce the potential markets with a Class I differential of of the southeast. According to the considerably, allowing Class I handlers $1.60 per hundredweight or less would commenters, such a program would to compete more effectively with have faced a price inversion in four of encourage balancing production with manufacturing plants for fluid milk. the last seven months of 1998. The fluid milk demand. The comments state range of the price inversion would have that because such a pricing plan would Class II been $.21 to $1.49. In a fifth month, be revenue neutral, it would allow for Under this final decision, the value of price inversion would have occurred at more price stability and more reliable Class II skim milk will be computed by a Class I differential of $1.49 or lower. price signals than is currently available multiplying the hundredweight of In September 1998, price inversion for producers in high Class I utilization producer skim milk allocated to Class II would have occurred in all Federal areas. by the sum of an advanced Class IV order markets except Florida. However, Addition of seasonal adjustments for skim price, calculated from nonfat dry using the shortened advance period marketing areas would disrupt the milk product prices reported by NASS

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00079 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.087 pfrm08 PsN: 02APP2 16104 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules for the most recent two-week period for differential, $0.30, was established by a course, eliminate some of the desired which prices are available on the 23rd national hearing conducted in 1991. At direct linkage between the nonfat solids day of the preceding month, and the 70- that hearing proponents of a $0.30 Class price in Class II and the nonfat solids cent Class II differential. The price used II differential explained that the average price in Class IV. However, especially for valuing Class II butterfat will be the difference between Class II prices and with the shortened period of advanced current month’s butterfat price Class III prices over a recent time period pricing, in most cases the linkage determined from the NASS-reported had averaged $0.30. The $0.30 should remain close enough so that the butter price, as in Classes III and IV, difference was not based on the actual Class II differential does not encourage plus .7 cents per pound to incorporate cost differences between existing classes the drying of milk for Class II uses just the Class II differential. of milk. to receive a price advantage. This Generally, the source of inputs The Class II price level determined alignment also should reduce perceived alternative to producer milk for the under this final rule should not, on problems in the use of nonfat dry milk manufacture of Class II products is dry average, be higher than its predecessor. to make Class II products. Tying the milk products and butterfat that The concern of commenters that the Class II price to the Class IV price by otherwise would be used in butter. level of the proposed Class II price this fixed differential, even with Basing the price of milk used to make would be excessive should be mitigated advanced pricing for Class II skim, Class II products on these alternative somewhat by the reduction in the level should reduce the incentive to produce ingredients should help considerably to of the Class IV formula adopted in this nonfat dry milk for use in Class II remedy a situation in which it is rule. For the period January 1994 products. perceived that a separate product class through December 1998, the Class II for dry milk (Class III–A) has resulted in price as determined in this final rule Quality Adjustments a competitive advantage over producer averaged $0.01 higher than the current This final decision provides for the milk used to produce Class II products. Class II price. There is a very large adjustment of producer payments for The 70-cent differential between the variation from year to year in the the somatic cell count of producers’ Class IV and Class II skim milk prices differences between the current and milk under most orders using multiple is an estimate of the cost of drying adopted Class II prices. In 1994, the component pricing. Payments made by condensed milk and re-wetting the current Class II price averaged $1.50 handlers for milk used in Class II, Class solids to be used in Class II products. more than the Class II price calculated III, and Class IV also will be adjusted on One commenter suggested that there according to this decision. For 1998, the basis of the somatic cell count of the should be a $1.00 difference between however, with butter prices at record milk. Class IV and Class II. levels, the Class II price computed from A somatic cell count (SCC) Comments filed in response to the butter and powder prices averaged $1.58 adjustment is appropriate for several proposed rule generally supported higher than the current Class II price. reasons. First, SCCs are not only an basing the Class II price on the Class IV These price differences illustrate the indicator of general milk quality, but price. However, many commenters, result of pricing Class II milk on the also are an indicator of the potential including operators of plants basis of manufactured ingredients yield of milk in cheese and other manufacturing food products, argued instead of on the basis of cheese. that the proposed $0.70 differential is Many of the comments received products that require casein for their too high. In many cases they stated that concerning the Class II price opposed structure and body. Research has shown the cost for rehydration is substantially the proposal to price Class II on a a direct link between increased SCCs lower than $0.70, if the nonfat dry milk current basis rather than on an advance and decreased cheese yields. is rehydrated at all. basis as is currently the case. The Second, many producers currently are Only a small portion of the $0.70 commenters argued that since Class II subject to some type of multiple differential is intended to represent the products are sold on an advance basis component pricing plan or quality cost of rehydration. The majority of the similar to Class I products the premium program that adjusts their pay $0.70, $0.57, represents the cost of continuation of advance pricing of Class prices for somatic cell levels even if the drying condensed milk. Comments filed II is essential. Other commenters order in which their milk is pooled does by Kraft, Inc., stated that the cost of expressed the view that the skim not incorporate such adjustments. using nonfat dry milk (NFDM) in Class portion of Class II could be forward Although many producers’ returns are II is 0–3 cents per pound. At a rate of priced but butterfat should be priced on affected by the SCC of the milk, there is 9 pounds of NFDM per hundredweight a current basis since competing uses for little, if any, oversight of the testing for of skim milk, this cost could represent butterfat such as cheese and butter somatic cells if the order does not as much as 27 cents per hundredweight. would be priced on a current basis. include pricing adjustments. Fair and When added to the 57-cent cost of Class II products high in butterfat, such accurate testing can be assured by drying condensed milk, the 70-cent as ice cream, could be placed at a incorporating multiple component differential appears to be justified. It competitive disadvantage in procuring pricing and somatic cell adjustments should be noted that the cost to butterfat if the current month’s butterfat into Federal orders. purchase or manufacture NFDM for use prices are substantially different than The somatic cell adjustment will in Class II products would include not the advanced priced butterfat price. apply on a hundredweight basis and be only the cost of milk at the Class IV The Class II price adopted under this computed by subtracting the SCC (in price, but the cost of making NFDM (in rule will result in forward pricing the thousands) from 350 and multiplying excess of $1.20 per hundredweight of skim milk portion of Class II while the result by the product of .0005 times skim milk when the make allowance for pricing butterfat on a current basis. the monthly average cheese price used a pound of NFDM is multiplied by the Butterfat used in Class II products to compute the protein price. This level yield). competes on a current-month basis with of adjustment has worked well in orders Many of the commenters suggested butterfat for used in cheese and butter, currently containing somatic cell that a rate of $0.30 is appropriate since and its price should be determined on adjustments, and is supported by data that is what is used currently in the the basis of the same month’s values. and research contained in Federal milk Federal orders. The current Class II Forward pricing of skim milk will, of order hearing records.

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There was not a great deal of some portions of most of the adjustment of protein value to reflect agreement on how to determine which consolidated orders for which the SCC the effect of additional butterfat in orders should provide for SCC adjustment is provided already contain cheese would increase costs in the adjustments. Some commenters favored such provisions. Mideast because of the high percentage their inclusion in all markets and some Several comments suggested of milk used in (lowfat) Italian and favored a SCC adjustment on all milk including a maximum count of 25,000 Swiss cheese in that market, and priced under multiple component psychrotrophic bacteria as a criterion for requested that the Mideast market pricing. NMPF favored SCC adjustments payment of positive SCC adjustments. provide for the same kind of MCP for regions that want them. A Northeast Even though there may be a valid reason pricing currently used in the Southern producer group argued that the limited for including psychrotrophic bacteria Michigan market. effect of SCCs on Class II and Class IV for payment purposes, bacteria counts All Federal orders outside of the three uses makes them unsuitable for use as will not be included with this decision. southeast orders with relatively high an adjustment factor for milk in the Somatic cell counts are the only quality Class I use (Appalachian, Florida and Northeast. One fluid milk handler adjustments in this final decision. The Southeast) and Arizona-Las Vegas opposed their application to Class I use, issue of whether to include should contain the same component while several others opposed excluding psychrotropic bacteria as a payment pricing plan. The affected orders have a Class I milk from using somatic cell criteria is better left to a Federal order large portion of their milk used in count as a cost component because such hearing that specifically addresses the manufactured products, and the an adjustment could result in fluid issue. In contrast to a somatic cell components in that milk that determine handlers receiving lower-quality milk. adjustment, which already is contained the yield of product available for The application of somatic cell in many of the orders with multiple handlers to sell are the most appropriate adjustments will be limited to orders component pricing, none of the orders basis for determining its value. At the providing for multiple component currently provide for adjustments for same time, there is no indication that pricing, since the detrimental economic bacteria counts. MCP should apply to Class I milk, and effect of somatic cells has been shown it is difficult to justify pricing fluid milk Application of the Replacement Basic to occur principally with respect to the on an MCP basis in terms of the Formula Price(s) protein component of milk. SCCs economic value of components in those unquestionably do have detrimental Under this final rule, producers in products. effects on the flavor and keeping quality most Federal order markets will be paid Although the proposed rule included of fluid milk products, and undoubtedly on a multiple component basis since the provisions for the Mideast order that on other dairy products as well, but the basic formula price replacement is would continue elements of the current economic quantification of those effects based on individual milk component Southern Michigan MCP plan, further is not part of the information available prices. Producers will be paid for the study supports the conclusion that there for this decision. There are three order pounds of butterfat, pounds of protein, is no benefit to establishing a areas in which producer sentiment is pounds of other solids, a per component pricing plan under one opposed to the inclusion of SCC hundredweight price known as the order that differs significantly from the adjustments, and these adjustments are producer price differential, and a per rest of the consolidated orders. This not adopted for the three orders. In the hundredweight somatic cell adjustment. issue is discussed more thoroughly in case of the Pacific Northwest and The producer price differential returns the Mideast section of this decision. Western consolidated orders, most to producers their pro rata share of the All of the Federal milk orders will producers already are covered under proceeds of the classified pricing require changes to accommodate very effective SCC payment programs, system. The butterfat, protein, and other replacement of the current BFP with the and the average SCC in these markets is solids prices paid to producers will be multiple component pricing plan or less than 250,000 (below the neutral the same as the prices for those with its hundredweight price level for SCC value adjustments). There components announced for Class III use equivalent. There will no longer be a would seem to be little reason to require regardless of the utilization of the milk. butterfat differential under any order, additional SCC programs for these Handler obligations and producer but butterfat prices. The same butterfat orders. In addition, the Northeast order payments under the Federal orders that price will be used for butterfat in Class does not contain a SCC adjustment. do not provide for component pricing II (with an addition of .7 cents per Comments filed by Northeast interested will be based on hundredweight prices pound to reflect the Class II differential), persons argued that the predominant computed from these component prices. Class III, and Class IV, while a separate use of milk for manufacturing in that Although several comments butterfat price, announced in advance, area is nonfat dry milk and butter, and supported the proposal that multiple will apply to butterfat used in Class I. that yields of these products are not component pricing (MCP) be applied For purposes of allocation of producer affected by SCCs. A somatic cell value only to milk used in Classes II, III and receipts the assumption will be made adjustment is not, therefore, included in IV, several comments from the that the total nonfat solids, protein and the Northeast order. Southwest area argued that it should be other (nonfat) solids cannot be separated As in the proposed rule, for the orders applied to all milk or not adopted at all. easily from skim milk. These nonfat containing a somatic cell adjustment National Farmers Organization (NFO) solids will therefore be allocated provision the adjustment will be also favored the adoption of component proportionately with the skim milk applied to milk used in Classes II, III pricing for all classes of milk, and other based on the percentage of protein and and IV for handler billings, and to all comments favored the adoption of MCP other solids in the skim milk received producer milk for payment to for all Federal milk orders. from producers. producers. This application of a SCC Several New York comments stated For the Market Administrator to adjustment has worked well in the that MCP would not benefit producers, compute the producer price differential, orders currently providing for it, and would serve only to impose higher costs handlers will need to supply additional should result in no additional on handlers, and shouldn’t be adopted information on their monthly reports of marketing, testing or accounting for the Northeast. Michigan Milk receipts and utilization. Handlers that requirements in those orders. At least Producers expressed concern that the are filing reports in orders that currently

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00081 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.090 pfrm08 PsN: 02APP2 16106 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules have multiple component pricing and a nonfat solids in Class IV times the equaling the combined value of the skim somatic cell adjustment will see little or nonfat solids price, and the pounds of and butterfat prices for the lowest- no change in their reporting butterfat in Class IV times the butterfat priced class in the previous month. By requirements. Under orders that are price will comprise the value of Class IV computing the partial payment on a adopting component pricing for the first producer milk. Milk used in Classes III hundredweight basis, confusion about time, the pounds of protein, the pounds and IV in orders that do not include the use of partial month component test of other solids, and somatic cell MCP will be paid for on the basis of the averages will be eliminated and information will be needed in addition butterfat price per pound and the handler’s partial payroll processing to the product pounds and the butterfat applicable skim milk price per costs should not be affected. Final currently reported. This data will be hundredweight. Also included will be payments to producers and for 9(c) milk required from each handler for all the appropriate somatic cell adjustment will be based on: (a) the hundredweight producer receipts, including milk applied to milk in Class II, Class III, and of milk times the producer price diverted by the handler, receipts from Class IV, the value of overage, the value differential adjusted for location, (b) the cooperatives as 9(c) handlers and, in of inventory reclassification, the value pounds of protein times the protein some cases, receipts of bulk milk of other source receipts and receipts price, (c) the pounds of other solids received by transfer or diversion. from unregulated supply plants times the other solids price, (d) the Payments by handlers to cooperative allocated to Class I, and the value of pounds of butterfat times the butterfat associations for Class I milk will be handler location adjustments. price, and (e) the somatic cell calculated on the basis of the For each marketwide pool using MCP, adjustment rate times the hundredweight of Class I skim milk a producer price differential price per hundredweight of milk. times the Class I skim price plus the hundredweight will be computed that Since producers will be receiving pounds of Class I butterfat times the will represent producers’ shares of the payments based on the component Class I butterfat price. Payment for Class value of the pool. The total value of levels of their milk, the payroll reports II milk will be determined on the basis milk to handlers in excess of the value that handlers supply to producers and of the Class II pounds of nonfat solids of producer protein, other nonfat solids to the Market Administrator must reflect times the Class II nonfat solids price (or, and butterfat at the applicable the basis for such payment. Therefore in non-MCP orders, the Class II skim component prices will be determined by the handler will be required to supply milk price times the hundredweight of dividing that value by the the producer not only with the Class II skim milk), and the pounds of hundredweight of milk in the pool. For information currently supplied, but butterfat in Class II times the Class II orders without MCP, the value of milk also: (a) The pounds of butterfat, butterfat price. The Class II nonfat solids to handlers will be divided by the protein, and other solids in the price is computed by dividing the Class hundredweight of producer milk to producer’s milk, as well as the average II skim milk price by 9. Class III milk compute a uniform price per somatic cell count of the producer’s will be paid for based on the pounds of hundredweight to producers. milk, and (b) the minimum rates that are protein in Class III times the protein The handler’s obligation to the required for payment for each pricing price, the pounds of other solids in producer settlement fund under MCP factor and, if a different rate is paid, the Class III times the other solids price, orders will be determined by subtracting effective rate also. The requirement that and the pounds of butterfat in Class III from the handler’s value of milk the payment factors be reported to times the butterfat price. The pounds of following values: (a) The total pounds of producers when producers are paid nonfat solids in Class IV times the producer milk times the producer price currently exists in all of the orders. nonfat solids price, and the pounds of differential adjusted for location, (b) the Addition of the component information butterfat in Class IV times the butterfat total pounds of butterfat times the is purely a conforming change. price will be used to calculate butterfat price, (c) the total pounds of Administration of these provisions obligations for Class IV milk. Milk used protein times the protein price, (d) the should not be changed from current in Classes III and IV in orders that do total pounds of other solids times the practices. not include MCP will be paid for on the other solids price, (e) the total value of With advance pricing of Class I and basis of the butterfat price per pound the somatic cell adjustments to the inherent instability of the and the applicable skim milk price per producers’ milk, and (f) the value of commodity markets there may be hundredweight. The appropriate other source milk in Class I at the occasions when the computation of the somatic cell adjustment will apply to producer price differential with any producer price differential results in a milk in Class II, Class III, and Class IV. applicable location adjustment at the value of zero or below. The orders The Class I value of milk to handlers plant from which the milk was shipped should contain no provision to prevent will be calculated by multiplying the deducted from the handler’s value of the producer price differential from hundredweight of producer skim milk milk. In orders without MCP, handler being a negative value. in Class I times the Class I skim price obligations will be computed by The following tables contain the plus the pounds of Class I butterfat subtracting the value of producer milk prices computed based on the formulas times the Class I butterfat price. Class II at the uniform price per hundredweight and data series described in this final milk value will be computed on the from the value of milk to the handler. decision for the period of January 1994 basis of the Class II nonfat solids price Payments to producers traditionally through December 1998. The prices are times the pounds of total nonfat solids have been made in two payments, a shown for information purposes only. in skim milk allocated to Class II and partial payment based, in most cases, on These prices result from the strict the pounds of butterfat in Class II times the prior month’s Class III price and a application of the formulas to prior the Class II butterfat price. Class III milk final payment at the uniform price to marketing situations. These prices value will be computed based on the producers. This traditional payment should not be interpreted as prices that pounds of protein in Class III times the system will continue, with any would have actually occurred protein price, the pounds of other solids exceptions for local marketing practices throughout the data period because in Class III times the other solids price, noted in the regional discussions. The industry participants likely would have and the pounds of butterfat in Class III partial payment will be paid on a per reacted differently to the price levels times the butterfat price. The pounds of hundredweight basis with the price that would have resulted from the

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ACTUAL CLASS PRICES AND FINAL DECISION CLASS PRICES AND CLASS I PRICE MOVER,* BY MONTH, JANUARY 1994 THROUGH DECEMBER 1998 [Dollars per cwt.]

Final class I Year and month Basic for- price Final class Class III±A Final class Class II Final class mula price mover * III price price IV price price II price

1994 January ...... $12.41 $11.72 $11.49 $10.22 $10.22 $13.25 $11.05 February ...... 12.41 11.73 11.64 10.23 10.19 12.26 10.90 March ...... 12.77 12.02 12.33 10.32 10.33 12.61 11.01 April ...... 12.99 12.90 12.89 10.34 10.41 13.19 11.10 May ...... 11.51 12.15 11.05 10.24 10.17 13.88 11.06 June ...... 11.25 10.56 10.37 10.09 10.10 12.18 10.72 July ...... 11.41 11.10 10.90 10.13 10.18 10.35 10.80 August ...... 11.73 11.63 11.06 10.38 10.42 11.84 11.03 September ...... 12.04 11.84 11.76 10.35 10.32 12.95 10.93 October ...... 12.29 11.92 11.74 10.36 10.31 12.15 10.90 November ...... 11.86 11.80 11.49 10.40 10.36 12.53 11.01 December ...... 11.38 10.91 10.88 10.17 10.16 12.24 10.87 Average ...... 12.00 11.69 11.47 10.27 10.26 12.45 10.95 1995 January ...... 11.35 10.64 10.66 10.06 10.07 11.02 10.71 February ...... 11.79 11.19 11.33 10.12 10.23 11.35 10.85 March ...... 11.89 11.59 11.49 10.22 10.25 12.20 10.85 April ...... 11.16 11.07 11.08 10.27 10.28 12.09 10.89 May ...... 11.12 10.74 10.55 10.21 10.29 12.19 10.89 June ...... 11.42 10.78 10.56 10.37 10.36 11.46 11.04 July ...... 11.23 11.10 10.64 10.61 10.60 11.42 11.23 August ...... 11.55 11.00 10.88 10.82 10.94 11.72 11.52 September ...... 12.08 12.51 12.37 10.90 10.89 11.53 11.52 October ...... 12.61 12.93 12.69 11.66 11.46 11.85 12.09 November ...... 12.87 13.19 12.96 12.40 11.95 12.38 12.52 December ...... 12.91 13.34 12.84 11.24 11.13 12.91 11.61 Average ...... 11.83 11.67 11.50 10.74 10.70 11.84 11.31 1996 January ...... 12.73 12.82 12.32 11.16 11.15 13.17 11.84 February ...... 12.59 12.62 12.37 10.39 10.70 13.21 11.63 March ...... 12.70 12.66 12.52 10.32 10.49 13.03 11.17 April ...... 13.09 12.84 13.15 10.52 10.65 12.89 11.29 May ...... 13.77 13.68 13.12 11.90 11.74 13.00 12.12 June ...... 13.92 14.28 13.31 15.12 14.25 13.39 14.07 July ...... 14.49 15.41 13.41 16.01 15.32 14.07 15.95 August ...... 14.94 15.32 14.02 15.82 15.44 14.22 16.35 September ...... 15.37 15.74 15.17 15.85 16.09 14.79 15.89 October ...... 14.13 15.28 13.54 14.94 14.82 15.24 15.62 November ...... 11.61 12.33 11.33 12.18 12.10 15.67 13.03 December ...... 11.34 11.06 10.68 11.75 11.76 14.43 12.67 Average ...... 13.39 13.67 12.91 13.00 12.88 13.93 13.47 1997 January ...... 11.94 11.62 11.05 11.50 11.68 11.91 12.52 February ...... 12.46 11.95 11.56 12.36 12.34 11.64 13.02 March ...... 12.49 12.74 11.55 12.78 12.80 12.24 13.33 April ...... 11.44 12.65 11.23 12.10 12.13 12.76 12.87 May ...... 10.70 11.20 10.23 11.56 11.58 12.79 12.53 June ...... 10.74 11.95 9.96 12.22 12.06 11.74 12.77 July ...... 10.86 11.98 10.13 12.06 11.93 11.00 12.54 August ...... 12.07 11.97 11.50 11.88 11.91 11.04 12.63 September ...... 12.79 12.42 12.32 11.87 11.83 11.16 12.55 October ...... 12.83 12.76 12.54 13.50 13.29 12.37 13.98 November ...... 12.96 13.80 12.59 14.01 13.86 13.09 14.56 December ...... 13.29 13.81 12.55 12.46 12.72 13.13 13.43 Average ...... 12.05 12.40 11.43 12.36 12.34 12.07 13.06 1998 January ...... 13.25 12.76 12.51 12.04 12.29 13.26 13.02 February ...... 13.32 13.03 12.87 12.89 13.07 13.59 13.78 March ...... 12.81 12.75 12.50 12.67 12.79 13.55 13.49

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ACTUAL CLASS PRICES AND FINAL DECISION CLASS PRICES AND CLASS I PRICE MOVER,* BY MONTH, JANUARY 1994 THROUGH DECEMBER 1998ÐContinued [Dollars per cwt.]

Final class I Year and month Basic for- price Final class Class III±A Final class Class II Final class mula price mover * III price price IV price price II price

April ...... 12.01 12.69 11.50 12.88 12.90 13.62 13.59 May ...... 10.88 13.27 10.65 13.96 13.54 13.11 14.24 June ...... 13.10 14.20 12.65 15.38 14.89 12.31 15.54 July ...... 14.77 15.35 14.12 15.59 15.62 11.18 16.15 August ...... 14.99 16.25 14.21 16.52 16.38 13.40 16.96 September ...... 15.10 18.32 14.66 19.81 18.71 15.07 19.28 October ...... 16.04 18.06 16.05 18.13 18.19 15.29 18.67 November ...... 16.84 16.82 16.90 14.87 15.71 15.40 16.39 December ...... 17.34 17.44 17.51 13.48 13.39 16.34 13.98 Average ...... 14.20 15.08 13.84 14.85 14.79 13.84 15.42 60-Month Avg ...... 12.70 12.90 12.23 12.24 12.20 12.83 12.84 * Developed for informational purposes only. Advanced skim milk and butterfat prices will be used to calculate Class I price for succeeding month.

BILLING CODE 3410±02±M opportunity to consider and establish a and supply points—to simplify a very 3. Class I Pricing Structure nationally coordinated Class I pricing complex problem. The production of surface that uses location adjustments to milk and the consumption of dairy This decision adopts a Class I pricing the differential levels to price milk for products are fixed at the various supply structure that provides incentives for fluid use in every county in the United and consumption points used by the greater structural efficiencies in the States. model. Plant locations were restricted to assembly and shipment of milk and The PR provided an extensive review those presently processing products but dairy products. In conjunction with of 7 options that were developed and plant processing locations were not other reforms discussed in this decision, considered. After qualitative and/or constrained with respect to the volume the adopted Class I price structure quantitative analysis, all but Option 1A processed. Processing costs were provides the necessary changes needed and Option 1B were preliminarily assumed to be uniform between to improve milk pricing in the eliminated for various stated reasons. locations and across plant volumes (no consolidated markets. The adopted Nonetheless, the PR invited comments economies of scale). Therefore, the Class I pricing structure results from on any of the seven pricing options or model allowed processing to move additional quantitative and qualitative any other pricing ideas. Also, the among available locations to find the analyses of Option 1A and Option 1B Department indicated a preference for least cost solution in terms of assembly that were presented in the proposed rule Option 1B for a number of reasons. from supply points through distribution issued January 21, 1998 (the PR), Nearly all of the public comments to consumption points. consideration of public comments received in response to the PR on Class received to these options, and the I price structure focused on the relative Transportation costs in the model legislative requirements of the AMAA. merits of Option 1A and Option 1B. No include costs of raw milk assembly, The adopted Class I pricing structure persuasive comments were received to interplant bulk shipment, and the cost utilizes USDSS model results adjusted cause the Department to further of hauling finished products. for all known plant locations and consider the other five options. Transportation costs among regions establishes differential levels that will reflected not only distance traveled, but generate sufficient revenue to assure an The USDSS Model also differences in wage rates and State adequate supply of milk while Option 1A and Option 1B were based highway weight limit restrictions. While maintaining equity among handlers in to a significant degree on the U.S. Dairy assembly costs and interplant bulk the minimum prices they pay for milk Sector Simulator Model (USDSS). The shipments were calculated using a bought from dairy farmers. USDSS was used to evaluate the linear cost function, the finished geographic or ‘‘spatial’’ value of milk product functions were non-linear. In Background and milk components across the U.S. fact, finished product hauling costs (e.g., Although not required by the 1996 Using 240 supply locations, 334 packaged milk) fell below raw milk Farm Bill, the legislation provided consumption locations, 622 dairy assembly and hauling costs on an authorization for the Secretary to review processing plant locations, 5 product equivalent unit basis in many cases at the Class I price structure as part of the groups, 2 milk components (fat and distances more than 900 miles. Previous consolidation of the orders including solids-not-fat) and transportation and spatial modeling had assumed the consideration of utilization rates and distribution costs among all locations, constantly higher finished product multiple basing points for developing a USDSS determines economic efficient transportation costs versus raw milk pricing system. In any event, the location values for milk and milk assembly and shipping costs for all consolidation of orders requires the components. The model initially used distances. The updated model results review of the pricing system because data from May and October 1995, and were based on transportation cost historically, Class I pricing provisions, for this decision used updated data from analyses, particularly the reduction in as well as other Federal order May and October 1997. distribution costs for finished products provisions, have been reviewed The supply and consumption of milk resulting in distribution costs for these primarily on an individual market basis. used by the model are aggregated to products on par with bulk milk The reform effort provides the geographic points—consumption points assembly and hauling costs.

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The output from the USDSS model USDSS model does provide an objective recognized that the objective of the provided information as to optimal and quantitative guidepost from which AMAA is to stabilize the marketplace processing locations and volumes at to compare current federal order with minimum prices, not to set market those locations, milk assembly, and differentials and in considering possible prices. The pricing criterion of the intermediate and finished product alternatives. AMAA, section 608c(18), requires prices distribution flows. It represented a least Several factors were considered in that are reflective of economic cost, or ‘‘most efficient’’ organization of selecting a replacement for the current 14 conditions affecting supply and demand the industry. Importantly for the Class I price structure that served to for milk and its products. In this regard, research, the model provided the form the criteria used to examine consideration was given to whether the marginal values (i.e., the value of one options. First, a Class I price structure proposed prices would generate more unit) of milk at each location. must be considered from a national, as sufficient revenue for producers These values, technically known as well as a local or regional, perspective. necessary to maintain an adequate shadow prices, are indicative of values Many comments from industry supply of milk. Equally important, the that are consistent with the optimized addressed Class I pricing issues from a prices need to provide equity to solution. A shadow price on one unit of local or regional perspective in the handlers with regard to raw product milk at any processing location can be development of options presented in the costs as required by section 608c(5) of interpreted as follows: If the processor PR. These comments provided valuable the AMAA. at a particular location had one more information about particular markets unit of milk, the entire pattern of milk but generally did not consider the Evaluation Criteria assembly, and product transportation feasibility or impact of a local or In evaluating the final Class I pricing could be reorganized in such a way that regional issue on a national basis. While options, nine performance criteria, marketing costs, equal to the shadow remaining mindful of local and regional based upon regulatory objectives and price, could be saved. This notion of concerns, USDA has also evaluated requirements of the AMAA, were again marginal value is consistent with alternative Class I pricing structures used as they were in the PR. The economic theory on how prices are from a national perspective, as should evaluation criteria are divided into two determined in a competitive market. be expected, given the national concerns categories, objective and administrative. The significance of the shadow value expressed about milk pricing. The objective criteria are as follows: in terms of milk price regulation may be Second, a Class I price structure must 1. Ensure an adequate supply of milk stated: If the regulated price, or cost of recognize the location value of milk. for fluid use. Class I price levels need milk, is arbitrarily set higher than the Results from the USDSS model confirm to provide a sufficient price signal to shadow price at a particular processing that milk has value at location. As maintain an adequate supply of milk for location, a lower cost solution could be described earlier, the model provided fluid use. This supply level can be shadow prices reflecting the relative found by processing more milk at achieved through either the movement values of milk and milk components at another location. This would imply of milk to where it is needed, increased geographic locations. While the model higher transportation costs for either production, or some combination of shadow prices did not suggest Class I raw milk assembly, finished product both. distribution, or both. Such a result differentials for specific locations, they 2. Recognize quality (Grade A) value clearly leads to a higher cost, less do provide a means to evaluate price of milk. Grade A milk is required for efficient system. It is also contrary to relationships among locations. fluid use. Additional costs of obtaining what is generally thought of as the Third, a Class I price structure must and maintaining Grade A status need to ‘‘orderly marketing’’ of milk which is a recognize all uses of milk. The classified be reflected in Class I prices. fundamental reason for the existence pricing system contained in the Federal and goal of Federal milk marketing milk order program values milk for fluid 3. Provide appropriate market signals. orders. use higher than milk used for soft or A Class I price should send timely It should be stressed that the hard manufactured products. The higher signals to the market regarding supply/ calculated shadow prices of the model Class I price encourages all milk to be demand conditions. output provide information regarding used first to satisfy Class I needs. At the 4. Recognize value of milk at location. the relationship of the prices among point where the cost of moving milk Basic economic theory, validated by geographic locations. They do not from an alternate location for Class I use actual market observations and provide guidance regarding the overall is equal to the cost to supply milk for University-based research, affirms that level of Class I prices or differential manufactured products, demand for milk for Class I use has a different value values. That is, the model does not help manufactured products influences a at different locations. This value needs us understand whether the Class I market’s ability to procure milk for to be reflected in the Class I price in differential should arrive at a Class I Class I needs. Thus, all uses of milk order for the system to recognize and price of $14 in Minneapolis and $15 in must be considered when evaluating a resemble the market rather than New York City, or $15 in Minneapolis national Class I pricing structure. interfere with the market. and $16 in New York City. However, it Finally, a Class I price structure must 5. Facilitate orderly marketing with does tell us that the resulting Class I meet the requirements of the AMAA. coordinated system of prices. A system price difference between the two The broad tenet of the AMAA is to of Class I prices needs to be coordinated locations should be about one dollar. establish and maintain orderly on a national level. Appropriate levels A positive aspect of the USDSS model marketing conditions. For the Federal of prices will provide alignment both is the degree of detail available in the milk order program, this is achieved within and among marketing areas. This output. This detail is achieved through primarily through classified pricing and coordination is necessary for the the careful assembly of spatially pooling. With regard to pricing, it is efficient and orderly marketing of milk. disaggregated data. However, it should 6. Recognize handler equity with be remembered that by its construction, 14 Any references to the ‘‘current’’ system of Class regard to raw product costs. the USDSS is a ‘‘model’’ and thus a I prices or the ‘‘current’’ price structure are to be Appropriate levels of Class I prices interpreted as those established in or after the final simplification of a complex dairy decision based on the 1990 national hearing issued provide known and visible prices at all industry. That notwithstanding, the March 5, 1993 (58 FR 12634). locations thereby ensuring that handlers

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The hundredweight fixed differential for Model Class I price structure should not three surplus zones (Upper Midwest, West, and Southwest) within a nine- Option 1A, modified Option 1B and significantly increase the burden on the adopted Class I pricing structure handlers, particularly small businesses. zone national price surface, and for the other six zones, an added component were evaluated qualitatively against the This would include increased reporting evaluation criteria and quantitatively requirements and record keeping, as that reflects regional differences in the value of fluid and manufacturing milk. utilizing the USDA multi-regional dairy well as possible increases in sector model. This model was administrative assessments should This option emphasized current supply and demand conditions with the USDSS developed to answer some very specific Market Administrators be required to questions about possible changes in the manage a more complex regulatory model output. Some minor changes were made to dairy sector, particularly changes being system. considered in milk marketing orders. 2. Minimize impact on small the Option 1A differential levels presented in the PR. The changes only The main focus of the model’s businesses. The Class I price should be development and use was to set at a level that does not disadvantage involved adjusting certain county specific differentials to provide for more quantitatively examine the impacts of small businesses in competition with the changes under consideration in the large businesses. appropriate price alignment in several counties in the northeast, seven classified pricing of milk and dairy 3. Provide long-term viability. The products in the milk order system on an Class I price structure should be counties in Florida, and one county in North Carolina. Other than these minor order-by-order and regional basis, and expected to operate for an extended for other areas of the country not time period without major changes, Option 1A is the same as published in the PR. currently a part of the milk order modifications. system. The nine evaluation criteria listed Modified Option 1B: Relative Value- The multi-regional model establishes above are used to qualitatively evaluate Specific Differentials each of the options. Each option is a baseline consistent with the USDA evaluated based on how the option This option continues to establish official baseline projections for the dairy performed compared to the current Class I differentials based on a sector. It assumes 36 regions. These system, either better than, worse than, relationship between prices and include: 32 Federal Milk Marketing or the same as, for each performance geographic location as indicated by the Order areas (including Tennessee Valley criterion. The results of the qualitative USDSS model, but uses more current that was terminated on October 1, 1997) analysis provided a preliminary data. Modifications were made to and four non-Federally regulated areas framework for quantitative analysis Option 1B with respect to how adjusted (California, Other Unregulated Western using a multi-regional model developed Class I differentials were established for Counties, Unregulated Northern New by the Economic Research Service (ERS) each county in the United States. This York and New England and Other of the Department. modified version of Option 1B Unregulated Eastern Counties) and As previously indicated, Option 2— continues to establish differential levels projects baseline information through Relative Use Differentials, Option 3A— by setting and equating the relative the year 2005. The demarcation between Flat Differentials, Option 3B—Modified value-specific differential of $1.20 per the unregulated Western and Eastern Flat Differentials, Option 4—Demand- hundredweight in Minneapolis, counties follows a line extending north Based Differentials, and Option 5— Minnesota. The Option 1B differentials to south on the eastern State borders of Decoupled Baseline Class I Prices with in the PR relied on an algorithm to set North Dakota, South Dakota, Nebraska, Adjustors, were eliminated from further location adjusted differentials in every Kansas, Oklahoma and Texas. consideration. They were eliminated for county. The modified Option 1B price The model baseline also assumes that various reasons including failure to surface takes into full account all known the Class III price would be the Basic adhere to AMAA requirements, the plant locations as was done in the Formula Price (BFP), the Class II price likelihood of creating disorderly development of Option 1A. This would be the BFP plus 30 cents, each marketing conditions, and impacts on approach ensures that all plants region’s Class I price would be the BFP small businesses. A discussion of the similarly located would have similar plus the current Class I differential and five eliminated options, including the prices. the Class III-a price would continue. All other changes to milk order provisions evaluation against the criteria and/or The Adopted Class I Price Structure quantitative analysis were described in together with the three price surface detail in the PR. The adopted Class I pricing structure alternatives are presented as changes establishes a price surface that also from the baseline over the period of the The Final Options utilizes USDSS model results adjusted years 2000 through 2005. Each of the Three options formed the basis for for all known plant locations and alternatives include the impact of final consideration and are described establishes differential levels that will consolidation into 11 regional markets below. All options present national result in prices that generate sufficient and moving to wholesale product price Class I pricing structures developed revenue to assure an adequate supply of formulas in setting the class prices. utilizing the USDSS model. The options milk. The differential levels will better From its baseline, the model has the continue to vary in their reliance and maintain equity by raising the level 40 ability to quantify the impacts of pricing application of the USDSS model but all cents per hundredweight higher than changes in the consolidated regions and remain based on economic principles the level proposed in Option 1B and in in estimating how the end use of milk contained within the model. These modified Option 1B. The higher may be expected to change with the options include Option 1A, a modified differential level reduces the likelihood changes in how the order program will Option 1B, and the adopted Class I of class-price inversions, where the price milk. The model can generate pricing structure. Class I prices are below the long-term supply, demand, and price

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Changes in Class I and deficit markets. area is based upon reported state data. Class II prices affect demand for Class Class I differentials under this option Changes in the inventory of cow I and Class II products and the amount range from a low of $1.60 per numbers and output-per-cow for each of milk available nationally for cheese, hundredweight in the lowest valued region are related to regional farm milk butter, and nonfat dry milk production. zones of the Upper Midwest, Southwest, prices and feed costs, and past regional Likewise, the amount of milk used in and West, where there are abundant net returns to dairy farmers (a measure each class in each region and the supplies of milk in excess of fluid milk of profitability). Milk marketings in the regional class prices affect the farm level use, to a high of $4.30 per region are in direct relationship to milk all-milk price and the supply of raw hundredweight in Florida, where there production in the region. milk in the region and therefore the are deficit supplies of milk for fluid use. Once the volume of regional milk amount of milk available nationally for Analysis Based on Evaluation marketings is determined, marketings cheese, butter, and nonfat dry milk Criteria. Option 1A performs equal to or are distributed to seven uses: bottled production. The model iterates until an better than the current Class I system in whole milk, bottled low-fat milk, soft equilibrium is achieved for the year in each of the evaluation criteria. This is manufactured dairy products, American the wholesale product markets and then largely explained by the adjustments, cheese, other cheese, butter, and nonfat advances to the next year. improvements, and fine-tuning made to dry milk. Each of the seven uses has a A brief summary of the quantitative the current system of Class I retail demand equation. Generally, the impacts of each alternative price surface differentials Option 1A was evaluated demand for the specific product is a is included with the qualitative analysis against the objective criteria as follows: function of per capita income, the retail presented below. A detailed description 1. Ensure an adequate supply of milk price or the Consumer Price Index (CPI) of the USDA multi-regional dairy for fluid use. Option 1A performs of the product, and the price or CPI of model, as well as a complete discussion essentially the same as the current price a substitute product (e.g. margarine for of the impacts of the pricing alternatives structure in ensuring an adequate butter). are contained in the Final RIA. supply of milk for fluid use. Option 1A Demands for raw milk for use in fluid changes current differential levels in milk products and soft manufactured Option 1A: Location-Specific some regions to more accurately reflect dairy products have priority in the Differentials current milk supply-demand conditions. model and such demands are filled Option 1A would establish a Option 1A will have minimal impacts regionally from the region’s raw milk nationally coordinated system of on farm level milk prices and should supply before the national demands of location-specific Class I differentials ensure adequate supplies of milk for the hard manufactured product markets reflecting the relative economic value of fluid use. are met. The Class I and Class II uses of milk by location. An important feature 2. Recognize quality (Grade A) value milk in each region are based upon of the option is the location adjustments of milk. Option 1A recognizes the differences in prices and population by that geographically align minimum quality value (Grade A) of milk through region. A CPI for fluid milk and other Class I milk prices paid by fluid milk the addition of a differential that begins dairy products are estimated for each processors nationwide regardless of the at $1.60 per hundredweight in the base region based upon a margin mark-up defined milk marketing area boundaries zone. equation and the region’s Class I and or order pooling provisions. A basic 3. Provide appropriate market signals. Class II prices. These values are used to premise of Option 1A is that the value Option 1A adjusts and refines the estimate regional per capita use, and of milk varies according to location existing Class I price structure to when multiplied by projected across the United States. provide appropriate market signals. In population for each region, determine Compared to the modified Option 1B some geographical areas, Class I the amount of milk allocated to Class I and the adopted Class I price structure, differentials would be increased. These and Class II uses. this option tends to most reflect the changes indicate that current Class I The sum of each region’s raw milk current Class I pricing surface. Although differential levels are not high enough to supply less the milk used in Class I and extremely similar to the current Class I attract adequate supplies of milk to the Class II results in a measure of the price surface, there are distinct applicable fluid milk markets. In certain national manufacturing milk supply. differences. Option 1A would establish other areas, Class I differentials would The model solves for equilibrium in a nationally coordinated price surface be lowered, indicating that they exceed supply and demand by solving for that uses location adjustments to adjust levels necessary to adequately supply wholesale prices of cheese, butter, and the price of milk for fluid use for every the associated markets with their fluid nonfat dry milk that equate the supply county of the United States. milk needs. and demand in the hard manufactured Under Option 1A, Class I differentials 4. Recognize value of milk at location. dairy product markets. The hard are the lowest in geographical areas The spatial values of milk reflected in manufactured product markets, the evidencing the largest supplies of milk Option 1A recognize the value of milk Class I markets, the Class II markets, and relative to local/regional fluid milk at location more accurately than the the farm level raw milk supply are needs. The differentials become current system for two principal linked through price equations that progressively higher as they move from considerations. First, in structuring the relate the changes in wholesale product these areas to markets with less differentials in Option 1A, the effect of prices to changes in prices for milk used production relative to demand for fluid current Class I differential levels on in Class I, Class II, Class III, Class III-a milk. Nine differential zones provide milk supplies, demand, and dairy (or Class IV) and the farm level all-milk the basis for establishing the price farmer returns regionally during the past price. structure. These zones were established decade were considered. Second, the

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00087 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.097 pfrm08 PsN: 02APP2 16112 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules relative values of milk and milk for fluid milk between location, it could ‘‘zoned’’ structure of relative price components at geographic locations not be used for determining an differences that are aligned. throughout the United States from the appropriate differential level. Option 1A Modified 1B Differential Level USDSS model results were considered. utilizes $1.60 per hundredweight as the 5. Facilitate orderly marketing with minimum differential level. A complete As pointed out in the Option 1A coordinated system of prices. Option 1A explanation of the factors that discussion, the USDSS model only provides a comprehensive national developed and explain this differential provided information regarding relative pricing surface for Class I milk that level was set forth in the PR. In differences in prices between establishes a value for Class I milk in summary of those reasons, the $1.60 per geographic locations and offers no every county. Thus the price any hundredweight differential level is used information for determining the level of processor would pay for milk would be in Option 1A because it would ensure Class I differentials used in setting Class the same regardless of which order the a sufficient supply of milk for fluid uses I prices. The same is true for modified processor is regulated under. As such, in the most surplus regions. Option 1B. Modified Option 1B relies Option 1A is an improvement over the Option 1A will have little impact on much more directly on the geographic current price structure which evolved in small businesses, either producers and price relationship results of the USDSS a piecemeal fashion. Additionally, the processors. In certain situations, it may model in defining the structure and Class I differentials and location improve a small business’ competitive relative differences represented in its adjustments in Option 1A would marketing position as compared to differential schedule for all locations. While modified Option 1A establishes facilitate more efficient and orderly current levels. Because the $1.60 base a $1.70 Class I differential at marketing of milk for fluid use through zone differential includes a competitive Minneapolis, adjusted from a minimum the nationwide coordination of prices factor as discussed previously, more of level of $1.60 (the lowest differential when compared to the current system. the actual value of fluid milk will be level at any location in Option 1A), 6. Recognize handler equity with reflected in the minimum Federal order modified Option 1B sets a Class I regard to raw product costs. Class I price. This may decrease the level of the differentials proposed under Option 1A differential at Minneapolis at the over-order value that must be negotiated are consistent with the inherent current level of $1.20 per between processors and producers. economic value of milk at location. The hundredweight. It is important to note Doing this would provide small coordination and alignment of prices, that any modified Option 1B zone could businesses with a more equitable based upon cost differences and current be discussed as the ‘‘starting’’ point competitive position. marketing conditions, better ensures differential. This decision only refers to handlers of equity in competing for Quantitative analysis of Option 1A and references Minneapolis at the $1.20 available milk supplies. using the USDA multi-regional model level for illustrative purposes since it Option 1A was evaluated against the evaluated the various impacts of this provides a degree of continuity in how objective criteria as follows: pricing option. Overall, the magnitude Option 1B was presented and discussed 1. Minimize regulatory burden. of price and income changes under in the PR. Option 1A would not change the Option 1A is relatively small when Because Option 1B was expected to regulatory burden of the Federal order compared to the baseline. Option 1A result in a significant change to the program. Option 1A would not result in results in an 8-cent increase in the industry in both the pricing surface and increased reporting, record keeping, average Class I price for all current the level of Class I differentials, it was compliance, or administrative costs to Federal orders. Further details of the proposed in the PR in conjunction with handlers. impact of these Class I price changes, three alternative transitional phase-in 2. Minimize impact on small and others, that are based on the USDA programs. However, none of the phase- businesses. In regions where more of the model results are available in the final in programs received public support. actual value of fluid milk would be Regulatory Impact Analysis (RIA). The final RIA statement provides the reflected in the differentials than is Modified Option 1B—Relative Value- full measure of the USDA multi-regional currently reflected, small businesses Specific Differentials model analysis of this option. In short, may have a marginal improvement in modified Option 1B is rejected because their relative competitive bargaining Modified Option 1B would also the differential levels it would set position vis-a-vis large businesses. This establish a nationally coordinated would result in minimum prices that is based on the concept that large system of Class I differentials and would not generate sufficient revenue to businesses (producers, cooperatives or adjustments that recognizes several low assure an adequate milk supply. handlers) are better able to negotiate pricing areas. Modified Option 1B more Additionally, for markets with lower premiums above minimum order prices directly applies the USDSS model’s differential levels, there is a greater due to advantages attained from their optimal solution in developing the Class potential for class-price inversions that size. Overall, this option is not expected I price structure. would increase the likelihood of to materially impact small businesses The modified Option 1B differentials disorderly marketing conditions. differently than the current price differ from those published in the PR. The Adopted Class I Price Structure structure. The differences are explained largely by 3. Provide long-term viability. To the a more complete consideration of all The adopted Class I pricing structure extent the location adjusted Class I known plant locations. The Option 1B results from additional quantitative and differentials under Option 1A will differential values published in the PR qualitative analyses of Option 1A and correct instances of price misalignment relied on an algorithm to establish Option 1B, consideration of public and more accurately reflect the differential levels for those counties that comments received to these options, economic value of milk by location, the were not part of the optimal solution. and the legislative requirements of the long-term viability of Option 1A is However, all plant locations need to be AMAA. The adopted Class I pricing expected to exceed that of the current considered for setting prices at these structure utilizes USDSS model results price structure. locations and prices must be aligned adjusted for all known plant locations Because the USDSS model only between locations. This has been done and establishes differential levels that determines the relative value differences in modified Option 1B and results in a will generate sufficient revenue to

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COMPARATIVE CLASS I DIFFERENTIALS AT SELECTED CITIES UNDER THE ADOPTED CLASS I PRICE STRUCTURE [Dollars per hundredweight]

City Current Adopted Difference

New York City, NY ...... 3.14 2.50 (0.64) Charlotte, NC ...... 3.08 2.55 (0.53) Atlanta, GA ...... 3.08 2.90 (0.18) Tampa, FL ...... 3.88 4.20 0.32 Cleveland, OH ...... 2.00 2.00 0.00 Kansas City, MO ...... 1.92 1.90 (0.02) Minneapolis, MN ...... 1.20 1.60 0.40 Chicago, IL ...... 1.40 1.95 0.55 Dallas, TX ...... 3.16 2.10 (1.06) Salt Lake City, UT ...... 1.90 1.50 (0.40) Phoenix, AZ ...... 2.52 1.55 (0.97) Seattle, WA ...... 1.90 1.45 (0.45)

The adopted Class I pricing structure all markets even though the adopted 5. Facilitate orderly marketing with was evaluated against the objective Class I pricing structure lowers coordinated system of prices. The criteria as follows: differentials in some markets. Over- adopted Class I pricing structure 1. Ensure an adequate supply of milk order pricing will likely function in establishes a coordinated system of for fluid use. The adopted Class I most, if not all markets, even with the differentials with appropriate location pricing structure establishes lower higher-level differentials. However, the adjustments. Like the other two options, differentials than current levels in many higher differential level better ensures a comprehensive national pricing of the proposed markets. Because the that the minimum prices established surface has been developed that differential level is higher than under under the orders will generate a establishes a value for Class I milk in modified Option 1B, the adopted Class sufficient supply of milk and better every county. As a result, a processor’s I pricing structure relies less on the use ensures equitable minimum prices regulated price will be the same of over-order premiums as the method among regulated handlers than does regardless of the order regulating it. to attract adequate milk supplies for modified Option 1B. Additionally, 6. Recognize handler equity with fluid purposes. While over-order because class-price inversions are premiums will remain useful for mitigated, more appropriate price regard to raw product costs. With the allowing the market to find the final signals are provided to the marketplace. 40-cent per hundredweight increase in value of Class I milk, the higher-level the differential level, processor equity is 4. Recognize value of milk at location. better maintained under the adopted differentials of the adopted Class I The adopted Class I pricing structure Class I pricing structure. With price pricing structure will better serve to appropriately recognizes the value of increases or decreases in some areas, the ensure that the minimum prices set by milk at location. It is based on the markets will need to adapt to the new the orders will attract an adequate location value of milk as determined by supply of milk for fluid use. the May 1997 results of the USDSS pricing structure. While it is not the 2. Recognize quality (Grade A) value model. It also aligns the relative-value intent of the Federal order system to set of milk. As with Option 1A and differences while adhering to spatial- market prices, the reflection of a larger modified Option 1B, the adopted Class value differences determined by the portion of the price under regulation I pricing structure similarly recognizes model giving full consideration to all provided by the adopted Class I pricing the quality (Grade A) value of milk plant locations. Thus, in utilizing the structure, better assures handlers a through the use of a differential added model results that determine the most reasonable degree of equity with regard to the basic formula price. efficient spatial value of milk for fluid to raw product costs. 3. Provide appropriate market signals. use to establish the price surface, the The adopted Class I pricing structure The adopted Class I pricing structure adopted Class I pricing structure should was evaluated against the administrative provides appropriate market signals in perform better than the current system. criteria as follows:

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1. Minimize regulatory burden. The the adopted Class I pricing structure with shortening the advance pricing adopted Class I pricing structure would minimizes this potential outcome. The notice of Class I prices by 18 days as not change the regulatory burden of the inability of small processors to compete discussed in the BFP section of this Federal order program in terms of with large processors at price levels decision, minimizes class-price reporting, recordkeeping, compliance, above Federal order minimums is inversions. The rise in the all-milk price and administrative costs to handlers. similarly eased. in the first year of implementation is 2. Minimize impact on small 3. Provide long-term viability. The expected to stimulate additional milk businesses. Under the adopted Class I adopted Class I pricing structure production in the milk order system. pricing structure, a fuller measure of the provides for a more efficient pricing This additional milk production results Class I value needed to attract adequate structure. This option is an alternative primarily from Class I prices being milk supplies will come from regulated from the current way the Federal order established by using the expected higher prices. Reliance on over-order payments program has approached Class I pricing. Class IV prices in the year 2000. Over negotiated outside the Federal order Historically the Class I price established the six-year analytical period, the system is diminished, but continues to under Federal orders represented the annual all-milk price is expected to be recognized as in either the current minimum value of Class I milk in the drop by about two cents per system or in Option 1A. As a result, it marketplace based on the cost of hundredweight, but the annual average is likely that small handlers who might maintaining Grade A milk and of marketings in the entire milk order have been disadvantaged by the original associated marketing costs together with system is expected to increase by about Option 1B will not be under this the cost of alternative milk supplies. 8.3 million pounds when compared to modified version. The adopted Class I pricing structure the baseline. This increase in Federal order Class I prices are provides the opportunity for increased marketings is largely explained by the mandatory and affect processors in a marketing efficiencies by promoting a pooling of milk that was not pooled in specific area equally as minimum more optimal organization in the recent years because of class-price enforced price levels. Since more of the assembly and distribution of milk inversions. actual value of Class I milk is products while establishing prices that The USDA analytical model suggests represented in regulated prices, the will assure an adequate milk supply. In that annual cash receipts, or revenue, potential for large handlers to have an this way, it is expected to have long- for producers under the adopted Class I advantage over small handlers is term viability. pricing structure will increase in many mitigated in competing for a supply of Quantitative analysis of the adopted markets when compared to the baseline. milk under the adopted Class I pricing Class I pricing structure using the USDA The marketing areas expected to have structure. Large processors often have multi-regional model evaluated the the largest average annual increases in advantages related to economies of scale various impacts of this pricing option. producer revenue include the following and may be able to temporarily inflate The evaluation assumed the eleven orders: Chicago Regional—$43.1 over-order prices they are willing to pay market order consolidation, four classes million, New York-New Jersey—$18.7 until they have forced smaller of milk use, and the BFP replacement businesses out of business who could presented earlier in this decision. Class million, Iowa—$17.5 million, Southern not afford to pay higher prices. I differentials are reduced from current Michigan—$14.1 million, and Tampa Additionally, with higher differentials levels in about half of the marketing Bay—$12.2 million. Other markets and resulting higher producer blend orders. The reductions range from 4 would be expected to have lower prices, the balance of market power cents per hundredweight in the Ohio estimated annual cash receipts over a between producers and processors is Valley order to as much as $1.18 per six-year analytical period of the years better maintained. Producers will not hundredweight in the Eastern Colorado 2000–2005 from the baseline. The need to negotiate with processors to order. The Class I differential for the marketing orders with the largest obtain a better price for their milk to the Eastern Ohio-Western Pennsylvania reductions include: Texas (¥$39.7 extent that would have been expected order would be unchanged. For the million), Middle Atlantic (¥$39.5 under modified Option 1B. Small dairy other markets, the Class I differential is million), Eastern Colorado (¥$11.4 farmers have less production volume, increased, ranging from 8 cents per million), Southwest Plains (¥$11.3 and typically have higher per hundredweight in the Greater Kansas million) and Central Arizona (¥$10.4 hundredweight production costs. City order, to 57 cents in the million). Hence, small producers who are less Southeastern Florida order. The USDA analytical model suggests able to negotiate for prices that may be Under the adopted Class I pricing that as the adopted Class I pricing higher than the Federal order minimum structure, six current milk orders would structure results in lower Class I prices price will be better served under the have Class I differentials lower than the in many markets, the average annual adopted Class I pricing structure. When differential established at Minneapolis. impact on retail prices to the consumer too much reliance is placed on the use This gives explicit recognition that these for fluid milk will be about 2 cents per of over-order premiums (as in modified other areas have adequate milk supplies gallon less, on average, over the six-year Option 1B), it is likely that dairy farmers to satisfy Class I demands at lower costs. period of the years 2000–2005 when defined as small businesses would For areas needing supplemental compared to the baseline. From a benefit less from the regulation of milk supplies of milk for fluid use, the Class national perspective, this translates into marketing. I differentials are reflective of consumer savings of about $79 million Small businesses may be impacted transportation costs from the closest for fluid milk products annually. Sales under the adopted Class I pricing alternative supply area. of manufactured dairy products over the structure as adjustments are made in According to the USDA model same time period are expected to response to the new pricing structure. analysis, the adopted Class I pricing decrease somewhat, but expenditures However, to the extent that small structure differential level would for these products will be higher. producers may not be able to bargain increase order marketings over the six- While only summarized here, the with processors for over-order year analytical period of the years 2000– complete USDA multi-regional model premiums to adequately cover their 2005 when compared to the baseline. analysis of Options 1A, modified Option costs, the increased differential level in Raising the differential, in conjunction 1B and the adopted Class I pricing

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00090 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.101 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16115 structure are included in the final RIA Public Comments began. They point out that even though statement. The majority of comments received in there are fewer and larger dairy farms with greater milk production, the Comparison of Option 1A and the response to the PR dealt with the Class number of plants at which to sell milk Adopted Class I Price Structure I price structure. In all, 4,217 comments were received on this issue. Of this are fewer than when the order program Option 1A and the adopted Class I number, 3,579 comments indicated first began. Implicit in this relationship, pricing structure have similarities but support for the adoption of Option 1A they said, is the degree of uneven rely on differing methods in and 436 comments supported the market power that handlers have over constructing a nationally coordinated adoption of Option 1B. Some support producers. One commenter noted that Class I price structure. Both recognize USDA of both Class I pricing options the ratio of dairy farmers to milk plants today has increased threefold since that milk has a location value. Both called for changes in each of the 1960, an indicator of the growth in the utilized the USDSS model results to Option’s details. No comments were concentration of market power among establish the price surface. Both received that supported any sort of handlers. Even the prominence of dairy establish Class I prices by adding a fixed transition programs suggested in farmer cooperatives over the years has differential to the implied value of milk adopting Option 1B. Some comments, had little significant impact on the used in manufacturing. Both establish a while supporting Option 1B in its relative bargaining power of dairy price surface that assigns a price to general theme, proposed adopting farmers, noted many commenters. While every county in the United States and Option 1A initially and phasing in the these organizations have served with would assure that a price at any adoption of Option 1B over an extended particular location will not vary varying degrees of success in negotiating time period. for higher milk prices for their members, depending upon the marketing order It is clear from the comments received they said, cooperatives do not and under which the milk is pooled. that there is broad-based support for cannot have the ability to significantly Although similar in the above adopting Option 1A. These commenters impact prices because no entity can respects, they also differ. First, they explained what they thought were and control or limit the supply of milk to the differ in the method of determining the should be the most important goals of level of the Class I differential. Option marketplace. Because dairy farmers face the milk marketing order program, the such a skewed marketing situation, most 1A relies on finding that Class I pricing policies and features that it differentials would be established at a commenters view milk marketing orders should contain to achieve these goals, as the only practicable tool to assure level that more fully reflects the and their view of the legislative additional value of Class I milk in the farmers receive a fair price for their requirements that must be incorporated milk. most surplus regions. The adopted Class into milk orders. Such was similarly I pricing structure relies on the finding Supporters of Option 1A indicated expressed in explaining both the that because of the continuing that the national system of milk order support for, and opposition to, Option marketing situation they face, no basis needs to result in prices that will 1B. exists for concluding that more generate sufficient revenue to bring Supporters for Option 1A generally emphasis should be placed on a dairy forth an adequate milk supply. saw it as the best Class I pricing option farmer’s ability to negotiate prices with Secondly, they differ in how the price that would properly reflect the fullest handlers. According to these surface should be established regardless measure of the AMAA’s articulated commenters, relying too much on the of the level. Option 1A provides for the goals and requirements. These marketplace would only provide the alignment of resulting Class I prices by supporters expressed the limitations of incentive for producers to needlessly evaluating the cost of alternative relying too much on the free market in compete with each other to supply the supplies based upon the current Class I setting milk prices. For example, higher-valued fluid market. Those that differential structure. This results in a supporters of Option 1A indicated that are successful might receive more for surface that is smoother and flows milk marketing orders exist because their milk than those who could not, but primarily from north to south and west dairy farmers are at a distinct to this end, there is no guarantee that all to east. However, the adopted Class I disadvantage in their marketing handlers would pay the same price for pricing structure relies on a cost relationship with handlers who buy milk. Nor is there a guarantee that minimization model to provide for a their milk. They cited the characteristics handlers would share the higher-valued more efficient organization and of milk—that it is highly perishable, use of milk equitably with those structure in milk supply and bulky, is produced daily and must be producers. This, they said, results in distribution. Thus, it results in more marketed nearly as often, and is disorderly marketing conditions and the limited relative price differences and in expensive to transport—as making it a pitting of farmer against farmer in a price surface that is flatter. unique commodity. Unlike other unnecessary and destructive price Thirdly, they differ in their reliance commodities, grains for example, milk competition. It was these conditions, on the USDSS model results. Option 1A cannot be withheld from the market in they note, that led to creation of milk recognizes the value associated with the the hope for a better price, nor can it be orders and justified the marketwide model results but relies on knowledge of shipped long distances in search of a pooling and minimum pricing specific marketing conditions and higher price because transportation provisions contained in milk orders practices to make adjustments to costs quickly erode the benefits of a today. Only Option 1A, say its existing differentials. The adopted Class higher price. Dairy farmers don’t even supporters, best establishes the proper I pricing structure, on the other hand, know the price they will receive for value of milk that, together with relies more directly on the USDSS their milk in advance of having to ship classified pricing and marketwide model results that indicate the optimal to market, they noted. pooling, assures the highest degree of spatial values for fluid milk which serve Also, supporters of Option 1A were of equity for both producers and handlers. to promote market efficiencies, and the opinion that marketing conditions Supporters of Option 1A agreed and implements this structure to encourage faced by dairy farmers today are recognized that it is important to have market efficiency within the dairy fundamentally no different than they a Class I pricing structure that is industry. were when the order program first national and more reflective of

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However, the supporters can be expected to remain as it is today. negatively impacted because the of Option 1B think that Class I They noted further that Option 1A gives overproduced milk supply drives down differential levels should be set at explicit recognition to more than a prices for milk used in manufactured minimum levels that will allow the single reserve supply area in the dairy products which compete in a effective price for milk to be much more country, and that Option 1A would national market. They noted this is determined by the marketplace. In this assign the lowest differential in each of especially injurious to dairy farmers in way, they said, milk production and these reserve supply areas, what many markets where most of the milk prices would respond more effectively supporters of Option 1A viewed as produced is used in manufactured dairy to changing supply and demand significant pricing reform. products. conditions. By taking this approach, Option 1A supporters also thought Adding to this, the opponents of the they say, Option 1B Class I differential that the USDSS model served as an current Class I pricing system and levels will provide a sufficient degree of excellent tool in developing a Class I Option 1A are also of the opinion that the structure needed for producers and price structure. However, they also technology is available today to meet handlers, while reducing market recognized the limitations of relying too the supplemental milk needs of any distortions that result from regulation- much on this analytical model because milk-deficit area. Not only do they think induced prices that discriminate against it does not bring into consideration all that higher-than-necessary Class I producers, especially in the Upper of the other necessary judgements and differentials result in artificially- Midwest region. factors that cannot be included in a induced overproduction, they also As mentioned above, supporters of model. For example, many commenters believe that resulting high Class I prices Option 1B called for certain pointed out that while Option 1A used may be reducing fluid milk modifications. The most significant the USDSS model as a guide, it cannot consumption by consumers. They are of change included the lowering of the be relied upon for making adjustments the opinion that it is more appropriate Class I differential level for to conform with known relationships and efficient to attract milk to meet fluid Minneapolis, Minnesota. These between and among geographic and demands by compensating those who commenters offered a $1.08 per actual plant locations. Further, said incur the cost of shipping milk from hundredweight Class I differential level supporters of Option 1A, the model is surplus areas rather than paying a high for this location. They based this static, and cannot estimate the dynamics price to local producers in milk-deficit recommendation on their own study of changes that may result in supply and areas to bring forth a sufficient supply and survey of prevailing conditions in demand conditions over time. of local milk to meet fluid demands. the Minneapolis area. This proposal is In summary, Option 1A supporters Supporters of Option 1B indicated consistent with their view that Class I indicated Option 1A best assures the support for the more market-oriented differential levels should be set at continuation of dairy farmers receiving theme reflected in this Class I pricing minimum levels. This level included, a fair price for their milk. Processors, option. These supporters commented they said, premiums above the Upper they also pointed out, would not see a that Option 1B will allow milk prices to Midwest’s order blend price, quantity significant change in their ability to respond more appropriately to changing and quality premiums, and hauling compete for a milk supply since most of supply and demand conditions. Because subsidies. From this level, all other the value of fluid milk would be of this, they said, the milk order differential levels should be set and contained in the regulated minimum program will become more market- adjusted. price. They concluded that any changes oriented. The overall pricing structure These commenters also cited the to milk orders that would diminish offered in Option 1B, they say, flattens USDSS model’s limitation in these outcomes would be harmful to the the resulting level of Class I prices determining the proper alignment of dairy industry and to the public interest. throughout a larger portion of the Class I differential levels, a similar Opponents to Option 1A view it as country, thereby providing more of a criticism voiced by Option 1A maintaining too much of the status quo level playing field for producers supporters. These commenters are also and not addressing the reform needed in everywhere. of the opinion that, due to more than 60 Class I pricing. The opponents of Option Supporters of Option 1B view the years of Federal regulation, the relative 1A also view the current Class I pricing increased market-oriented theme as the value differences implied in the model structure as seriously flawed. In their proper direction in which to bring the results were too much like existing view, the current system relies on Class I pricing structure as the milk value differences than would be the case recognizing the Upper Midwest region order program is reformed. Not only is in an unregulated market. They as the reserve supply of milk for the it consistent, in their view, with the indicated that the USDSS model’s country when this is no longer the case. reform mandates established by optimal solution values should be used They see Option 1A as largely Congress in enacting the 1996 Farm Bill, conservatively as maximums in setting maintaining this viewpoint. the movement to a more market- relative geographic differences to the Opponents to Option 1A and the oriented milk order program will Class I pricing structure. Some current Class I pricing structure are of provide incentives for private sector commenters suggested that because the the opinion that today’s differential innovations that will benefit dairy model establishes geographic values for levels and Option 1A differential levels farmers and consumers. all milk uses, a bias results toward are too high, or at least higher than Supporters of Option 1B take a higher Class I values relative to necessary to attract adequate milk fundamentally different view than manufacturing values in many markets. supplies in many areas. Because Class I supporters of Option 1A on the Opponents to Option 1B did not like differentials are too high, they said, appropriate level of the Class I the idea of making the milk order improper economic incentives exist in differential. Supporters of Option 1A are program more market-oriented by many areas for increased milk of the opinion that Class I differential reducing Class I differentials in setting production—in fact overproduction— levels should be set high enough to Class I milk prices. If this is done, say beyond what is needed to meet Class I assure the least amount of price inequity Option 1B opponents, a cascading series

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Related to this, some are largely content with the current way fact calls for, the altering of current commenters noted that the relative the Federal milk order program has supply and demand conditions for milk. differences in prices that would be set approached Class I milk pricing, both in These commenters are of the opinion under Option 1B would not provide its structure and the degree to which it that the Department should not act to enough of a price difference to cause is has returned equitable prices to cause changes in either prices or milk to move from surplus to deficit producers and handlers. But some marketing conditions. Additionally, areas as would be provided in Option changes are needed to assure that this they are also of the opinion that it was 1A. Relying too much on over-order program remains viable to serve the not the intent of Congress to have milk premiums will benefit large handlers to needs of the dairy industry and the order reform result in either an increase the competitive disadvantage of small public well into the 21st century. or decrease in returns to dairy farmers. handlers, they said. Because actual milk The need to reform the milk order Opponents of Option 1B were of the prices paid by handlers would program is clearly and uniformly opinion that too much reliance was increasingly be determined outside of recognized by industry participants and placed on directly applying the USDSS the order’s minimum pricing provisions, the public. To this end, most producers model results as the Class I pricing they concluded, handlers would be and handler entities are of the opinion structure, and that inappropriate much less assured of the price their that the reform effort should result in reliance was also placed on the role of competitors are paying for milk. limited change in the prices that are over-order premiums in achieving a established under the orders, and that more market-oriented pricing plan for Conclusion any changes to the system be governed the milk order program. Opponents Milk is a unique agricultural by a minimum of change in the prices argued that today’s over-order commodity and faces unique marketing and the terms of trade between premiums are directly tied to the circumstances. It is highly perishable, is producers and handlers. Other producer differential levels and the alignment of produced daily and therefore needs to and handler entities are of the opinion Class I prices established under the be marketed in a very committed and that the ‘‘traditional’’ methods of Class existing orders. Additionally noted, continuous production-and-marketing I milk pricing are seriously flawed, current and consolidated markets have, cycle. These characteristics, together resulting in a program that has become and will continue to have, different with the fact that there are many more viewed as economically discriminatory circumstances that will dairy farmers than milk buyers, presents to dairy farmers in certain regions of the disproportionately affect the ability of the opportunity for marketing problems country and is institutionally resistant producers to negotiate over-order to occur that can be disruptive and to change. The public too, expects that premiums, especially in those markets destructive to dairy farmers. This sort of the program should be operated in a where Class I differentials are lowered marketing situation places producers at manner that will provide and promote most from current levels. a marketing disadvantage relative to efficiency and offer the potential for a Because Option 1B calls for handlers, and without some government less expensive milk supply. reductions from current differential involvement, equitable terms of trade It is the Class I pricing structure that levels nearly everywhere, they observed, between these two entities can be provides additional revenue above the less of a minimum order price is assured difficult to achieve. These unique basic value for milk to producers. to producers. In those markets where features of milk and the marketing Because of this, Class I pricing is often minimum order Class I prices are situation faced by dairy farmers were viewed as the cornerstone of the milk reduced the most, a greater burden is noted in public comments and are order program’s pricing policy. This is placed on producers and handlers in reflected in the legislation authorizing so because the Class I fluid use of milk negotiating actual prices relative to milk marketing orders. Milk marketing commands the highest-valued use in the those orders where price levels are not orders, using the tools of classified marketplace and is the preferred outlet as affected, they said. In other words, pricing and marketwide pooling, can for milk by producers. It is also this use noted one commenter, producers in significantly mitigate the undesirable of milk that has the greatest effect on milk-deficit areas would have Class I effects of this marketing situation and determining the location value of all differentials reduced the most and still satisfy the public interest by having milk and in determining the differences would be required to be much more an adequate supply of milk at in blend prices that are received by market-oriented than producers in milk- reasonable prices. producers. surplus area where the differential level As noted in public comments, the Because milk value varies by location, is maintained or increased. One structure of today’s dairy industry, it is appropriate, in using a classified commenter noted, that once over-order characterized by many dairy farmers pricing plan, to establish Class I prices premiums are established, they can and relatively few buyers, is basically that reflect these location value easily collapse because no one has the the same as it was when the milk order differences. Supporters of Option 1A ability to control or limit milk program first began. No dairy farmer, and Option 1B agree this is best production or the flow of milk to dairy farmer cooperative or bargaining accomplished with a system of Class I market. Very small additional volumes organization can effectively serve to differentials that properly links and of milk to a market can destroy over- either control milk production or limit aligns milk value. In evaluating how order premiums, this commenter added. the supply of milk to the marketplace to best to accomplish this, it is also On the producer side of relying too achieve a measure of reasonable price important to recognize the significant much on over-order premiums, they certainty. This can, from time-to-time, changes that have taken place within said, prices received would be much be achieved but such instances are the dairy industry since the full measure less equitably shared and uniform, and generally short-lived and cannot be of Class I pricing was last undertaken at would tend to force dairy farmers to relied upon for serving the public’s a 43-day national hearing in 1990.

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Today, and as evidenced in the desired and needed to achieve the goals I needs and the adopted Class I pricing hearing record of 1990, there was of the AMAA articulated by Option 1A structure accomplishes this. general satisfaction with the way Class supporters while also providing the Additionally, it continues to consider I milk pricing was developed and appropriate changes needed to obtain the cost of moving milk from an employed in a system of orders that had greater economic efficiency and alternate location for Class I use, a evolved over nearly 60 years. The record equity—an objective voiced by consideration important to both Option of that hearing evidenced that supporters of Option 1B. The adopted 1A and Option 1B supporters. This is technological and structural changes class I pricing structure will establish reflected in its aligned structure, were underway, but the record did not Class I milk prices that will result in a recognizing that in supplying milk for contain sufficient evidence for changes sufficient supply of milk for the national manufactured products, demand for at that time. The Upper Midwest region system of reformed and consolidated manufactured products influences a of the country can no longer be milk orders. market’s ability to procure milk for considered the single reserve supply of The adopted Class I pricing structure Class I needs. In this way, the adopted milk that the country can rely upon for recognizes and addresses the concerns Class I pricing structure appropriately a supply of milk to meet fluid needs in of Option 1A supporters in their view of considers all uses of milk as a national deficit areas. In fact, the reform effort the limitations of relying on the Class I pricing structure. has clearly revealed that there are marketplace in establishing milk prices Finally, the adopted Class I pricing several reserve supply areas, and the to producers that are equitable and structure meets the requirements of the Class I pricing structure changes reasonable given the marketing situation AMAA. The broad tenet of the AMAA adopted are reflective of this change. they face. Similarly, the adopted Class is to establish and maintain marketing Other issues—technological factors, I pricing structure recognizes that stability and orderly marketing improved assembly and distribution handlers will be assured a higher degree conditions for milk. The Federal milk systems allowing for sales competition of minimum price equity. As order program will continue to achieve of ever-larger geographic areas, the importantly, the adopted Class I pricing these goals primarily through classified growing importance of milk value based structure provides the necessary pricing and marketwide pooling. As to on the value of its components—all structural reform needed in the dairy pricing requirements, the AMAA speak to the need for reforming the industry. The adopted structure objective to stabilize the marketplace Federal order system. provides the incentives necessary for with minimum prices and not set The PR preliminarily narrowed the increased efficiency in the organization market prices is also achieved. As a Class I pricing structure to two options. and distribution of the milk supply and national Class I pricing structure, it Both have similarities and differences dairy products that is not offered by the specifically addresses, and adequately that have been discussed in detail. The price structure of Option 1A. adopted Class I pricing structure will As discussed earlier, it is important sets, appropriate Class I differential work in conjunction with other reforms and appropriate that the Class I price levels that will result in milk prices that to milk order provisions, especially the structure recognize all uses of milk. The are high enough to generate sufficient more transparent product price formulas classified pricing system of the Federal revenue for producers so that an and the reduced amount of advance milk order program will continue to adequate supply of milk can be notice for Class I and Class II prices. value fluid milk in the highest-priced maintained while continuing to provide Taken as a whole, the package of class. The higher-priced classification equity to handlers. reforms retain the features that are encourages all milk to first satisfy Class BILLING CODE 3410±02±P

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BILLING CODE 3410±02±C

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4. Classification of Milk and Related diverted between plants, general rules fluid milk product definition. Currently, Issues pertaining to the classification of this section exempts from the fluid milk The Federal milk order system should producer milk (including the product definition ‘‘formulas especially continue to contain uniform determination of shrinkage and prepared for infant feeding or dietary classification provisions, but with some overage), rules describing how to use that are packaged in hermetically- modification. The proposed allocate a handler’s receipts of skim sealed containers.’’ As contained in the modifications are consistent with the milk and butterfat to the handler’s proposed rule, this exemption would Agricultural Marketing Agreement Act utilization of such receipts, and have applied to ‘‘formulas especially of 1937, which requires that milk must provisions concerning the market prepared for infant feeding or meal administrator’s reports and replacement’—without regard to the be classified ‘‘in accordance with the announcements concerning type of container—and ‘‘any products form in which or the purpose for which classification. The classification and packaged in all-metal, hermetically- it is used.’’ The uniform provisions contained in classification-related provisions have sealed containers.’’ These changes were been restructured, in part, to not widely supported and have been this final decision provide for 4 classes standardize and simplify the regulatory dropped because they could result in of use. They are similar to the uniform program. reclassifying certain fluid milk products classification provisions contained in Further details concerning these from Class I to Class II. The language in the proposed rule, but with some changes are explained in the following this final decision is identical to Section modifications. In particular, cream discussion. 15(b)(1) of the present orders. cheese has been moved from Class II to Class III, and the proposed fluid milk 4a. Fluid Milk Product (§ 1000.15) 4b. Fluid Cream Product (§ 1000.16) product exclusion for products The new orders contain a modified No change has been made to the fluid packaged in ‘‘all-metal, hermetically- fluid milk product definition in cream product definition. The current sealed containers’’ has been changed § 1000.15. The changes to the fluid milk definition is uniform under all the back to the present standard: ‘‘formulas product definition include eliminating orders and should be used in the newly especially prepared for infant feeding or the term filled milk, including eggnog in merged orders. There were no dietary use (meal replacement) that are the list of specified fluid milk products, comments supporting a change in this packaged in hermetically-sealed and revising the word buttermilk to read provision. containers.’’ cultured buttermilk. The revised fluid In addition to these changes, the milk product definition reads ‘‘any milk 4c. Filled Milk proposed shrinkage provisions have products in fluid or frozen form The definition of filled milk has been been revised to more closely resemble containing less than 9 percent butterfat eliminated from all milk orders and the the provisions that are now in the and more than 6.5% nonfat milk solids term has been removed from the fluid orders, and the provision for milk that that are intended to be used as milk product definition and other is dumped or used for animal feed has beverages. Such products include, but provisions within the orders. Filled been added back to the orders, but has are not limited to, milk, skim milk, milk is a product that contains a been moved from Class III to a new lowfat milk, milk drinks, eggnog, and combination of nonmilk fat or oil with paragraph, § 1000.40(e), which specifies cultured buttermilk, including any such skim milk (whether fresh, cultured, other uses of milk that are to be priced beverage products that are flavored, reconstituted, or modified by the at the ‘‘lowest class price for the cultured, modified with added nonfat addition of nonfat milk solids). Filled month,’’ be it I, II, III, or IV. Milk that milk solids, sterilized, concentrated (to milk was first produced and marketed is lost in an accident, flood, or fire (i.e., not more than 50% total milk solids), or in the 1960s. In 1968, the orders were § 1000.40(c)(3) in the proposed rule reconstituted.’’ amended to provide a definition of published on January 30, 1998, at 63 FR The term ‘‘buttermilk,’’ as used in the filled milk. Currently, there is little or 4972) has been combined with milk that fluid milk product definition, is no filled milk being produced under is dumped or used for animal feed in changed to read ‘‘cultured buttermilk.’’ Federal orders. The term filled milk is the new paragraph (e). Finally, the The revised term clearly distinguishes used 18 times in each of the milk orders. classification for inventory of fluid milk the ‘‘beverage’’ buttermilk product from It serves little purpose today except to products and fluid cream products in the buttermilk byproduct which is complicate and lengthen the regulatory bulk form has been moved from Class III produced from a continuous churning language. For this reason, any reference to Class IV. operation. to filled milk has been removed from all Changes in the proposed rule that The fluid milk product definition also orders. have been carried forward to this final is modified to exclude ‘‘filled milk’’ and The form of filled milk and purpose decision include the reclassification of to include eggnog in its list of products. for which it is used are the same as the eggnog from Class II to Class I, the Although it is apparent that eggnog is a form and purpose for which whole milk formation of a new Class IV which beverage milk product and clearly meets is used. Filled milk is marketed by includes milk used to produce butter many of the criteria for being considered handlers in the same types of packages and any milk product in dried form, and a fluid milk product, it is not now and in the same trade channels as whole elimination of the term filled milk from included in the list of products milk, and is mainly intended to be used the orders. identified as fluid milk products. The as a beverage substitute for milk. In addition to changes in the class addition of eggnog to the list of fluid Whether made from vegetable fat and uses of milk, this final decision modifies milk products results in a change of the fresh or reconstituted skim milk, or any the definitions of fluid milk and product’s classification from a Class II combination thereof, the resulting commercial food processing product to a Class I product. The product resembles whole milk in establishment. Also, this decision elimination of the term ‘‘filled milk’’ appearance. Therefore, any filled milk contains modified administrative rules from the fluid milk product definition is produced and marketed in the future related to the classification of milk. discussed later. will be classified as a Class I product These include rules for classifying skim In the proposed rule, certain changes under the revised fluid milk product milk and butterfat that is transferred or were proposed for section 15(b)(1) of the definition.

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No letters were received commenting disposed of as fluid milk sold by the received. However, a large majority of on this change. glass from a bulk dispenser. the comments on this issue supported 4 There were no comment letters that classes of utilization as proposed. 4d. Commercial Food Processing addressed these recommendations in Establishment (§ 1000.19) response to the proposed rule. 4f. Class I Milk The definition of commercial food In this final decision, Class I milk processing establishment (CFPE) has 4e. Classes of Utilization (§ 1000.40) includes all skim milk and butterfat been revised by removing the filled milk Historically, the fluid or beverage uses contained in milk products that are reference, for the reasons previously of milk have been classified in the intended to be consumed in fluid form discussed, and by removing the word highest-priced class (Class I), and soft or as beverages, with certain exceptions. ‘‘bulk’’ from the definition. The removal spoonable products, those from which These exceptions include plain or of the word ‘‘bulk’’ will allow a CFPE some of the moisture has been removed, sweetened evaporated or condensed to receive fluid milk products and fluid have been classified in the intermediate milk, milk that is used in formulas cream products for Class II use in class of milk (Class II). The final especially prepared for infant feeding or certain sized packages as well as in decision issued on February 5, 1993 (58 meal replacement if such products are bulk. FR 12634) provided 3 uniform classes of packaged in hermetically-sealed Presently, the CFPE definition milk for all orders. Classes I and II containers, and any product that prohibits the receipt of fluid milk continued the traditional classification contains by weight less than 6.5 percent products for Class II use in relatively of milk, while the lowest-priced class nonfat milk solids. small pre-measured packages that might (Class III) contained the hard, storable Under this final decision, eggnog will reduce the CFPE’s production costs. products. In a final decision that became join lowfat eggnog as a Class I product. While packaged fluid milk products effective December 1993, a fourth Class I products are generally classified should be permitted to be transferred to class—Class III–A (actually a sub- on the basis of their fluid form and a CFPE in any size, only those products section of Class III)—was established for intended use. Eggnog, a highly seasonal that are shipped in larger-than- most orders for milk used to produce product, is clearly intended to be consumer-sized packages (i.e., larger nonfat dry milk. consumed as a beverage. Since this than one gallon) should be eligible for This final decision continues to product is manufactured, packaged and a Class II classification. If milk is provide a Class I classification for milk distributed to the consumer as a received in gallon containers or smaller, used for fluid and beverage use, with drinkable beverage, it should be the milk should be priced as Class I certain exceptions for formulas classified as a Class I product. milk since there is no way of especially prepared for infant feeding or Comments received regarding the guaranteeing that such products will not dietary use in hermetically-sealed reclassification of eggnog were generally be sold for fluid use. Permitting milk in containers and products with less than in support of its reclassification into any sized container to be sold to a CFPE 6.5 percent nonfat milk solids. Soft or Class I, although a few handlers for Class II use if the container had a spoonable products, most soft cheeses, submitted comments opposing this special label, such as ‘‘for commercial and milk that is used in the manufacture change, arguing that it would increase food processing use only,’’ was of other food products or sweetened the cost of eggnog and, therefore, reduce considered, but such a provision would condensed milk will continue to be consumer demand for this product. be impractical and it would be classified as Class II. Class III will Class I Used-to-Produce. In order to prohibitively expensive for a handler to continue to apply to milk used in hard simplify the accountability for milk prepare specially labeled products for cheeses, cream cheese, and other products classified as Class I that may small accounts. The current restriction spreadable cheese, but will no longer contain nonmilk ingredients and/or barring a CFPE from having any apply to butter. Finally, the new Class previously processed and priced skim disposition of fluid milk products other IV applies to all skim milk and butterfat milk and butterfat, the proposed rule than those in consumer-sized packages used to produce butter or any milk recommended adding a ‘‘used-to- (one gallon or less) should be retained product in dried form. Class IV will also produce’’ category to Class I. The under the new orders. apply to bulk milk that is in inventory proposed rule stated that the used-to- These two restrictions are based upon at the end of the month. produce accountability method would practical considerations. The integrity of A new paragraph (e) has been added preclude the need to develop and the classified pricing system would be to § 1000.40 that classifies other uses of maintain nonstandard conversion much more difficult to maintain if the milk that are priced at the ‘‘lowest- factors and non-milk credits (i.e., salt, market administrator were forced to priced class’’ for the month. flavoring, stabilizers) for milk product audit every CFPE on a regular basis. By Under the pricing formulas proposed accountability and would improve the prohibiting the sale of fluid milk for the new orders, it is not certain accuracy of handler reporting and products in consumer-sized packages to whether the Class III price or the Class minimize audit corrections without a CFPE for anything but Class I use, IV price will be the lowest class price sacrificing any statistical information, there would be less need to regularly for the month. In view of this price pricing considerations, or classification audit CFPE’s to be sure that such uncertainty, a new paragraph has been criteria. products are not being sold to the added to § 1000.40 to guarantee that Several comment letters were public. Similarly, since packaged fluid milk that is lost in an accident, dumped, received arguing that the proposed Class milk products in containers larger than or used for livestock feed is accounted I used-to-produce category would not one gallon are rarely, if ever, found in for at the month’s lowest class price. simplify the accounting system but retail outlets, it is unlikely that such Comments filed regarding the number instead would complicate it. No products will be sold for fluid use. By of classes of utilization for the proposed comments were received endorsing this restricting fluid milk product merged orders varied from supporters of proposal. disposition by CFPE’s to packaged one class, which would eliminate all Our analysis of the proposed Class I products not larger than one gallon in manufacturing classes, to supporters of used-to-produce category generally size, there is reasonable assurance that 5 classes of milk. Comments concerning supports those who argued against it. If milk priced as Class II will not be the addition of an export class were also there were no need to follow a pool

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The containers should continue to be this final decision, the proposed used- National Milk Producers Federation, classified as Class II products. Although to-produce category would simply Dairy Farmers of America, and the proposed rule suggested a require dual accounting with no numerous individual handlers repeated modification of this exemption, there offsetting benefit. Accordingly, the Class essentially the same argument. was insufficient support to move I used-to-produce proposal has been Some comments addressed the forward with this suggestion. dropped from this final decision. classification of cottage cheese and Accordingly, no change was made from 4g. Class II, III, and IV Milk ricotta cheese, in addition to cream the language that is now in the orders. cheese. A national manufacturer of The treatment of buttermilk should The classification of milk used in cheese argued that milk used in cottage remain unchanged from the proposed Class II, III, and IV uses and products is cheese and ricotta cheese should be rule. No comments were received in essentially the same as contained in the reclassified from Class II to Class III. opposition to the proposed distinction proposed rule with a few exceptions. The handler stated that due to falling between buttermilk for drinking First, cream cheese is moved from demand for cottage cheese, it should be purposes and buttermilk for baking Class II to Class III, where it has been placed with other cheeses in Class III. purposes. As set forth in the proposed for many years. Another cottage cheese manufacturer rule, drinking buttermilk would have to Second, fluid milk products and bulk made the same suggestion. Several be labeled as ‘‘cultured buttermilk’’ fluid cream products in inventory at the comment letters also pointed out that while buttermilk for baking must end of the month have been moved from ricotta cheese was priced under contain food starch in excess of 2% of Class III to Class IV. California’s Class 4–b, giving California Third, the skim milk equivalent of the total solids in the product and the processors an advantage over processors nonfat solids used to modify a fluid product must be labeled to indicate the making ricotta from milk priced under milk product that has not been food starch content. Federal milk orders. While these accounted for in Class I has been moved The proposal to account for all Class comments may have some merit, we from Class III to Class IV. II products on a used-to-produce basis Fourth, the proposed Class II believe that more information is needed was unopposed. Accordingly, this classification for any fluid product in an before these changes can be considered. accounting method, which now applies ‘‘all-metal, hermetically-sealed Ending inventory of fluid milk to all Class II products, except for some container’’ is changed to what is now in products and fluid cream products in fluid cream products, is extended to the the orders: i.e., ‘‘formulas especially bulk form should be moved to Class IV. remaining Class II products that are prepared for infant feeding or dietary Since the Class IV price is expected to currently accounted for on a disposition use (meal replacement) that are be the lowest class price in the long run, basis. packaged in hermetically-sealed it is logical to classify ending inventory As noted above, a large majority of the containers’’. in Class IV. Also, paragraph (c)(4) of comment letters supported the 4 classes Finally, the surplus classification for § 1000.40, should be moved from Class of utilization as set forth in the milk that is dumped or used for animal III to Class IV. This paragraph prices the proposed rule, including the separate feed is added back to the orders, but, as skim milk equivalent of nonfat milk Class IV for butter and milk products in described earlier, it has been placed in solids used to modify a fluid milk dried form. Therefore, no change has a new paragraph (e) of § 1000.40 which product. With the inclusion of a Class been made to Class IV in this final prices milk in the lowest-priced class IV classification for all products in dried decision except for the addition of the for the month. For the same reasons form, the nonfat milk solids used to items already discussed. cited previously, milk which is lost in modify a fluid milk product should be Several commenters reiterated a fire, flood, or accident also has been priced as Class IV, together with other requests made prior to the proposed rule moved from Class III to the ‘‘other uses’’ dried products, rather than Class III. to reclassify bulk sweetened condensed class. Products lost by a handler in a fire, milk from Class II to Class IV. The Under the proposed rule, the flood, or vehicular accident and commenters explained that sweetened classification of cream cheese would products that are dumped or used for condensed milk is primarily used in have been changed from Class III to animal feed have been moved from commercial food processing Class II. The rationale for this change Class III to a new paragraph establishments and in the confections was that the milk used in Class II (§ 1000.40(e)) which would price skim industry and that it is interchangeable products is used to process or milk and butterfat in such uses at the with powdered milk products and sugar manufacture products for which lowest class price for the month. Under in ingredient markets for processed handlers know a consumer demand the pricing formulas proposed for the foods and candy. They argued that exists and that such products are neither new orders, the Class III price or Class manufacturers of sweetened condensed as perishable as fluid products nor IV price is likely to be the lowest class milk are currently at a competitive perform a balancing function for the price for the month, but it is possible disadvantage with manufacturers of market, as do butter, powder, and the under some orders that the Class I or II nonfat dry milk and urged that the 2 hard cheeses. price could be the lowest class price for products be classified identically. This proposal was not well received the month if component values were According to one commenter, the by a large majority of the handlers and increasing rapidly. In view of this price Galloway Company, the current system producer organizations that commented uncertainty, a new paragraph has been of classification places sweetened on it. The International Dairy Foods added to § 1000.40 to guarantee that condensed milk at a significant Association argued that the pricing of milk that is lost in an accident, dumped, disadvantage and has virtually

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Specifically, a result, there must be an economic There were very few comment letters Hershey argued that the Class II relationship between the Class II price that supported the proposal and an classification for fresh milk used to and the cost of using alternative dry or overwhelming number of comments make chocolate, compared to the Class concentrated products to make Class II urging us to keep the current provision. IV classification for milk used to make products. Under current pricing Many of the opponents were high Class powder that is subsequently used in provisions, the Class II price can be I utilization handlers who complained chocolate violates the Act because such excessive relative to using nonfat dry that the proposed change would milk starts out in the same form and is milk since the Class II price is a measure reclassify their shrinkage from Class III used for the same purpose. of the value of milk in cheese (the Class to Class I, increasing their costs for this Hershey explained that whole milk, III price) plus a differential. lost milk. sugar, cocoa butter, and chocolate liquor Conceptually, we do not believe that It was not only handlers that disliked are used to make ‘‘chocolate crumb,’’ the value of milk used in demand- the proposed shrinkage provision. which is further processed to make driven products like chocolate and Several producer organizations, chocolate. According to Hershey, the sweetened condensed milk that is used including Dairy Farmers of America and chocolate crumb has a moisture content in food products is the same as milk that the National Milk Producers Federation, of only 1 percent, which means that if is sometimes made into powder for lack also voiced their opposition to the a manufacturer receives fresh whole of any other use. The major point of the proposal. Most of the comment letters milk, it must remove 99 percent of the ability to substitute among forms of urged us to retain the key features of the water from it in order for the milk to milk, sweetened condensed milk, and present shrinkage provision, but there perform its function in the chocolate. nonfat dry milk in certain uses is that were comments suggesting a simpler An alternative to starting with whole there is a fixed relationship between the provision. milk and drying it is to purchase whole Class II and Class IV price. The Based on the comments received, this milk powder and mix it with the sugar, appropriate price relationship is final decision retains, in large part, the cocoa butter, and chocolate liquor to discussed in the Class II pricing section present method of calculating shrinkage make the chocolate crumb. of this decision. allowances and pricing shrinkage, but Hershey argues that maintaining the In the proposed rule, no allowance with certain modifications. Just as in the current disparate classifications for was provided for dumped milk or milk current provisions, there are specified fresh milk used to make chocolate and used for animal feed, and a Class III allowances for shrinkage. The major fresh milk that is first dried and then classification was recommended for difference is that shrinkage is not used to make chocolate, in combination milk lost in a fire, flood, or accident. automatically assigned to a specified with the proposed 70-cent Class II Many handlers and the National Milk class, as it is now, but rather is assigned differential, will pressure manufacturers Producers Federation objected to the to the ‘‘lowest-priced class.’’ This to change their manufacturing processes removal of the Class III classification for change was made to conform with the and formulas, reduce the use of fresh milk that is dumped or used as animal new 4-class pricing system and, more milk and increase the use of milk feed. importantly, to recognize that there is powders, reduce milk solids in product On the basis of the comments filed on no fixed relationship between class formulas, replace milk solids with lower this issue, a surplus use has been prices because of the different formulas cost alternatives, and might even established for milk that is dumped or used to compute them. For example, influence the location of chocolate used as animal feed. The price because the formulas for Class III and IV manufacturing plants. Hershey also applicable to such use will be the lowest prices are not directly related, it cannot notes that the State of California does class price for the month. be known in advance which class price not discriminate between manufacturers will be lowest. Since the relationship of chocolate, but instead prices all milk 4h. Shrinkage and Overage between class prices will vary from one used to manufacture chocolate in the Shrinkage is experienced by handlers month to the next, under the provision same class whether the chocolate in milk processing operations and in the adopted here shrinkage may be priced manufacturer begins its process with receipt of farm bulk tank milk at in Class III one month and in Class IV fluid milk, sweetened condensed milk, receiving stations and processing plants. the next. It is necessary to price evaporated milk, nonfat dry milk, or Milk is unavoidably lost as it remains in shrinkage in the lowest-priced class to whole milk powder. pipe lines, adheres to tanker walls and/ avoid the situation where a cheese Galloway and Hershey conclude that or other plant equipment, and is washed plant, for example, would have to pay there is no justification for pricing milk away in the cleaning operations. In more for its shrinkage than it would for used to make sweetened condensed addition, unexpected losses, including milk used in cheese. Such would be the milk or chocolate crumb in a higher spillage or leaking packages, also case if shrinkage was always priced in class than milk used to produce contribute to shrinkage. Class IV and the Class IV price exceeded powdered milk. However, Galloway In the proposed rule, we proposed a the Class III price. Pricing shrinkage in states, if sweetened condensed milk is pro rata assignment of shrinkage based the lowest-priced class prevents this kept in a class higher than powder, the on a handler’s utilization. In other problem. differential for that class should be no words, each handler’s shrinkage would As noted, the current shrinkage more than 30 cents per hundredweight. have been classified according to the allowances has been retained in the Bulk sweetened condensed milk/skim handler’s use of milk that was not lost revised provision. Thus, a pool plant milk is used as an intermediate product in transit or processing. We believed operator would receive a lowest-priced in ice cream, candy, and other that the adoption of such a provision class shrinkage allowance based on 2

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00101 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.111 pfrm08 PsN: 02APP2 16126 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules percent of the total quantity of milk As noted elsewhere in this decision, more producers is commingled on a physically received at the plant directly a recent development in milk processing farm with RO or UF equipment, that from producers’ farms on the basis of is the use of on-farm filtering equipment farm will be treated as a plant and the farm weights and tests, plus 1.5 percent (e.g., reverse osmosis or ultra-filtration) dairy farmer owning or leasing the farm of bulk milk received on a basis other to concentrate milk before it is shipped will be the responsible handler for all of than farm weights and tests, and minus to a plant for use in a variety of milk the milk processed that month. 1.5 percent of the quantity of bulk milk products. Although this milk falls under The shrinkage provision in this final transferred to other plants, excluding the same broad ‘‘concentrated milk’’ decision differs from the current concentrated milk transferred to another category as condensed milk, it is shrinkage provisions in one other plant for an agreed-upon use other than actually a very different product which respect. At the present time, when a Class I. A cooperative association can conceivably be used for fluid use as manufacturing facility that has handler that delivers milk to pool plants well as in a manufactured product such absolutely no Class I utilization has on a basis other than farm weights and as cheese or ice cream. Thus, language ‘‘excess shrinkage’’ (i.e., shrinkage that tests would receive a shrinkage is needed in the shrinkage provision to exceeds its 2 percent shrinkage allowance of .5 percent of the total differentiate this type of concentrated allowance) the excess shrinkage is quantity of milk picked up at producers’ milk from condensed milk. We have assigned to Class I even though the farms. Shrinkage in excess of these accommodated these 2 types of plant has no Class I utilization. Thus, allowances will be assigned in series concentrated milk by allowing the the milk that is ‘‘lost’’ by the plant is starting with Class I to the extent of shipping and receiving handlers to agree actually priced higher than the milk that available utilization. on the use of this milk. Accordingly, if is ‘‘used’’ by the plant. The shrinkage provision adopted for a handler receives concentrated milk Under the proposed provision, such the new orders contains language to from another plant by agreement for use excess shrinkage would be assigned to accommodate shrinkage associated with in Class II, III, or IV, the receiving whatever utilization the plant has, ‘‘concentrated milk.’’ Prior to the 1993 handler will get no shrinkage on this starting with Class I. In the case of a classification decision, condensed milk, milk. If no such agreement is specified, cheese plant that has no utilization which is made for use in ice cream and however, the receiving handler will get other than Class III, the excess shrinkage other manufactured products, was not a the 1.5 percent shrinkage allowance, would be assigned to Class III. fluid milk product. Hence, it was not just as would be the case for After shrinkage is assigned pursuant addressed by the shrinkage provision. unconcentrated milk that was received to § 1000.43(b) of the proposed orders, This changed after the decision, from another plant. it will be added to a handler’s reported however, when condensed milk became For example, milk may be utilization to arrive at the ‘‘gross a fluid milk product. In making this concentrated at a plant by using reverse utilization in each class.’’ The gross change to the fluid milk product osmosis or ultra-filtration techniques utilization in each class will then be definition, certain conforming changes and then be transferred to a 2nd plant carried over to § 1000.44, where it will that should have been made in the for use in a fluid milk product. In such be used to allocate the handler’s receipts shrinkage provisions were overlooked. case, the milk will not be transferred by to its gross utilization of such receipts. The current proceeding involving all agreement for other than Class I use, but Overage occurs when the reported Federal orders has been the first instead will be allocated to use at the utilization of producer milk exceeds the opportunity to rectify this oversight. 2nd plant receiving this concentrated reported quantity of producer milk During the interim period, the unique milk. In this instance, it is appropriate received. Overage, as well as shrinkage, problem associated with condensed to treat this milk just like can occur for a number of reasons but milk has been handled administratively. unconcentrated milk that is received at is usually the result of record-keeping Thus, the new language added to the a plant and then transferred to a 2nd and measurement errors. shrinkage provision does not represent plant. Thus, the first plant will initially As set forth in the proposed rule, a change from the way the rules have get a 2 percent shrinkage allowance for overage would have been classified by been administered but merely codifies the milk received from producers, but being prorated to a handler’s reported them. will be required to subtract 1.5 percent utilization. It then would have been Some plants receive milk from from the 2 percent when the milk, even subtracted from the handler’s reported producers, condense (i.e., concentrate) though concentrated, is transferred to utilization to arrive at the gross the milk into a product that contains not the 2nd plant. The 2nd plant will get a utilization in each class which would more than 50 percent total milk solids, shrinkage allowance based on 1.5 have been used to allocate a handler’s and then transfer this product on an percent of the reconstituted volume of receipts in § 1000.44. agreed-upon basis to another plant for the concentrated milk. In other words, No comments were received use in some product other than a fluid for accounting purposes the water that specifically focusing on the proposed milk product (e.g., ice cream). In this was initially removed from the milk will treatment of overage, undoubtedly case, the first plant should retain the be added back to the concentrated milk because the proration of overage does full 2 percent shrinkage allowance before computing the 1.5 percent not have the same financial impact as because it incurs processing shrinkage shrinkage allowance for the 2nd plant. the proration of shrinkage. Nevertheless, in the course of concentrating—i.e., In the example above, the in conjunction with the change in the most likely condensing—the milk. The concentrated milk will likely be from a treatment of shrinkage, the treatment of plant purchasing this concentrated (i.e., farm plant which concentrates its milk overage also should remain the same as condensed) milk should get no before shipping it using either reverse it is now in the orders. Accordingly, in shrinkage allowance on this milk since osmosis (RO) or ultra-filtration (UF). As this final decision, overage is classified the designated use of this milk is for explained in the uniform provision in § 1000.44(a)(11) by subtracting the non-fluid use. Accordingly, the value of discussion in this final decision, milk excess pounds of skim milk and any shrinkage incurred in further from a single farm with RO or UF butterfat from each class, beginning processing this concentrated milk equipment will be treated as producer with Class IV. This treatment is would not be much less than its use milk of the first pool plant receiving this identical to the way overage is classified value. milk. However, when the milk of 2 or under the present orders in section

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44(a)(14), except for the fact that now— cases, it makes little difference to a milk and cream at the nonpool plant. It since there is no Class IV—the cooperative association whether a dairy has been added to ensure administrative allocation begins with Class III. farmer is a producer on one order or consistency and does not represent a another order; any differences in blend change in the application of this 4i. Classification of Transfers and prices between the orders will be provision. Diversions (§ 1000.42) washed out in the reblending process. In In § 1000.42(d)(2)(vi), the allocation Certain changes have been made to the case of milk of nonmember process for bulk fluid milk transferred the classification of transfers and producers that is diverted between from pool plants to nonpool plants is diversions section of the orders to orders, however, differences could arise modified such that any remaining simplify and clarify order language. The in a producer’s net proceeds for the unassigned receipts of bulk fluid changes discussed in this final decision month depending upon how much milk products be assigned, pro rata among are virtually identical to those contained was pooled in each order. Therefore, such plants, to the extent possible first in the proposed rule, except for minor these situations should be handled in to any remaining Class I utilization and corrections and conforming changes such a way as to be least disruptive to then to all other utilization, in sequence necessitated by other changes in order individual dairy farmers. beginning with the lowest class at the provisions. There were very few A market administrator does not nonpool plant. This change returns the comments pertaining to this section of know until handlers’ reports have been order language to the assignment the proposed rule. Those that were received that some portion of milk sequence that was adopted in the received supported the changes reported as diverted to another order Uniform Classification Decision of 1974. proposed. cannot be absorbed by the amount of Receipts from pool plants should not be At the present time, in many orders if non-Class I utilization in the receiving given preference by assigning such milk any milk that is diverted from one order order’s plant. In such case, the diverting to another for requested Class II or III to the available Class II use before handler should be given the option of assigning receipts from dairy farmers use is assigned to Class I, the dairy designating the entire load of diverted farmer who shipped that milk is defined who constitute the regular source of milk as producer milk at the plant milk for such nonpool plant. Generally, as a producer under the order receiving physically receiving the milk. the milk with respect to that portion of milk transferred or diverted from pool Alternatively, if the diverting handler plants to nonpool plants is surplus milk the milk assigned to Class I. In other wishes, it may designate which dairy orders under similar conditions, the and would be used in storable farmers on the diverted load of milk will manufactured products, such as nonfat dairy farmer becomes a producer on the be designated as producers under the dry milk and butter. By assigning receiving order for all of the milk order physically receiving the milk. As transferred or diverted milk to a diverted even though only a portion of a last resort, the market administrator nonpool plant’s Class II utilization first, the milk was classified as Class I. When will prorate the portion of diverted milk the pool plant operator is forced to this type of adjustment is necessary, the among all the dairy farmers whose milk account for this milk at the Class II diverting handler is informed by the was received from the diverting handler price, even though the nonfat dry milk market administrator’s office that there on the last day of the month, then the or other surplus product that was made is not enough Class II or III use second-to-last day, and continuing in with the milk is of a lesser value. This remaining in the receiving plant to that fashion until the diverted milk that process will prevent the assignment of absorb all of the milk diverted. In such is in excess of Class II, III, and IV use case, the diverting handler may pick has been assigned as producer milk receipts at a higher utilization than the which load or loads of diverted milk under the receiving order. actual utilization. will become producer milk under the A conforming change that should be Receipts of bulk fluid cream products receiving order. made in each order relates to milk that at nonpool plants from pool plants and Since the orders are not precisely is transferred or diverted for Class II or plants regulated under other Federal clear on how inter-order diverted milk III use. Presently, milk may be orders, similarly, will be assigned to the should be handled, some modification transferred or diverted on a requested lowest class utilization first. Generally, is needed in the order language. Under Class II or III basis. However, with 4 a plant operator will use its regular most orders, and as provided in this classes of utilization in the new orders, source of supply in the highest valued final decision, milk may be diverted milk could be diverted for requested uses before using alternative supplies. from one order to another for a Class IV use also. Rather than specifying Thus, if a nonpool plant receives cream requested use other than Class I. ‘‘Class II, III, or IV,’’ however, the orders from a pool plant or a plant regulated However, if there is not enough Class II, should simply state ‘‘other than Class I’’ under another Federal order, it is likely III, or IV utilization in the receiving to accommodate a system of more than that the regulated plants were trying to plant to be assigned to the diverted 3 classes. This language is simpler, dispose of their excess cream. The milk, some milk may have to be shorter, and accomplishes the same end. nonpool plant receiving the cream will assigned to Class I. When this happens, To simplify and clarify the most likely use it for manufacturing the practical administrative problems classification of transfers and diversions purposes; therefore, it should be involve determining which milk of of bulk fluid milk products and bulk assigned to the lowest class first. The which dairy farmers and which loads of fluid cream products from a pool plant priority given to regular source supplies milk will be shifted as producer milk to a nonpool plant, which are classified is recognized and the provision from one order to another. by assigning the nonpool plant’s modified to reflect this. Market administrators should be utilization to its receipts, the phrase, 4j. General Classification Rules given some flexibility to handle these ‘‘excluding the milk equivalent of both (§ 1000.43) administrative problems on a market-by- nonfat milk solids and concentrated market and case-by-case basis. As a milk used in the plant during the For classification purposes, the milk practical matter, most milk diverted month,’’ has been added in of a cooperative bulk tank handler—i.e., between orders is diverted by § 1000.42(d)(2)(i). This language will a ‘‘9(c) handler’’—that is delivered to a cooperative associations that reblend help to clarify the steps to be followed pool plant will be treated as ‘‘producer proceeds to their members. In most in verifying the utilization of bulk fluid milk’’ of the pool plant operator. This

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00103 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.114 pfrm08 PsN: 02APP2 16128 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules change will shorten and simplify the basis of the handler’s utilization at all plants, distributed on routes, and then allocation section. plants combined. The objective was to returned to the last plant of receipt. The computation and classification of prevent more distant other order milk A handler transferring packaged fluid shrinkage and overage have been added from being assigned to Class I use at the milk products to another handler’s plant to this section. This will eliminate expense of producers who were located may incur some lost product en route to Section 41, the section previously used nearer to the city markets and who the buying handler’s plant. In such case, for this purpose. Also, the last represented the normal source of supply the transferring handler may report such paragraph of Section 43 has been for the markets’ fluid milk needs. product as route returns and account for removed because milk for Class IV use The 11 new orders do not fit within the milk used in such product at the now would be classified in Section 44 the parameters of the classical model lowest class price. of the orders. where a major consumption area is In view of the reclassification for No comments were received surrounded by production areas. The route returns for either handler involved pertaining to this section. marketing areas proposed for the in an inter-order transfer who reports 4k. Classification of Producer Milk consolidated orders span several states such returns, subject to market (§ 1000.44) and have a number of major population administrator verification, it is not centers. They also have pockets of milk necessary to classify interorder transfers A handler may receive milk from a production that, in a number of cases, of fluid milk products at 98 percent producer, a cooperative association are in higher-priced areas than some of Class I and 2 percent Class III because acting as a handler on bulk tank milk, this rule overcompensates handlers for by transfer from another pool plant, or the fluid milk plants within the marketing area. This milk may not be route returns and unfairly reduces from ‘‘other sources’’ such as nonpool income to producers. For these reasons, plants, partially regulated plants, and economically available to a fluid milk plant several hundred miles away. In the ‘‘98/2’’ rule has been eliminated. plants that are regulated under other In addition to the changes discussed orders. Because of this diversity in fact, it may be that a plant near the periphery of a multi-state market may above, Section 44 has been shortened sources of receipt, it is necessary in a and simplified by removing unnecessary milk order to go through an allocation find its closest and cheapest source of supply from outside the market rather references that serve to confuse the sequence to determine which source of language rather than make it easier to milk gets priority to a particular class of than from within the marketing area. Accordingly, the system allocation rules understand. Where possible, simpler utilization and to determine how language has been used to replace producer milk was used. In some orders, are not supported by current marketing conditions. Therefore, all orders have lengthy section references. this allocation sequence is done on a No comments were received system-wide basis; in others, it is done been modified to allocate milk only on a plant-by-plant basis rather than on a supporting or opposing these for each plant receiving producer milk. recommendations. Section 44 is one of the most system basis. complicated and difficult-to-understand Another change that has been made in 4l. Conforming Changes to Other sections in a milk order. Consequently, the allocation section concerns the ‘‘98/ Sections (§§ ——.14, ——.41, and an attempt has been made to simplify 2’’ rule. At the present time, only 98 ——.60). and shorten it. Part of this task was percent of the packaged fluid milk Paragraph (b) of the other source milk made easier by proposed changes to products transferred between orders is definition has been removed to reflect other sections (e.g., elimination of filled allocated to Class I; the remaining 2 the fact that all packaged fluid cream milk, elimination of individual handler percent is allocated to Class III. This products now would be accounted for pools, and modification of the treatment provision, originating from the June 19, on a used-to-produce basis. Also, as of inter-order transfers and diversions). 1964, ‘‘compensatory payment’’ previously noted, the simpler and All orders are not now uniform in the decision, was adopted to provide an shorter treatment for shrinkage shortens classification of producer milk. For allowance for ‘‘route returns.’’ the existing shrinkage provision to the example, some orders (e.g., Chicago According to that decision, ‘‘it is point where it is no longer necessary to Regional) provide for system allocation reasonable to expect some route returns keep a separate section for it. Therefore, while others allocate receipts on a plant- will be associated with inter-market a separate section for shrinkage is by-plant basis for a multiple plant transfers just as there are in connection eliminated and the revised contents of handler. with milk locally processed in the that section are now incorporated as a Under the consolidated orders, milk receiving market . . . a small allowance new paragraph (b) in § 1000.43. Finally, will be allocated on a plant-by-plant of 2 percent for such returns, which conforming changes have been made to basis, as modified to reflect other must fall into surplus use, should be § ——.60 (Handler’s value of milk for changes proposed herein. The system included to avoid such over-assignment computing the uniform price) to reflect allocation method that is found in some in Class I.’’ (29 FR 9120). the elimination of filled milk from the orders is based upon a set of marketing This final decision classifies route order, and to reflect changes in conditions concerning the locations of returns based upon the use of such references due to other modifications handlers’ plants and the market’s returns. If route returns are used for such as the changes in the treatment of available milk supply in relation to animal feed, an ‘‘other use’’ shrinkage and overage. those plants. These provisions were classification is provided and such milk intended to stop abuses that occurred is priced at the lowest class price for the 4m. Organic milk when milk was transferred from one month. If route returns are used to make During the development stage of the market to another. Rather than permit another product, such as cottage cheese order reform process, a proposal was an inter-order transfer to be assigned at for example, the milk would be received from Horizon Foods to exempt a handler’s high Class I utilization plant, reclassified as Class II. This organic milk from pricing and pooling while the handler’s producer milk was classification not only applies to under Federal milk orders. assigned to lower use value at another packaged products made from producer In 1990, Congress passed, and the of its plants, the system allocation milk, but also includes packaged President signed into law, the Organic provisions assigned the transfers on the products that were received from other Food Production Act of 1990 (7 U.S.C.

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6501 et seq.), establishing the first saturated and milk in excess of fluid pool plants with progressively lower Federal standards for organic food needs must be disposed of at Class I prices. products. A proposed rule was issued competitive prices. If and when this This final decision is based on the on December 5, 1997, and published in happens, it is likely that some form of premise that Class I milk does not have the Federal Register on December 16, classified pricing will be implemented. the same value at every location. For 1997 (62 FR 65849), to implement the Finally, the Act provides for classifying this reason, Class I differentials have National Organic Program. and pricing milk on the basis of its form been established for each order with Organic dairy products can now be and use. As a result, different costs that location adjustments that result in found in many, if not most, major may be associated with producing establishing a unified Class I price grocery chains in metropolitan areas. organic milk or other types of milk are structure that applies to every county The retail price of organic dairy not relevant. For these reasons, it would and city in the contiguous 48 states. products is well above non-organic be inappropriate at this time to exempt Given this approach, it is no longer products. In addition to carrying organic organic milk from pooling or to provide appropriate to classify a bulk movement milk, many supermarkets now also carry any other type of special treatment for of milk as Class I milk in one section of organic yogurt, sour cream, butter, and it under the guise of Federal order the order and then in another section of other organic dairy products. All of reform. the order depart from the principle of these products are priced well above No comments were filed concerning pricing such Class I milk at the plant their non-organic counterparts. this issue with the exception of Horizon where it was physically received. Processors of organic milk have asked Foods, which continued to support its In actual practice, a distributing plant for exemption from Federal regulation. proposal. does not receive a fixed amount of milk In a May 20, 1997, letter to the each day of the week. Some days are Department, Horizon Foods argued that 4n. Allocation of Location Adjustment heavy bottling days when more milk is (1) organic milk is a different Credits needed for Class I use. On such days, a commodity; (2) the market for organic A provision that is now common to distributing plant may not be able to dairy products is a niche market; and (3) most orders has not been carried obtain enough local milk to meet its Federal order regulation of organic milk forward to the consolidated orders. This Class I needs and may have to import is contrary to the intent of the Organic provision, which allocates location plant milk from more distant locations. Foods Production Act because it does adjustment credits that are applied to At the end of the month, however, when not ‘‘facilitate interstate commerce in transfers of bulk fluid milk products the allocation of location adjustment fresh and processed food that is between pool plants, is commonly credits takes place, it may appear that organically produced.’’ Horizon’s found in Section 52 of most current there was more than enough local milk proposed solution was to exempt orders (See, for example, §§ 1001.53(h), to meet the distributing plant’s fluid organic milk from the producer milk 1007.52(b), 1030.52(c), or 1079.52(d)). needs, even though this was not the case definition if the milk is produced on a Under most orders, intra market when recapped on a daily basis. certified organic farm and if the broker shipments of milk between handlers are Nevertheless, the allocation provision pays the producer at least 110% of the assigned to Class I use, unless both allocates location adjustment credits month’s Class I price for such milk. handlers agree on a lower classification. based on monthly volumes of milk, not The proposal to exempt organic milk Milk that is assigned to Class I use is daily volumes, so the supply plant from Federal order pricing is denied for priced at the receiving plant subject to could be in a position where it receives several reasons. First, contrary to the a location adjustment credit that may no Class I location adjustment credit assertions of Horizon Foods that all apply if it is demonstrated that such even though the milk was indeed organic milk is priced at 110% of the milk is actually needed for Class I use. shipped for Class I use. Class I price, regardless of how the milk If the credit is applied, the milk is Some of the new orders have is used, there is evidence that some priced at the transferring plant. This transportation credit provisions that organic milk has been pooled and assignment of location adjustment provide for hauling credits on bulk milk priced as non-organic milk under some credits is intended to prevent the use of received by transfer from a plant orders, including the Chicago Regional pool proceeds to pay the hauling cost regulated under another Federal order and Southern Michigan orders, for for the transfer of bulk milk between and assigned to Class I use at the example. Second, although the retail pool plants when the intended use of receiving plant. To arrive at the price of organic milk is well above non- the milk is for other than Class I use. classification of such milk, the milk is organic milk, we believe that organic To carry out this concept, the assigned to the lower of the receiving milk competes with the regulated provision typically assigns a pool plant’s or the receiving market’s Class I market and, therefore, also must be fully distributing plant’s Class I use first to its utilization. When milk is purchased in regulated. Third, if Congress wished to milk receipts directly from producers, this manner, the transportation cost of exempt organic milk from Federal milk then to bulk milk received from a the milk assigned to Class I is absorbed, order regulation, they could have done cooperative bulk tank handler, then to for the most part, by the transportation so either in the Organic Foods milk received by diversion from another credit that is provided for the handler Production Act or in the 1996 Federal pool plant, and then to packaged fluid purchasing the milk without regard to Agricultural Improvement and Reform milk products received from other pool whether milk could have been Act; but they did not. Fourth, there is plants. The remaining Class I use in the purchased from a closer source of no indication that all processors of distributing plant is then assigned to supply. organic milk price their receipts the bulk milk received by transfer from Finally, the current application of the same way as Horizon Foods. Even if other pool plants. In some orders, this provision in question can result in a they did, however, the one class/one remaining Class I use is assigned pro situation where there is more incentive price system currently used by Horizon rata to all of the pool plants from which to receive bulk milk transferred from a could be a temporary phenomenon due bulk milk was obtained. In other orders, plant regulated under another Federal to the rapidly expanding market for the remaining Class I milk is first order than from a plant regulated under organic products. The day may come assigned to pool plants with the same the same order, whether or not any when the organic market becomes Class I price and then, in sequence, to other transportation credits are

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00105 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.117 pfrm08 PsN: 02APP2 16130 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules involved. Should this occur, it can No comments to the proposed rule and ensuring orderly marketing by result in a transfer of Class I sales to the were received with regard to most of the providing a reasonable means for transferring plant’s Federal order provisions discussed in this section. To producers within a common marketing market. the extent that there were comments, area to establish an association with the For all of the reasons cited above, the they are specifically discussed below. fluid market. Obviously, matching these allocation of location adjustment credits Most of the provisions in the proposed goals to the very disparate marketing has been removed from the orders. rule are adopted without substantive conditions found in different parts of Several comment letters were received change. Any substantive changes are the country requires customized supporting this change; none were specifically discussed below. provisions to meet the needs of each received in opposition to it. market. For example, in the Florida The Concept of Pooling Milk Proceeds 5. Provisions Applicable to All Orders marketing area, where close to 90 All Federal milk orders today, save percent of the milk in the pool will be In addition to the terms and one, provide for the marketwide pooling used for fluid use, pooling standards conditions of milk orders previously of milk proceeds among all producers will require a high degree of association described, there are a number of other supplying the market. The one with the fluid market and will permit a provisions common to all milk orders exception to this form of pooling is relatively small amount of milk to be that describe and define those persons found in the Michigan Upper Peninsula sent to manufacturing plants for use in and plants affected by the regulatory market, where individual handler lower-valued products. In the Upper plan of the program. Different marketing pooling has been used. Midwest market, on the other hand, a conditions in the consolidated areas, Marketwide sharing of the classified relatively small percentage of milk will together with institutional factors, do use value of milk among all producers be needed for fluid use. Accordingly, not lend themselves to an entirely in a market is one of the most important under the pooling standards for that uniform set of provisions for all orders. features of a Federal milk marketing order smaller amounts of milk will be Consequently, in each of the order. It ensures that all producers required to be delivered to fluid milk consolidated orders there are provisions supplying handlers in a marketing area plants and larger amounts of milk will that are unique to each order. receive the same uniform price for their be permitted to be sent to manufacturing This part of the final decision milk, regardless of how their milk is plants for use in storable products such discusses the nature of these common used. This method of pooling is widely as butter, nonfat dry milk, and hard order provisions, their purpose, and supported by the dairy industry and has cheese. The specific pooling provisions whether or not a provision can be been universally adopted for the 11 adopted for each order are discussed in uniformly applied to all orders. When a consolidated orders. detail in the sections of this document provision does not lend itself to uniform There were a number of proposals and pertaining to each of the consolidated application, it is discussed in public comments considered in orders. subsequent sections of this final rule determining how Federal milk orders together with the provisions unique to should pool milk and which producers Route Disposition each of the individual orders. should be eligible to have their milk Route disposition is a measure of fluid To the extent that provisions can be pooled in the consolidated orders. Many milk sales in commercial channels. It is uniformly applicable for all of the of these comments advocated a policy of defined to mean the amount of milk consolidated orders, they are included liberal pooling, thereby allowing the delivered by a distributing plant to a in Part 1000, the General Provisions of greatest number of dairy farmers to retail or wholesale outlet (except a Federal Milk Marketing Orders which share in the economic benefits that arise plant), either directly or through any are, by reference, already a part of each from the classified pricing of milk. distribution facility (including milk order. Thus, as provided here, the A number of comments supported disposition from a plant store, vendor or General Provisions include the identical pooling provisions in all vending machine), of a fluid milk definitions of route disposition, plant, orders, but others stated that pooling product in consumer-type packages or distributing plant, supply plant, provisions should reflect the unique and dispenser units that is classified as Class nonpool plant, handler, other source prevailing supply and demand I milk. milk, fluid milk product, fluid cream conditions in each marketing area. The route disposition definition product, cooperative association, and Fundamental to most pooling proposals adopted here differs from the definition commercial food processing and comments was the notion that the contained in some current orders. establishment. In addition, the General pooling of producer milk should be Presently, the route disposition Provisions include the milk performance-oriented in meeting the definition of several orders makes classification section of the order, needs of the fluid market. This, of reference to plant movements of pricing provisions, and some of the course, is logical since a purpose of the packaged fluid milk products between provisions relating to payments. These Federal milk order program is to ensure distributing plants with respect to additions to the General Provisions an adequate supply of milk for fluid use. determining if such transfers should be should make milk order provisions A suggestion for ‘‘open pooling,’’ considered ‘‘route disposition’’ of the more understandable to the general where milk can be pooled anywhere, transferring plant or the receiving plant. public by removing the differences that has not been adopted, principally As provided here, however, this issue is now exist and by consolidating uniform because open pooling provides no addressed in section 7(a) of the pool provisions in one place. Thus, an reasonable assurance that milk will be plant section, which essentially treats interested person would only have to made available in satisfying the fluid such transfers as if they were route read one ‘‘nonpool plant’’ section, for needs of a market. Proposals to create disposition. instance, to understand how that term is and fund ‘‘stand-by’’ pools are similarly applied to all orders. By contrast, at the rejected for the same reason. Plant present time, ‘‘nonpool plant’’ is The pooling provisions for the A plant definition is included in all defined in every order and there are consolidated orders provide a orders to specify what constitutes an slight differences in the definition from reasonable balance between encouraging operating entity for pricing and one order to the next. handlers to supply milk for fluid use regulatory purposes. As provided in

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§ 1000.4 of the General Provisions, a At the present time, both reverse Adding the butterfat pounds to this plant is the land, buildings, facilities, osmosis and ultrafiltration systems are computation will yield the product and equipment constituting a single being utilized on some farms, equivalent pounds. operating unit or establishment at which principally large farms in the In addition to having UF and RO milk or milk products are received, southwestern United States. The equipment, some farms today may have processed, or packaged. This is meant to product shipped from these farms (i.e., a separator to separate skim milk from encompass all departments, including the retentate) currently is sent to cream before they leave the farm. Rules those where milk products are stored, processing plants for use in are also established for this type of such as a cooler. The plant definition manufactured products but it could be operation. does not include a physically separate used in a range of milk products. Skim milk and cream going through a facility without stationary storage tanks The retentate received from a farm farm separator also should be treated as that is used only as a reload point for with a UF or RO system will be treated producer milk if received at a pool plant transferring bulk milk from one tank to as producer milk at the pool plant at or diverted to a nonpool plant. The another, or a physically separate facility which the milk is physically received producer will be required to obtain scale that is used only as a distribution point or, if the retentate is shipped to a weights and tests on each load of skim for storing packaged fluid milk products nonpool plant, as producer milk and cream shipped along with samples in transit for route disposition. diverted to a nonpool plant. In either of each. The same ownership, To account for regional differences case, the milk or milk components will recordkeeping, sampling and reporting and practices in transporting milk, some be priced at the pool plant or nonpool requirements that apply to RO and UF of the consolidated orders provide for plant where the milk is physically units will also be applicable. the use of reload points for transporting received. In formulating a policy for the bulk milk that do not have stationary To be considered a farm and a treatment of RO and UF retentate, it is storage tanks. producer, as opposed to a plant and a important to recognize that the milk handler, an RO or UF unit must be produced on a farm with RO or UF Farm-Separated Milk under the same ownership as the farm equipment is fully available to meet the With the advent of new technology for on which it is located and only milk needs of the fluid market, either before on-farm separation of milk into its from that farm or other farms under the or after passing through such units. components, some additional regulatory same ownership may be processed Therefore, there should be no question language has been added to the plant through the unit. The producer concerning the propriety of pooling this definition to specify who is the operating the unit shall be responsible milk along with other producers’ milk. responsible handler for the milk or milk for providing records of the daily At this writing, the Food and Drug components leaving the farm and how weights of the milk going through the Administration (FDA) has not yet these components will be classified and unit. Also, the producer must provide decided whether UF retentate can be priced. This determination will be samples for each load of milk going reconstituted and sold as fluid milk. based, in part, on whether the farm through the unit and must furnish the However, FDA has approved the use of processing facility is a plant. receiving plant with a manifest on each UF retentate in certain cheese products Ultrafiltration (UF) is a membrane load of retentate showing the scale on a trial basis. Therefore, before process that transfers water and low- weight along with samples of the receiving UF retentate for use in any molecular weight compounds through a retentate. Finally, the producer product, handlers should be certain that membrane while retaining suspended operating the RO or UF unit must such use has been approved by the FDA. solids, colloids, and large organic maintain records of all transactions molecules. It selectively fractionates which must be available to the Market Distributing Plant some milk solids components and Administrator upon request. If the A distributing plant is defined as a selectively concentrates other solids producer does not meet these plant that is approved by a duly components of milk. recordkeeping and reporting constituted regulatory agency to handle When a UF membrane is used, water, requirements, the unit will be Grade A milk and at which fluid milk lactose, uncomplexed minerals and considered to be a plant. products are processed or packaged and other low-molecular-weight organic RO and UF retentate will be from which there is route disposition or compounds pass through the membrane. considered to be producer milk at the transfers of packaged fluid milk For example, if unaltered milk plant which receives it. The pounds of products to other plants. This containing 3.5 percent fat, 3.1 percent RO and UF retentate received will be definition, and the following supply protein, and 4.9 percent lactose is run priced according to the skim-equivalent plant definition, are essentially the same through a UF membrane until half of the pounds of such milk. The skim- as those found in present orders, except original volume is eliminated, the equivalent pounds for RO retentate will for minor changes made to conform remaining product not passing through be determined by dividing the solids- with the pool plant provisions adopted the membrane (i.e., retentate) will not-fat pounds in the retentate by the for the consolidated orders. contain all of the fat and protein but average producer solids-not-fat in the only half of the lactose. The permeate skim portion of the producer milk used Supply Plant (i.e., that part of the original milk that in the product. The butterfat pounds A supply plant is a regular or reserve does pass through the membrane) will would then be added to this number to supplier of bulk milk for the fluid contain water, lactose, non-protein arrive at the product skim-equivalent market that helps to coordinate the nitrogen, and about one-sixth of the pounds. supply of milk with the demand for minerals. In computing the fluid equivalent of milk in a market. As defined in this Reverse osmosis (RO) is also a UF retentate, the fluid equivalent factor decision, a supply plant is a plant membrane process, but the membranes should be computed by dividing the approved by a duly constituted have much smaller pores than UF true protein test in the skim milk regulatory agency for the handling of membranes, allowing only the water to portion of the retentate by the true Grade A milk that receives milk directly pass through. The end product protein test in the skim milk portion of from dairy farmers and transfers or essentially is concentrated milk. the producer milk used in the product. diverts fluid milk products to other

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00107 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.120 pfrm08 PsN: 02APP2 16132 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules plants or manufactures dairy products associated with the fluid market to share should continue in the consolidated on its premises. in the pool, a second standard orders. However, for the single purpose determines if the plant is sufficiently of qualifying a plant as a pool Pool Plant associated with a particular market to distributing plant, the pool distributing The pool plant definition of each share in the pool applicable to that plant definition has been modified to order describes those plants which market. The ‘‘in-area’’ standard adopted treat transfers of packaged fluid milk receive milk that shares in the for the consolidated orders requires that products to other plants as if they were marketwide pool. It provides standards a distributing plant have 25 percent of route disposition of the transferring to identify those plants engaged in its route disposition within a marketing plant for the purpose of identifying the serving the fluid needs of the marketing area before it can be fully regulated by plant’s association with the fluid area. Pool plants serve the fluid market the order covering that marketing area. market. This is necessary to preclude a to a degree that warrants their producers The 15 percent in-area standard in the plant from becoming partially regulated sharing in the added value that derives proposed rule has been changed to 25 if the plant shipped significant from the classified pricing of milk. percent for all orders to reflect the quantities of packaged fluid milk While the pool plant definition in every larger, merged marketing areas that are products to another distributing plant. A consolidated order provides for a set of adopted. This change should not affect conforming change has been made to common principles, the standards the regulatory status of any current the distributing plant definition in applicable to pool plants differ among distributing plant. § 1000.5 to reflect this change. the consolidated orders, reflecting the At the present time, some orders A special pool distributing plant fact that marketing conditions vary describe the in-area route disposition provision (i.e., Section 7(b) of the across the country. The goal in drafting standard as a percent of plant receipts, consolidated orders) has been adopted pooling standards is to ensure both an while in other orders it is described as for distributing plants that distribute adequate supply of milk for fluid use a percent of route disposition. For the ultra-pasteurized or aseptically- and orderly marketing by allowing all new orders, the in-area standard for all processed fluid milk products. Such milk in a marketing area the opportunity orders is expressed as a percent of total plants must be located in the marketing to serve the fluid market and thereby route disposition. This methodology area and must process a certain share in the pool. will ensure that the in-area route percentage of their milk receipts into There are 2 performance standards disposition standard never exceeds the ultra-pasteurized or aseptically- applicable to pool distributing plants in total route disposition standard, a processed fluid milk products during the consolidated orders. The first situation that is now possible under the the month. The minimum percentage standard, which varies among orders, terms of the present Upper Midwest used for each order in Section 7(b) is requires a distributing plant to have a order. For most orders, this change will equal to the total route disposition minimum Class I utilization. Since route make little difference and should not percentage required in Section 7(a) of disposition includes only Class I milk, result in regulating any plant that is the order for distributing plants the specific standard is a measure of a now unregulated. processing standard shelf-life fluid milk distributing plant’s route disposition as Under the consolidated orders, a products. However, unlike the standards a percent of its total receipts of fluid distributing plant that has sales in more for a 7(a) plant, there is no route milk products. This standard is than one Federal order marketing area disposition standard for a 7(b) plant to generally directly related to the market’s will be regulated, for the most part, meet. Class I utilization. Accordingly, in the under the order in which it has the most Plants specializing in ultra- higher Class I utilization markets in the sales. There are certain exceptions to pasteurized or aseptically-processed Southeast, the overall route disposition this rule, however, particularly in the 3 fluid milk products tend to have erratic standard is 50 percent. In a market such Southeast orders, where the shifting of processing and distribution patterns as the Upper Midwest, on the other plants among markets has created reflecting the long-life nature of the hand, where Class I utilization will be disorderly marketing conditions in product they process. In some months, much lower, the overall route recent times. In the Florida, Southeast, they may process fluid milk products disposition standard is only 15 percent. and Appalachia orders, a distributing but have little or no route disposition The specific standards for each plant that is located within the because the products are stored in consolidated order are discussed in marketing area and that meets the inventory. In addition, these plants Section 6 of this decision. order’s pooling standards will be often have much wider distribution One change common to all orders regulated under that order even though patterns than do other distributing from the proposed rule to this final it might have more route disposition in plants and, under current orders, decision is the substitution of ‘‘total some other marketing area. frequently shift regulation from one receipts of fluid milk products’’ for When the regulation of a plant does order to another. This shifting ‘‘receipts of bulk fluid milk products’’ in shift from one order to another, the shift regulation is disruptive to the producers computing the total and in-area will only occur after the plant has had and/or cooperatives supplying these disposition for a distributing plant. This greater sales in such other market for 3 plants and is an additional regulatory change was made to achieve consistency consecutive months. This provision will burden to the plant operator. in accounting for packaged receipts at a provide some stability to avoid the To provide regulatory stability for distributing plant that are subsequently frequent shifting of regulation between these plants, they will be treated as a disposed of as route disposition or orders. fully regulated plant if they process a transferred to another plant. Since all To facilitate proper administration minimum percent of their milk receipts such disposition will count towards and accounting, all orders currently into ultra-pasteurized or aseptically- meeting an order’s specified pooling provide that packaged fluid milk processed fluid milk products during standards, receipts of such products products transferred from one handler the month. Having met this standard, from another plant also should be to another be treated as inter-handler which varies among orders, they will counted as part of the plant’s receipts. transfers, with each transaction properly not shift regulation to another order Once it is determined that a identified and specifically reported to simply because they have more route distributing plant is sufficiently affected market administrators. This disposition in such other order’s

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00108 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.121 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16133 marketing area. In fact, they need not specialization of plant operations. It also revision is warranted, he/she shall have any route disposition in the order minimizes unintended regulatory effects provide written notification to in which they are located to remain that may cause the uneconomical and interested parties of such revision at regulated. However, if they do not meet inefficient movement of milk for the least one day before the revision goes the processing standard of the order in sole purpose of retaining pool status. into effect. which they are located but do meet the However, some conditions need to be This provision allows the market 7(a) standards for a distributing plant satisfied for unit pooling. The ‘‘other’’ administrator to respond promptly to under one or more other orders, they plant(s) of the pool unit—i.e., the plants changes in local marketing conditions will become regulated under the order that would not qualify for pool status as and should result in better service to the in which they have the most route a single plant—must be located in an dairy industry and to the public. The disposition. If they continue to qualify equivalent or a lower price zone than authority given to the market for pool status on this basis, they may the primary pool distributing plant. This administrator to make needed be subject to regulatory shifts depending condition is required to assure that the adjustments in the manner specified is upon the pattern of their route transportation of milk for Class II uses commensurate with the authorities disposition. will not be subsidized through the already delegated by the Secretary to the marketwide pool and to assure pricing market administrator. Pool Supply Plant equity to all handlers processing Class As provided in the proposed rule, the Performance standards for pool II products that do not use unit pooling. market administrator would have had supply plants are designed to attract an Unit pooling status must be requested in the authority to adjust pooling standards adequate supply of milk to meet the writing and approved by the market for distributing plants as well as supply demands for fluid milk in a market. Pool administrator for its proper plants. However, such authority has not supply plants move milk to pool implementation and administration. been provided in any of the current distributing plants that service the System Pooling marketing orders except for the marketing area. Southeast, and in that market it has The pool supply plant definition, like Supply plants and reserve supply never been needed. Consequently, it the distributing plant definition, does plants provide a benefit to the market was concluded that any changes that not lend itself to uniform application in because they are required to meet may need to be made to pool all consolidated orders. Consequently, certain performance standards in distributing plant standards can best be pool supply plant performance supplying the needs of the fluid market. handled through normal amendatory standards should be established They also serve to balance the market. and suspension procedures. according to regional needs. The Because handlers often operate more Treatment of Concentrated Milk specific standards adopted in each order than one supply plant within the are described in section 7(c) of each new market, some of the merged orders allow An issue related to pooling that order and are explained in more detail a single proprietary handler or one or should be clarified with the issuance of in the regional discussions of this more cooperative associations to new orders is the treatment of document. combine their plants into systems for concentrated milk that is shipped In most current orders, a pool supply the purpose of meeting the order’s between plants. plant does not include any portion of a performance standards for pooling. Prior to the 1993 classification Under system pooling, 2 or more plants plant that is not approved for handling decision, condensed milk was not in a system can qualify for pool status Grade A milk and that is physically defined as a fluid milk product. by meeting the applicable performance separated from a portion of the plant Accordingly, when condensed milk was standards in the same manner as a that has such approval. Some inspection shipped from a supply plant to a single plant. However, not all plants in agencies render only one type of distributing plant it was not counted as a system of supply plants must transfer approval for an operation. To a qualifying shipment for the purpose of or divert milk to a distributing plant. In accommodate those areas where split determining the pool status of the recognition of this fact, the supply plant operations are permitted, some of the supply plant. By the same token, when definition in § 1000.6 has been modified consolidated orders provide for a a distributing plant received a shipment to conform with this provision. physically separated portion of the plant of condensed milk from another plant, as a ‘‘nonpool plant.’’ Adjustment of Pooling Standards the condensed milk was excluded from the distributing plant’s receipts for the The consolidated orders provide the Pooling Options purpose of computing the pool plant market administrator with authority to Unit Pooling status of the distributing plant. adjust shipping standards for supply In the 1993 classification decision, Unit pooling allows 2 or more plants plants, reserve supply plants, balancing condensed milk was redefined as located in the marketing area and plants, and supply plant units if he/she concentrated milk 15 and was included operated by the same handler to qualify finds that such revision is necessary to in the fluid milk product definition. An for pool status as a unit by meeting the encourage needed shipments or to unintended consequence of this change total and in-area route disposition prevent uneconomic shipments of milk. was that certain plants which had never standard as if they were a single pool A finding by the market administrator been pool plants before suddenly distributing plant. To qualify as a unit, that adjustments are warranted would became pool plants because of their at least one of the plants in the unit— follow an investigation conducted on shipments of condensed milk, and i.e., the primary plant— must qualify as the market administrator’s own a pool distributing plant on its own initiative or at the request of interested 15 As used in parts 1000 through 1135, the term standing and the other plants in the unit parties. Before making a finding that concentrated milk means milk that contains not less must process only Class I or Class II revisions are warranted, the market than 25.5 percent, and not more than 50 percent, milk products. administrator would notify interested total milk solids. It may include milk that has been condensed or milk that has been filtered using such Unit pooling serves to accommodate parties of this possibility and invite methods as reverse osmosis and ultra-filtration. and provide a flexible regulatory data, views, and arguments. If the Concentrated milk may be pasteurized and it may approach in addressing the market administrator determines that a be homogenized.

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00109 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.122 pfrm08 PsN: 02APP2 16134 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules certain distributing plants that had been buying handler understands that there plant. While providing for such a pool plants suddenly found themselves will be no shrinkage allowance allowed definition may appear redundant, this unable to qualify as pool plants because on the milk. The buying handler also provision is useful to more clearly their receipts of ‘‘fluid milk products’’ knows that the volume of concentrated define the extent of regulation were enlarged to include their milk received will not be counted as a applicable to plants. condensed milk receipts. When plant receipt for the purpose of Nonpool plants should include a handlers complained about these determining its pool status. plant that is fully regulated under unforseen and unexplained changes, it A supply plant shipping concentrated another Federal order, a producer- was decided administratively to milk for Class II use may or may not handler plant, a partially regulated continue the previous treatment for wish to be pooled under a Federal order. distributing plant, an unregulated condensed milk until the orders could If the plant wished to be treated as a supply plant, and an exempt plant. The be amended. nonpool plant, concentrated milk could definitions for these nonpool plants are The consolidated orders should be transferred for Class II or III use by not materially different than those continue this special treatment for agreement with the receiving handler. In provided in the current orders with the condensed milk. Although condensed such case, the transfer of concentrated possible exception of an ‘‘exempt milk conceivably may be reconstituted milk would not be counted as a plant.’’ for fluid use, as a practical matter this qualifying shipment in meeting the pool Certain plants are exempt from is rarely, if ever, done. Sometimes, supply plant shipping standards and the regulation under Federal milk orders. condensed milk is used to fortify fluid receipt of concentrated milk at the These plants fall into 4 categories: (1) milk, but for the most part condensed distributing plant would not be counted Plants that are operated by a milk is made to be used in ice cream as part of the distributing plant’s governmental agency which have no mix or some other manufactured dairy receipts for purposes of computing its route disposition in commercial product. total route disposition. Of course, the channels; (2) plants operated by a When condensed milk is transferred agreement to transfer milk for a pre- college or university that dispose of from the plant of origin to a distributing arranged use is contingent upon the fluid milk products only through their plant in the same or another order, it is receiving distributing plant having own facilities with no route disposition generally transferred, by agreement, for sufficient Class II or III utilization to in commercial channels; (3) plants from Class II or III use. Using this criteria as absorb these receipts. which the total route disposition is for a distinguishing feature of this product, On the other hand, if a supply plant individuals or institutions for charitable the pool supply plant provision of each making concentrated milk wished to purposes without remuneration; and (4) order should exclude from qualifying qualify for pool status, it could simply plants that have route disposition of shipments to distributing plants transfer concentrated milk to a pool 150,000 pounds or less during the ‘‘concentrated milk transferred, by distributing plant without specifying its month. These types of plants have little agreement, for other than Class I use.’’ designated use. In such case, the impact on the regulated market and By the same token, a distributing plant shipment would count as a qualifying need not be regulated to ensure the also should exclude from its receipts, shipment for the purpose of meeting the integrity of the regulatory plan. for pooling purposes, ‘‘concentrated order’s pool supply plant shipping A number of Federal orders exempt milk received, by agreement, for other requirements provided that the from regulation small distributing plants than Class I use.’’ distributing plant receiving the which, because of their size, do not Using this language will preserve the concentrated milk was a pool plant. significantly impact competitive regulatory treatment that has applied to Since the receipt of concentrated milk relationships among handlers in the condensed milk for many years. At the would be counted as part of the market. The level of route disposition same time, however, this language receiving distributing plant’s receipts in required before an exempt plant allows flexibility for different treatment determining the distributing plant’s becomes regulated varies in the current in the case of concentrated milk that is pool status under the order, the plant orders. As adopted for the merged not destined for Class II or III use. would have to have sufficient Class I orders, any plant with route disposition In recent years, there has been much sales to maintain its identity with the during the month of 150,000 pounds or greater use of filtering equipment to fluid market. If the distributing plant less would be exempt from regulation. remove water from milk at the farm. did not have sufficient Class I use to This limit reflects the maximum amount This technology may be used to reduce meet the order’s pooling standards, it of fluid milk products allowed by an hauling costs in shipping milk long would not be qualified to have its exempt plant in any current Federal distances for use as fluid milk products. receipts pooled under the order and, by milk order and ensures that plants Although this concentrated milk is not extension, neither would the supply currently exempt from regulation will at present being used for fluid use, this plant that shipped the concentrated remain exempt. situation may change in the future. For milk to the distributing plant. Many current Federal orders also this reason, it is reasonable to provide This regulatory flexibility for provide regulatory exemption for a plant some flexibility in handling this type of concentrated milk should accommodate operated by a state or Federal product for both shrinkage and pooling varied situations in the consolidated governmental agency. For example, purposes. At this point in time, we orders. It will follow the historical some states have dairy farm and plant believe that the best way to provide this treatment for condensed milk but, at the operations that provide milk for their flexibility is to allow the handlers same time, it will provide for new uses prison populations. As provided herein, involved in making and using this and treatment for other types of regulatory exemption would be product to decide among themselves concentrated milk. continued under the consolidated how it will be used and reported, orders unless pool plant status is knowing ahead of time the shrinkage Nonpool Plant requested. and pooling implications involved with A definition is provided in all orders Regulatory exemption also should these decisions. Thus, if concentrated describing plants which receive, process apply to colleges, universities, and milk is purchased from another plant by or package milk, but which do not charitable institutions because these agreement for other than Class I use, the satisfy the standards for being a pool institutions generally handle fluid milk

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00110 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.124 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16135 products internally and have no impact administrator to more readily identify current regulatory status of producer- in the mainstream commercial market. those entities. handlers. However, in the event that these entities Producer-Handler One of the public comments received distribute fluid milk through proposed that the exemption of commercial channels, route sales by It has been a long-standing policy to producer-handlers from the regulatory such entities, including government exempt from full regulation many of plan of milk orders be eliminated. This agencies, will be monitored to those entities that operate as both a proposal is denied. In the legislative determine if Federal regulation should producer and a handler. Generally, a actions taken by the Congress to amend apply. producer-handler is any person who the AMAA since 1965, the legislation The determination and verification of provides satisfactory proof to the market has consistently and specifically exempt plant status will, from time to administrator that the care and exempted producer-handlers from time, necessitate the need for the market management of the dairy farm and other regulation. The 1996 Farm Bill, unlike administrator to require reports and resources necessary for own-farm previous legislation, did not amend the information deemed appropriate for the production and the management and AMAA and was silent on continuing to sole purpose of making this operation of the processing plant are the preserve the exemption of producer- determination. Such authority is personal enterprise and risk of such handlers from regulation. However, past currently provided in orders and should person. A primary basis for exempting legislative history is replete with the continue. producer-handlers from the pricing and specific intent of Congress to exempt pooling provisions of a milk order is producer-handlers from regulation. If it Handler that these entities are customarily small had been the intent of Congress to Federal milk orders regulate those businesses that operate essentially in a remove the exemption, Congress would persons who buy milk from dairy self-sufficient manner. Also, during the likely have spoken directly to the issue farmers. Such persons are called history of producer-handler exemption rather than through omission of handlers under the order. These persons from full regulation there has been no language that had, for over 30 years, have a financial responsibility for demonstration that such entities have an specifically addressed the regulatory payments to dairy farmers for milk in advantage as either producers or treatment of producer-handlers. accordance with its classified use. They handlers so long as they are responsible Since producer-handlers are intended must file reports with the market for balancing their fluid milk needs and to be exempt from most regulation, administrator detailing their receipts cannot transfer balancing costs, some means must be provided to and utilization of milk. including the cost of disposing of determine and to verify producer- The handler definition adopted for reserve milk supplies, to other market handler status. Accordingly, the market the consolidated orders includes the participants. administrator is provided with the operator of a pool plant, a cooperative The current orders have varying authority to require reports and other association that diverts milk to nonpool producer-handler definitions that information deemed appropriate to plants or delivers milk to pool plants for address specific marketing conditions determine that an entity satisfies the its account, and the operator of a and circumstances. For example, they requirements for producer-handler ‘‘nonpool plant,’’ which would specify different limits on the amount of status. Such authority is currently encompass a producer-handler, a milk that producer-handlers may provided in the orders and should partially regulated distributing plant, a purchase and retain their exempt status. continue. plant fully regulated under another Some modifications have been made to Producer Federal order, an unregulated supply the producer-handler provisions in the plant, and an exempt plant. consolidated orders for standardization. Under all orders, producers are dairy In addition, ‘‘third party’’ However, no changes have been made farmers that supply the market with organizations that are not otherwise that would intentionally regulate a milk for fluid use or who are at least regulated under provisions of an order producer-handler that is currently capable of doing so if necessary. are included in the handler definition. exempt from regulation under their Producers are eligible to share in the This category includes any person who current operating procedures. Because revenue that accrues from marketwide engages in the business of receiving the producer-handler provision is pooling of milk. The producer milk from any plant for resale and slightly different from one order to the definitions of the individual orders are distribution to wholesale and retail next, the specific details regarding each described under the regional outlets, brokers or others who negotiate definition are described in the regional discussions later in this document. the purchase or sale of fluid milk discussions that follow. Any general Responding to regional needs, producer products or fluid cream products from provision in the proposed rule, such as definitions will differ by order with or to any plant, and persons who, by the phrase ‘‘or acquired for distribution’’ respect to the degree of association that purchase or direction, cause the milk of in § 1000.44(a)(3)(iv), that would have a dairy farmer must demonstrate with a producers to be picked up at the farm changed the status of a current market. and/or moved to a plant. Such producer-handler has been eliminated. A dairy farmer may not be considered intermediaries provide a service to the Public comments were received a producer under more than one Federal dairy industry. These persons are not, regarding the extent of regulation that milk order with respect to the same however, recognized or regulated as should apply to producer-handlers. The milk. If a dairy farmer’s milk is diverted entities required to make minimum majority of public comments supported by a handler regulated under one payments to producers. The expanded the status-quo regarding the regulatory Federal order to a plant regulated under marketing chain brought about by such treatment of producer-handlers, another Federal order, and the milk is intermediaries has made it increasingly emphasizing that they should remain allocated at the receiving plant (by difficult for the market administrator to exempt from regulation in accordance request of the diverting handler) to Class track the movement of milk from farms with current order provisions and that II, III or IV, the dairy farmer will to consumers. The revised handler the provisions should be regional in maintain producer status in the original definition enables the market nature so as not to affect or change the order from which milk was diverted.

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Since producer-handlers and exempt computed by dividing the amount of supplied to regulated handlers under plants are specifically exempt from milk shipped to distributing plants by a the Federal order system. Federal order pricing provisions, the plant’s total receipts. As provided in the As provided herein, a cooperative term producer should not include a orders, ‘‘receipts’’ include milk that is association means any cooperative producer-handler as defined in any physically received at the plant as well marketing association of producers Federal order. Likewise, the term as diverted to nonpool plants. This which the Secretary determines, after producer should not apply to any inclusion of diverted milk in a plant’s application for such recognition by the person whose milk is delivered to an receipts automatically limits the amount cooperative, is qualified as such under exempt plant, excluding producer milk of milk that may be diverted by those the provisions of the Act of Congress of diverted to such exempt plant. Some of plants. Thus, the maximum quantity of February 18, 1922, as amended, known the new orders (See Orders 1001, 1124, milk that such plants would be able to as the ‘‘Capper-Volstead Act’’. 1131, and 1134) also exclude from divert and still maintain their pool plant Additionally, the new orders continue producer status a dairy farmer whose status would be 100 percent less the to require that a cooperative association milk is received at a nonpool plant as pool plant shipping standards for the other than producer milk. The reasons month. have full authority in the sale of the milk of its members and that it be for including this provision are This treatment of diverted milk will engaged in making collective sales or explained in the regional discussions mitigate the need for suspending order marketings of milk or milk products for describing those orders. diversion limitations, an action that is its dairy farmer members. Producer Milk quite common in some of the current orders. Unlimited diversions for many Several current orders provide a The producer milk definition of the new orders will allow for definition for a federation of 2 or more identifies the milk of producers which maximum efficiency in balancing the cooperative associations. As adopted is eligible for inclusion in a particular market’s milk supply. The market here, all consolidated orders recognize a marketwide pool. This definition is administrator’s ability to adjust federation of cooperatives as satisfying specific to each consolidated order, shipping percentages for pool supply the cooperative definition for the reflecting the fact that marketing plants, pool reserve supply plants, and purposes of determining milk payments conditions differ among regions. In general, the definition of producer balancing plants will ensure that an and pooling. Individual cooperatives of milk for all consolidated orders adequate supply of milk is available for a federation of cooperatives must also continues to include the milk of a the fluid market without the imposition meet the criteria as set forth for producer which is received at a pool of diversion limits. individual cooperative associations and plant or which is received by a While a one-time producer ‘‘touch their federations as incorporated under cooperative association in its capacity as base’’ standard and virtually unlimited state laws. diversions are appropriate for most of a handler. Most current orders consider Handler Reports milk to be ‘‘received’’ when it is the consolidated Federal orders, they physically unloaded at the plant and the are not appropriate for certain ‘‘deficit’’ All current orders require handlers to consolidated orders would continue that markets in the Southeast. For these submit monthly reports detailing the treatment. orders, touch base requirements and sources and uses of milk and milk In order to promote the efficient diversion limits provide another tool to products so that market average use handling of milk, all orders currently ensure that an adequate supply of fluid values, or blend prices, can be allow a handler to move producer milk, milk is available to meet the markets’ determined and administered. Payroll needs. The specific standards for these within certain specified limits, from a reports and other reports required by the orders are discussed in the regional producer’s farm to a plant other than the market administrator are also provided section of this document. handler’s own plant. This is referred to for in the orders. The order language for as a ‘‘diversion’’ of milk. Under the In order to provide regulatory the consolidated orders is similar to that flexibility and marketing efficiencies, all consolidated orders, the definition of contained in current orders. The dates of the new orders having diversion producer milk allows unlimited when reports are due in the market limits allow the market administrator to diversions to other pool plants, thereby administrator’s office differ slightly by increase or decrease these limits on providing maximum flexibility in order according to custom and industry relatively short notice. This provision efficiently supplying the fluid market. practice. Under some orders, unlimited currently exists in some Federal orders diversions to nonpool plants would also and has proven to be a responsive, Announcements by the Market be allowed once a dairy farmer has efficient, and effective way to deal with Administrator become associated with a particular rapidly changing marketing conditions. In the course of administering the order. Under other orders, however, a Cooperative Association producer would be required to ‘‘touch order, the market administrator is base’’ at a pool plant one or more times All current orders provide a definition required to make several each month and, in addition, aggregate for dairy farmer cooperative associations announcements each month with diversion limits may be applied to a that market milk on behalf of their dairy respect to classification, class prices and handlers’ total diversions. The specific farmer members. Providing for a component prices, an ‘‘equivalent touch base and diversion limits are uniform definition of a cooperative price’’ when necessary, and various described in the regional discussions association facilitates the administration producer prices. As adopted here, these pertaining to each order. of the various order provisions as they provisions are uniform and are nearly Even for orders without any diversion apply to such producer organizations identical to current order provisions, limits, there is a practical limit to how and recognizes the unique standing with the exception of section 62 much milk may be diverted from a pool granted to dairy farmer cooperatives (Announcement of producer prices), plant because of the pooling standards under the Capper-Volstead Act. Dairy which differs to some extent among that must be met. For a pool supply farmer cooperatives are responsible for orders depending on the degree of plant, for example, there is a standard marketing the majority of the milk component pricing used in the order.

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Producer-Settlement Fund existing orders generally allow proper for such milk just as if it were producer In all of the current and consolidated deductions authorized by the producer milk received directly from producers’ orders, handlers are required to pay in writing. Proper deductions are those farms. Many, but not all, of the current minimum class prices for the milk that are unrelated to the minimum value orders have such a provision. For Class I bulk milk that is received received from producers. These of milk in the transaction between the from a cooperative’s pool plant, the proceeds are blended through the producer and handler. Producer minimum Class I price level for such marketwide pool so that producers are associations are allowed by the statue to ‘‘reblend’’ their payments to their milk should be the price applicable at returned a uniform, or blend, price for producer members. The Capper the location of the receiving handler’s their milk. The mechanism for the Volstead Act and the AMAA make it plant. In the case of such transfers, it is equalization of a handler’s use value of clear that cooperative associations have presumed that milk will move from milk is the producer-settlement fund. It a unique role in this regard. lower-priced areas to higher-priced is established and administered by the The payment provisions to producers areas. Under these circumstances, part market administrator for each order. and cooperatives for the consolidated of the transportation cost in moving the The producer-settlement fund ensures orders vary with respect to payment milk is covered by the difference in the that all handlers are able to return the frequency, timing, and amount. These Class I prices at the receiving plant and market blend price to producers whose differences are generally consistent with shipping plant. milk was pooled under the order. current order provisions and with Pricing Class I transfers at the Payments into the producer-settlement industry practices and customs in each receiving plant’s location ensures that a fund are made each month by handlers of the new marketing areas. handler would not have an incentive to whose total classified use value of milk Each of the new orders will require receive more distant plant milk instead exceeds the value of such milk handlers to make at least one partial of closer milk directly from producers’ calculated at the uniform price (or at payment to producers in advance of the farms. It also ensures that all similarly- component prices for those orders with announcement of the applicable located pool plants will pay the same component pricing). Similarly, uniform prices. The Florida order will minimum prices for their receipts payments out of the producer-settlement require 2 partial payments, mirroring regardless of whether the milk comes fund are made each month to any the payment schedule now provided in from another plant or directly from handler whose use value is below the the 3 separate Florida orders. producers. Finally, it ensures that the value of milk at the uniform price or The amount of the partial payment handler receiving transferred milk pays component prices, as the case may be. varies among the new orders, reflecting at least a portion of the transportation The transfer of funds enables handlers the anticipated uniform price. Thus, for cost to move the milk to its plant. Since with a use value below the average for example, in the Upper Midwest order, transportation cost is likely to exceed the market to pay their producers the the partial payment rate for milk the difference in prices between the same uniform price as handlers whose received during the first 15 days of the transferor and transferee plants, the Class I utilization exceeds the market month will be not less than the lowest difference in cost will have to be made average. This provision is uniform for announced class price for the preceding up through over-order premiums. all consolidated orders. month. By comparison, the partial All of the payment dates are receipt The consolidated orders vary with payment for the Florida order for milk dates. Since payment cannot be received respect to dates for payments to the received during the first 15 days of the on a non-business day, payment dates producer-settlement fund, due largely to month will be at a rate that is not less that fall on a Saturday, Sunday, or industry practices and regional than 85 percent of the preceding national holiday will be delayed until preferences. Each consolidated order month’s uniform price, adjusted for the next business day. While this has provides for payment dates, and they plant location. the effect of delaying payment to are specific for each consolidated order. The final payment for milk under the cooperatives and producers, the delay is In view of the need to make timely new orders will be required to be made offset by the shift from ‘‘date of payment to handlers from the producer- so that it is received by producers no payment’’ to ‘‘date of payment receipt.’’ settlement fund, it is essential that later than 2 days after the required pay- Minimum Payments to Producers money due the fund be received by the out date of monies from the producer- due date. Accordingly, under all of the settlement fund. In a proceeding involving the current new orders payment to the producer- Cooperatives will be paid by handlers Carolina, Southeast, Louisville- settlement fund will be considered for bulk milk and skim milk on the Lexington-Evansville, and the former made upon receipt by the market terms described for individual Tennessee Valley Federal milk orders administrator. producers except that payment will be (Orders 5, 7, 46, and 11, respectively), The new orders specify that payment due one day earlier. Providing for an a proposal was made to clarify what cannot be received on a nonbusiness earlier payment date for cooperative constitutes a minimum payment to day. Therefore, if the due date for a associations is warranted because it will producers. The proposal was payment, including a payment to or permit the cooperative association the recommended by Hunter Farms from the producer-settlement fund, falls time needed to distribute payments to (Hunter) and Milkco Inc. (Milkco), 2 on a Saturday, Sunday, or national individual producer members. The handlers regulated under the current holiday, the payment would not be due cooperative payment language in each Carolina order. Under the proposal, a until the next business day. This is of the consolidated orders has been handler (except a cooperative acting in specified in § 1000.90 of the General expanded to include bulk milk and skim its capacity as a handler pursuant to Provisions. sold by cooperatives from their pool paragraph 9(b) or 9(c)) may not reduce plants as well as by cooperatives acting its obligations to producers or Payments to Producers and Cooperative as handlers for milk delivered directly cooperatives by permitting producers or Associations from producers’ farms. cooperatives to provide services which The AMAA provides that handlers When bulk milk is received by are the responsibility of the handler. must pay to all producers and producer transfer from a cooperative’s pool plant, According to the Hunter/Milkco associations the uniform price. The a minimum payment should be required proposal, such services include: (1)

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Preparation of producer payroll; (2) Payment Obligation of a Partially Adjustment of Accounts conduct of screening tests of tanker Regulated Distributing Plant All current orders provide for the loads of milk; and (3) any services for market administrator to adjust, based on processing or marketing of raw milk or All current and consolidated orders provide a method for determining the verification of a handler’s reports, marketing of packaged milk by the books, records, or accounts, any amount payment obligations due to producers handler. due to or from the market administrator, by handlers that operate plants which At the May 1996 hearing, or to a producer or a cooperative are not fully regulated under any representatives of Hunter and Milkco association. This provision is continued Federal order. These unregulated testified that both handlers receive milk in the consolidated orders. The from cooperative associations and handlers are not required under the provision requires the market Piedmont Milk Sales, a marketing agent scope of Federal milk order regulation administrator to provide prompt handling the milk of non-member to account to dairy farmers for their notification to a handler of any amount producers. The Hunter representative milk at classified prices or to return a so due and requires payment adjustment explained that due to competitive minimum uniform price to producers to be made on or before the next date marketing conditions in the Southeast who have supplied the handler with for making payments as set forth in the in late 1994 and early 1995 handlers milk. However, such handlers may sell provisions under which the error(s) were able to purchase milk supplies at fluid milk on routes in a regulated area occurred. Federal order minimum prices without in competition with handlers who are any over-order premiums being charged. fully regulated. Therefore, the regulatory Charges on Overdue Accounts As a result of the absence of over-order plan of Federal milk orders provides a All current orders provide for an premiums, the representative stated, minimum degree of regulation to all additional charge to handlers who fail to Hunter received underpayment notices handlers who have routes sales in a make required payments to the from the market administrator on milk regulated marketing area. This is producer-settlement fund when due. that it had received from Piedmont Milk necessary so that classified pricing and Such payments include payments to the Sales. pooling provisions of an order can be producer-settlement fund, payments to Hunter argued that the problem of maintained. It is also necessary so that producers and cooperative associations, what constitutes a minimum payment to orderly marketing conditions can be payments by a partially regulated producers should be clarified to assured with respect to handlers being distributing plant, assessments for order preclude another underpayment charged the classified value under an administration and marketing service, situation should premiums again order for the milk they purchase from and certain other payment obligations in disappear in the future. If this issue is dairy farmers. Without this provision, orders with specialized provisions such not resolved, according to Hunter, it milk prices in an order would not be as transportation credits. This should will suffer a loss of milk sales and its uniform among handlers competing for continue to be provided for in the producers will receive lower prices. sales in the marketing area, a milk consolidated orders. In order to discourage late payments, Hunter stated that the current policy is pricing requirement of the AMAA. discriminatory and unfair and that a 1.0 percent charge per month is There are 3 regulatory options everyone would benefit from a incorporated in the consolidated orders. clarification of the rules defining available to a partially regulated This rate represents the mid-point in the Federal order minimum prices. handler. First, the handler can purchase range of charges by all orders presently. Class I milk that is priced under a Overdue charges shall begin the day Based on the testimony presented at Federal order in an amount equal to, or following the date an obligation was the public hearing and comments in excess of, quantities sold in the due. Any remaining amount due will be received, the Department issued a final marketing area. Second, a payment may increased at the rate of 1.0 percent on decision on July 16, 1998 (63 FR 39039), be made by the partially regulated the corresponding day of each month denying the Hunter/Milkco proposal. handler into the producer-settlement until the obligation is paid in full. However, the decision stated that this All overdue charges would accrue to issue should be revisited as part of fund of the regulated market at a rate the administrative assessment fund. The Federal order reform. equal to the difference between the Class I price and the uniform price of late-payment charge is to be a penalty In the proposed rule for Federal order the regulated market. Finally, the that is meant to induce compliance with reform, interested parties were invited operator of a partially regulated plant the payment terms of the order. If late- to comment on this issue. Only one can demonstrate that the payment for its payment charges for monies due on Federal order reform comment, besides total supply of milk received from dairy producer milk were to accrue to the Hunter/Milkco’s, discussed this issue. farmers was equal to the amount which balance owed to either producers, This comment letter, filed by the same the partially regulated plant would have cooperatives or producers/cooperatives law firm that represents Hunter/Milkco, via the producer-settlement fund, it expressed sentiments nearly identical to been required to pay if the plant had been fully regulated. This amount may could result in such producers and those that have been expressed by cooperatives being less concerned Hunter/Milkco. be paid entirely to the dairy farmers that supplied the handler or in part to those whether they are paid on time. By Based on our review of these placing late-payment charges in the dairy farmers with the balance paid into comments, we continue to believe that administrative fund, however, the producer-settlement fund of the incorporation of Hunter/Milkco’s cooperatives and producers would not regulated market. proposed language in the consolidated be placed in a position where they Federal orders will not necessarily solve The regulatory options described would prefer to be paid several days late the handler equity problem but could above and the payment option for so that they would receive the late- create a host of additional problems. For reconstituted milk have worked well in payment charges (or increase the level the reasons stated in the aforementioned the current orders and are continued of producer prices due to late payment final decision, the proposal is again uniformly in § 1000.76 for the fee accrual to the producer-settlement denied for the consolidated orders. consolidated orders. fund). This is of particular concern in

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Because provisions that would otherwise have to This represents a considerable change in much of this state is serviced by be generated through handlers’ how milk will be priced for those secondary and rural winding roads, the administrative assessments. handlers and producers whose milk current New England order has currently is priced under the provisions provided for reload points as a workable Assessment for Order Administration of the New York-New Jersey order. solution to the inherent hauling The AMAA provides that the cost of In addition to the different pricing difficulties in transporting relatively order administration shall be financed provisions of the three existing orders, small loads of milk from the countryside by an assessment on handlers. Under other important differences and related to reload points and facilities with the consolidated orders, a maximum provisions need to be addressed in the stationary storage tanks that do not rate of 5 cents per hundredweight is Northeast regional order that will serve as a pricing point. This should provided. This assessment would apply accomplish the goals of the AMAA. continue to be provided for in the to all of a handler’s receipts pooled These include what is commonly consolidated Northeast order. Not to under the order. referred to in the New York-New Jersey provide this accommodation would adversely affect a substantial number of Deduction for Marketing Services order as the ‘‘pass through’’ provision; the need for providing marketwide small producers and the milk haulers As in most current orders, the service payments in the form of that service them. consolidated orders provide for the cooperative service payments and Pool Plant furnishing of marketing services to balancing payments that currently exist producers for whom cooperative The pool distributing and pool supply in the New York-New Jersey order and plant definitions of the consolidated associations do not perform services. do not exist in either the current New Such services include providing market Northeast order use the standard order England or Middle Atlantic orders. language format used in other orders, information and establishing or Additionally, the three current northeast verifying weights, samples, and tests of combined with performance standards orders also provide for seasonal that are adapted to marketing conditions milk received from such producers. In adjustments to the Class III and IIIA accordance with the Act, a marketing in the Northeast. price. The pool distributing plant definition services provision must benefit all It is fair to observe that the current nonmember producers under the order. specifies that a pool distributing plant order most affected by the consolidation must have 25 percent or more of its total The market administrator may is the New York-New Jersey order. In contract with a qualified agent, physical receipts of fluid milk addition to the differences already distributed as route disposition and that including a cooperative association, to described, certain terms and provisions at least 25 percent of route disposition provide such services. The cost of such of the Northeast order are also different be within the marketing area. The 25 services should be borne by the in how they are described and presented percent level of total receipts distributed producers for whom the services are but are nevertheless consistent with on routes is reasonably high enough to provided. Accordingly, each handler existing provisions that accomplish the establish a distributing plant’s will be required to deduct a maximum goals of the AMAA. This is less of an association with the fluid milk market. of 7 cents per hundredweight from issue for those entities that are The in-area route distribution amounts due each producer for whom a accustomed to the terminology of performance standard level of 25 cooperative association is not providing provisions used in the New England and percent is adopted because it tends to such services. All amounts deducted Middle Atlantic orders. The following minimize changing the regulatory status must be paid to the market presents a discussion of the of handlers from their current regulatory administrator not later than the due date recommended order provisions and status by the Federal order program that for payments to the producer-settlement issues that are unique to the may result from the consolidation of fund. consolidated Northeast order. existing orders. The 25 percent in-area 6a. Northeast Region Plant sales standard is also a reasonable measure for identifying a level at which The Northeast Marketing Area The plant definition for the a distributing plant is sufficiently The recommended consolidated consolidated Northeast order should associated with the marketing area. Northeast order differs significantly differ from that of the other As already discussed, the from other consolidated orders. In consolidated orders by allowing consolidated Northeast order and other addition to merging three existing stationary storage tanks to be used as nearby consolidated marketing orders Federal milk orders, the Northeast order reload points. This exception to the do not call for expansion to include also calls for expansion in the northern plant definition is warranted for the certain currently unregulated areas. This region of New York state, and all consolidated Northeast order due to includes areas in the states of New York, currently unregulated areas of the New certain unique conditions that affect the Pennsylvania, Virginia, and the entire England states (except Maine). ability of handlers and haulers to state of Maine. Some distributing plants While the current New England assemble milk in an efficient manner in these areas are not currently (Order 1) and Middle Atlantic (Order 4) and subsequently transport it to a plant regulated, or are only partially regulated orders have similar provisions for that actually processes milk into to the extent they have some Class I adjusting producer blend prices in a finished dairy products, including fluid sales in regulated areas. A 25 percent in- manner identical to plant price milk products. This exception would area route distribution level will serve adjustments for location, the current not consider the reload point or facility to ensure or minimize any changes in New York-New Jersey (Order 2) order as a point from which to price producer their current regulatory status under the employs a ‘‘farm-point’’ pricing method. milk. Rather, milk once assembled Federal program that result from

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Unit pooling, wherein two or more known producer-handler currently in Similarly, a dairy farmer would not be plants operated by the same handler operation in the Northeast order region. considered a producer under the order located in the marketing area can However, the three orders being for any month of July through November qualify for pooling as a unit by meeting consolidated have significant if any milk of the dairy farmer is the total and in-area route distribution differences in the extent of control a received at a pool plant or by a requirements of a pool distributing producer-handler must retain over its cooperative association handler if the plant, is included in the consolidated distribution practices. The current pool plant operator or the cooperative Northeast order. Providing for unit Middle Atlantic region does not limit association caused the dairy farmer’s pooling provides a degree of regulatory the distribution facilities that may be milk to be delivered to any plant as flexibility for handlers by recognizing used by a producer-handler. Thus, any other than producer milk, as defined in specialization of plant operations. limitation with respect to distribution this proposed order, or in any other Due primarily to positions offered by could either cause a current producer- Federal milk order during the same many of the major Northeast dairy handler to loose such status, or may month. cooperatives and their cause the need for a producer-handler to Producer Milk recommendations on appropriate pool modify its business practices. Therefore, supply plant performance requirements, the producer-handler definition adopted The producer milk definition of the the consolidated Northeast order supply herein removes any restrictions on how consolidated Northeast order follows plant performance requirements it distributes its products. the general structure and format of other initially should be set to require that in Also removed from the producer- consolidated orders. It differs from other the months of August and December, at handler definition is the provision that consolidated orders in that it requires least 10 percent of the total quantity of a producer-handler would not include cooperative handlers to organize reports bulk milk that is received at a supply any producer who also operates a of producer receipts that originate plant be shipped to distributing plants. distributing plant if it is requested that outside of the states included in the For the months of September through their dairy farm and plant be operated marketing area, or the states of Maine or November, such shipments by pool as separate entities. Removing this West Virginia, into reporting units with supply plants should be at least 20 component of the producer-handler each unit separately reporting receipts. percent. To the extent that a supply definition tends to strengthen the No diversion limits are established as plant has met these performance principle that producer-handlers rely they are in other consolidated orders. requirements, no performance primarily on their own farm production However, diversions are limited in requirement is recommended for the to bear the burden of balancing their functional terms. The maximum months of January through July. fluid sales and to find outlets for their quantity of milk that a supply plant However, a supply plant that has not surplus production. would be able to divert and still met these performance requirements maintain pool plant status would be 100 will need to meet a 10 percent Producer percent minus the applicable shipping performance requirement in each of the The producer definition of the standard. This should provide for a months of January through July in order consolidated Northeast order defines maximum amount of flexibility in to qualify as a pool supply plant. and describes those dairy farmers who marketing milk in the most efficient This decision also provides for a are properly associated with the manner to balance fluid milk needs. system of supply plants for the Northeast marketing area and who will consolidated Northeast order. This share in the benefits that accrue from Component Pricing provision allows two or more supply the marketwide pooling of milk under The consolidated Northeast order will plants operated by the same handler, or the order. employ a component pricing plan in the by one or more cooperative associations The producer definition establishes classified pricing of milk under the to be qualified for pool plant status by seasonal limitations for determining if a order as previously discussed in the meeting the shipping standards in the dairy farmer is considered to be a BFP section of this decision. This is same manner as a single supply plant producer under the order. Basically, the consistent with positions taken and subject to certain conditions. These order prohibits a dairy farmer from proposals offered by major cooperative conditions include written notification being a producer under the order during groups in the Northeast who supply a to the market administrator of the plants the flush production period if the dairy large percentage of the milk needs of the that will be included in the system, how farmer did not supply the market during market. However, on the basis of public pool status of plants will be affected if the months of relatively short comments, the consolidated Northeast individual plants are removed from the production when milk supplies are order will not contain a somatic-cell system, and provisions for adding plants needed most to meet fluid demands. adjustor. to the system. Accordingly, the producer definition In response to the proposed rule, one does not include dairy farmers whose major association representing primarily Producer-Handler milk during any month of December milk processors and dairy product The producer-handler definition for through June is received at a pool plant manufacturers in New York expressed the consolidated Northeast order limits or by a cooperative association handler opposition to employing a multiple receipts to no more than 150,000 if the operator of the pool plant or the component pricing plan in the pounds of fluid milk products from cooperative association caused the milk Northeast order. Their objection to its handlers fully regulated under any from such producer’s farm to be adoption is that it will be burdensome Federal order. While the proposed rule delivered to any plant as other than for handlers. This was expressed addressed significant limitations on producer milk as defined in the primarily as burdens associated with producer-handlers with respect to how producer milk provision of the changing from farm-point pricing to it distributes their milk, this decision Northeast order, or any other Federal plant-point pricing of milk and changes removes such limitations. The intent of milk order during the same month, in that handlers would need to make for providing an appropriate producer- either of the two preceding months, or producer pay-roll purposes and in the

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More importantly, it adoption was that multiple component As originally employed in the New was the place where control of the milk pricing does not favor fluid milk York-New Jersey order (Order 2), farm- passed from producer to the plant handlers, that it is designed primarily point pricing establishes the price for operator or from which the milk was for high-solids producers and milk by the zone (distance from market moved by the plant to other plants for manufacturers, that it may result in computed from the nearer of the basing fluid or manufacturing uses. Minimum manufacturers having to pay premiums points) of the township in which a prices required by the order to be paid to attract high-solids milk, and that it producer’s milkhouse is located. While by handlers were adjusted for the rewards some producers while reducing termed ‘‘farm-point,’’ farms are grouped location of the plant at which milk was pay prices to others. by their township location because this received from dairy farmers. These objections are unpersuasive. is the nearest practicable proxy for Bulk tank milk brought a set of new Multiple component pricing is a method actual farm location. In functional factors. When milk was transferred from for determining, among other things, terms, when a handler picks up milk at a producer’s bulk tank to the hauler, the how producer milk will be priced under a producer’s farm, the handler takes title point of transfer was also the point the order on a basis beyond just skim of the milk at the time and point of where several functions are performed. milk and butterfat. Components of milk pickup. Accordingly, there were no Milk in a producer’s bulk tank has have values that are recognized by the adjustments in payments to producers already been cooled, and therefore is not marketplace and producers have to cover any part of the cost of pickup subject to the early delivery deadlines. expressed the desire for having their pay or hauling in moving milk to the The weight of milk was determined at prices adjusted according to such handler’s plant. Farm-point pricing the bulk tank, and samples were taken values. Nevertheless, it does not affect fundamentally shifts the cost of for butterfat and quality. It was also here the total per hundredweight value of transporting milk from the producer to that the individual producer’s milk was milk. Additionally, multiple component the handler. Farm-point pricing has rejected or accepted and lost its identity pricing does not either favor or disfavor been in effect in Order 2 since 1961. by being co-mingled with other milk. fluid milk handlers as the multiple While the fundamental concept of farm- Numerous problems arose in component pricing plan adopted for the point pricing has been retained with regulating the handling of bulk tank Northeast order will continue to price respect to its overall structure of mileage milk in an order where pooling Class I milk on the basis of skim milk zones, other order provisions were depended upon direct delivery from the and butterfat. adopted subsequent to its establishment farm to a pool plant and under which It should be noted that there are many and modified over time so that farm- minimum class prices and the uniform multiple component pricing plans point pricing could remain viable while prices to be paid to producers was operated by many handlers in the allowing handlers to charge some of the reflective of the location of the plant northeast region. The existence of such cost of hauling producers’ milk to the where delivery was made: plans provides evidence that it is plant of first receipt. 1. Administrative problems associated appropriate and reasonable to formalize In the decision that established farm- with bulk tank handling arose, a multiple component pricing plan for point pricing (25 FR 8610, Sept. 7, particularly where and when milk was the consolidated Northeast marketing 1960), prevailing marketing conditions regarded to have been received. Bulk order, especially when there is strong served to warrant this type of pricing tank milk provided the opportunity to support for it by producers. To the system. At that time, the emergence of deliver milk to different plants, some extent that there are so many similar bulk-tank milk began to take on a degree pool and some nonpool. Where a given plans, it should not be particularly of prominence in the milk supply of tank load of milk was unloaded if it burdensome for a one-time change by Order 2. Prior to the adoption of farm- went to two or more plants of the same handlers in their accounting systems for point pricing (1959), about 8 percent of or different handlers on the same day determining producer payroll. the producers had bulk tanks, was difficult to determine. accounting for at least 14 percent of the 2. The incentive arose (because of the Farm-Point vs. Plant Point Pricing volume of milk associated with the administrative difficulty of determining At issue in merging the three market. About 92 percent of producers when and where milk was received) for northeast marketing areas is the use of delivered their milk at their own handlers to behave in a way that would two distinct pricing methods for milk. expense directly to plants in 40 quart result in the maximum exclusion of The Middle Atlantic and New England cans. Most of the milk can-delivered milk from the pool for fluid use outside marketing areas employ a system of was from farms within a radius of not the marketing area. plant-point pricing. This pricing method more than 15 miles from the plant. The 3. The incentive arose for the is also employed in every other milk of producers who had converted to maximum inclusion in the pool of milk marketing area in the Federal order bulk tanks, in some instances, was in fluid and manufacturing uses. system. Only the New York-New Jersey hauled more than 200 miles from farm 4. The incentive and opportunity marketing area uses what is called to city plants, but the majority of bulk arose for handlers to select one of ‘‘farm-point’’ pricing. This decision tank milk was moved much shorter several plants for receipt of bulk tank adopts plant-point pricing as the pricing distances to country receiving plants. milk, with or without manipulation of method for the consolidated Northeast The decision cited that in October, hauling charges. This distorted and order. 1959, milk was received from 49,719 impinged upon the effectiveness of the Plant-point pricing of milk that is producers at 691 plants. minimum price provisions of the order, pooled under an order prices milk f.o.b. When milk was delivered in cans to especially in the case of relatively long the plant of first receipt. The cost of a handler’s plant, the plant was the hauls of bulk tank milk. hauling from the farm to the plant is the location at which milk was weighed, The 1961 decision that established responsibility of the producer. When the sampled for butterfat and quality, and farm-point pricing provided eight receiving handler is also the hauler, where cans were washed. It was at the scenarios that demonstrated how orders permit the handlers in making plant that milk was accepted or rejected. handlers behaved so as to minimize

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00117 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.133 pfrm08 PsN: 02APP2 16142 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules their pricing obligations to producers. 11956, Oct. 31, 1963), it was noted that retained. However, the 10-cent Most of the scenarios arose from the there had been significant changes in negotiable limit was limited to inability to determine when milk was marketing conditions that arose from manufacturing milk. Can-milk at this received at a plant. In order to mitigate establishing farm-point pricing in 1961. time represented about 25 percent of the such circumstances, several things were These included the reduction in total amount of milk pooled in Order 2, done. Foremost was the establishment premiums to bulk tank producers in with the balance being bulk tank milk. of farm-point pricing on the basis of general; the reluctance of proprietary Proponents supporting this change to bulk tank units and the designation of handlers to receive bulk tank milk from the order claimed, and the decision each bulk tank unit as either a pool or individual producers because of the affirmed, that the manufacturing price nonpool unit and defining the hauling costs they would incur; the for milk in Order 2 was not properly circumstances under which such differences in pricing can and bulk tank aligned with manufacturing class prices designations could be changed. milk; and a slowdown in the trend of in adjacent Federal orders. In this The pricing of milk at the farm conversion from can milk to bulk tank decision (35 FR 15927, Oct. 9, 1970) the eliminated the incentive for handlers to milk. The 1963 decision, in Secretary found that to the extent that attempt to make it appear that the plant acknowledgment of changing marketing Order 2 handlers had borne the of receipt was other than the plant conditions, incorporated an authorized transportation costs associated with the where milk is actually received and 10-cent per cwt. charge for hauling pickup and movement of bulk tank milk handled. It was made crystal clear that under the Order, provided that used in manufacturing from the farm to delivery and receipt of bulk milk takes producers authorized this maximum the plant, Order 2 handler costs place at the farm. Once acquired by the level in writing. exceeded the price which handlers in handler, the plant or plants to which the In the 1963 decision, the Secretary adjacent order markets were required to milk may be delivered depended on found that allowing for a limited pay for milk used in manufacturing. By decision of the handler, not the authorized service charge for hauling adopting this transportation credit for producer. Under these circumstances, bulk tank milk at a maximum rate of 10 handlers, there was no need to adopt where the milk was actually used was cents per cwt. was sufficient. This was other proposals that would have not a factor to be reflected in the largely based on the fact that handlers lowered the manufacturing price for minimum producer price. The operator were not then charging for bulk tank milk under the other northeastern of the bulk tank unit was defined as the pickup and hauling, but rather were orders or lower the Class I price for milk handler and the point of receipt of milk. paying premiums for bulk tank milk. in Order 2 as had been proposed. This entity was responsible for Additionally, can-milk direct delivered establishing the unit, and it held the by producers to plants was still very By 1977, some 16 years after the responsibility for reporting, accounting, much the norm. While bulk tank milk adoption of farm-point pricing, pooling and paying producers. was growing, it had not yet accounted marketing conditions had changed again Additionally, the decision concluded for a majority of milk pooled on the and the issue of providing for more that the price at which the farm bulk order. equitable competition among handlers tank is accounted for to the pool should This decision raised, for the first time both within the Order 2 market and be the minimum class price adjusted for with respect to farm-point pricing, the between other orders took on primary location of the farm, and that payments maintenance of orderly conditions and importance. By this time, can-milk was by handlers directly to producers be uniform pricing to handlers on all milk about 3 percent of the market, with the adjusted to reflect all location priced and pooled under the order. balance represented by bulk tank milk, differentials based on where farms are Because bulk tank milk is priced by the near inverse of the marketing located and where bulk tank milk was township zone, (the best proxy for a conditions prevailing in 1961. The received. farm’s location) all farms in any transportation credit that had been A proposal that would have allowed particular township have the same value established for handlers in the 1970 a tank truck service charge authorized assigned to their milk. However, the decision for manufacturing milk was by the producer but not in excess of 20 decision found it necessary to reflect now extended to all milk received by cents per hundredweight (cwt.), and appropriate uniform pricing of bulk tank handlers. The transportation credit was establish that payments to cooperatives milk because it has differing values increased to 15 cents per cwt., plus an which serve as handlers operating a dependent on the accessibility and additional 15-cent maximum negotiable bulk tank unit should be at the price relative location of individual farms credit above the ‘‘automatic’’ 15 cents reflecting transportation and (the then within the township. With this finding, because total average transportation existing) direct delivery differential it was determined that responsibility for costs were found to be about 30 cents applicable at the handler’s plant where hauling to the township pricing point per cwt. For reasons nearly identical to milk is delivered by the cooperative was should be borne by the producer with the 1963 and 1970 decisions, not incorporated into the order. At that appropriate safeguards to protect the ‘‘formalizing’’ the negotiable hauling time, it was found that plant hauling producer. Therefore, a maximum charge was not adopted because of charges averaged nearly 20 cents per negotiable hauling charge from handlers needed flexibility in accounting for milk cwt. This was offered as rationale for a of 10 cents per cwt. was brought under movements from the farm to the negotiable 20 cent per cwt. charge by the order. township pricing point (42 FR 41582, handlers for hauling. Arguments not By 1970, marketing conditions in the Aug. 17, 1977). In that decision the withstanding, the underlying concepts New York-New Jersey market had Secretary also raised the direct delivery embodied in farm-point pricing caused changed to the point where handlers differential from 5 cents to 15 cents per the Department to not allow for any were authorized to receive a full 10-cent cwt. in the 1–70 mile zone for can-milk hauling deduction by handlers. hauling credit for each cwt. of bulk tank delivered by farmers to plants within Shortly after the implementation of milk which was disposed of for this zone, and changed the farm-point pricing, the need to amend manufacturing uses. Additionally, the transportation adjustment rate from 1.2 the order to keep farm-point pricing negotiable 10-cent hauling charge to cents per cwt. for each 10 miles to 1.5 viable arose. The first occurrence was in producers for a handler’s cost offset cents per cwt. for each 10-mile zone 1963. In the 1963 decision (28 FR established by the 1963 decision was beyond the 201–210 zone, and 1.8 cents

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00118 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.134 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16143 per cwt. for each 10-mile zone within plants in the major consumption areas incentive to haul direct-shipped milk to the 201–210 mile zone. of the market. Additionally, the decision city plants for manufacturing uses, since Cooperatives were of the strong indicated that this change was necessary there would be a credit from the pool for opinion that the cost of milk assembly to reflect current marketing conditions the full amount by which the uniform and transportation are the marketing and permit a more equitable competitive price transportation differential at the costs of the handler and not producers. situation for regulated handlers, both on city plant exceeds the transportation However, they also indicated that an intra market and inter market basis. differential for the zone of the bulk tank changes were warranted in the order The decision also applied a 15-cent unit. Adopting plant-point pricing for because of the failure of neighboring direct delivery differential for bulk tank producers would have had the effect of markets to adopt farm-point pricing. milk received at plants within 70 miles encouraging milk to move long Comparative examples of handler of New York City on the basis that a distances to city plants for price inequities with respect to their direct delivery differential is applicable manufacturing uses when transportation cost of milk was amply demonstrated to milk received in cans at a plant in the savings could be realized if such milk for both intra and inter market 1–70 mile zone. stayed nearer to manufacturing plants situations. With respect to inappropriate In the 1981 decision, the Secretary generally located in the milkshed. price alignment between orders, the found that the majority of milk moved Farm-point pricing has undergone competitive relationships between to distributing plants in 1979 from the many evolutionary changes from its Order 2 and Order 4 were closely 1–70 mile zone moved directly from inception in 1961. The original rationale examined. On intra-order movements of farms. This accounted for about 58 for farm-point pricing, free hauling and milk, it was shown that Class I handlers percent of the milk in this zone with 48 the administrative difficulty of in New York City had a significantly percent being reloaded. Moreover, the determining when milk from bulk tank lower procurement cost for direct-ship decision found that Order 2 plants units was received seems far removed over bulk tank milk because bulk tank located in northern New Jersey received from present-day marketing conditions milk from ‘‘distant’’ supply plants had direct shipped milk as did handlers and the rationale for continuing it. higher transfer and over-the-road located in Order 4. Thus, inter market There were a number of years that hauling costs. Supply plant milk at the price alignment needed to be structured hearings were necessary to first city represented about 80 percent of primarily on the basis of handlers recognize that the burden of milk receipts at city plants. The inter- obtaining direct shipped milk. transportation costs rested with market situation demonstrated that A federation of cooperative handlers. This resulted in handlers handlers in Philadelphia accounted for associations representing Order 4 being able to successfully argue that milk at prices lower than New York producers proposed that Order 2 be with this burden, it became much more handlers. Order 4 handlers were in a amended to return to plant-point difficult for the order to establish and position to establish lower resale prices pricing, with the direct delivery maintain uniform prices to handlers as for fluid milk than their competitors in differential being reduced to 10 cents required by section 608(5)(c) of the the New York market because the per cwt, and that the Class I differential AMAA. This is evidenced by the nature burden of increased hauling costs fell at the base zone of Order 2 be increased of the decisions of 1963, 1970, 1977, largely on Order 2 handlers. As in 1970, from the $2.25 level then in effect, to and 1981. Much ‘‘repair’’ to other order other proposals were denied in light of $2.40. This federation of cooperatives provisions were also needed to retain adopting the 15-cent hauling credit for believed that this ‘‘package’’ of order farm-point pricing. handlers. These other proposals modifications would provide for proper Few comments were received in included lowering Class I and the price alignment between Order 2 and response to the recommended adoption manufacturing price for milk in the Order 4. While the decision did apply of plant-point pricing by current Order order by 15 cents per cwt. different transportation rates at a rate of 2 entities. One New Jersey entity By 1981, bulk tank milk accounted for 1.8 cents per cwt. outside the base zone thought that its elimination would nearly the entire milk supply pooled on of the Order (201–210) and a rate of 2.2 eventually lead to increased hauling Order 2—about 99.6 percent. As the cents per cwt. inside the base zone, it costs borne by producers. Another result of a hearing held in June 1980, in did not provide for a return to plant- comment received from a trade the final decision (FR 46 33008, June 25, point pricing. organization representing fluid milk 1981) the Secretary again amended the While the decision did not adopt processors and dairy product transportation credit provisions of the plant point pricing, the decision did manufacturers, thought that too much order. The 15 cents per cwt credit for acknowledge that the amendments emphasis was placed on the ‘‘free- handlers was retained; however, the 15- adopted tended to establish plant hauling’’ to the detriment of other cent negotiable transportation service pricing with respect to the classified desirable features embodied in farm- charge was modified to allow handlers prices to handlers. However, farm-point point pricing. Most important was this to negotiate with producers for any pricing was retained with respect to entity’s view that farm-point pricing farm-to-first plant hauling cost in excess how producers were paid. With this provides for increased flexibility and in of the 15-cent transportation credit, plus being the case, the basic substantive providing for automatic incentives for ‘‘the amount that the class use value of difference between the amendments and the most efficient hauls of milk for/by the milk at the location of the plant of plant pricing is the impact on the handlers in assembling and moving first receipt was in excess of its class use movement of milk to higher-priced milk while not affecting the price paid value at the location where milk was zones for manufacturing use. Under to dairy farmers. received in the bulk tank unit from plant pricing, the minimum uniform The arguments for retaining farm- which the milk was transferred.’’ price payable to producers applies at the point pricing are not persuasive in light According to the 1981 decision, this location of the plant of first receipt and of the detailed discussion on the entire amendment would adjust hauling handlers receive a credit from the life-cycle of its history discussed above. allowances for handlers to more closely producer settlement fund at such This is not to discount the importance relate the location value of milk to the uniform price. The decision also of the certain desirable features of farm- costs incurred in transporting milk from concluded that plant-point pricing for point pricing that led to its adoption farms and country plants to distributing producers would provide a greater and that have been articulated over the

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00119 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.136 pfrm08 PsN: 02APP2 16144 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules years for its retention in the New York- state-regulated areas that fall outside of State order has not had any location New Jersey marketing area. the proposed marketing area. Further, differentials, thereby establishing a Nevertheless, farm-point pricing has the ADCNE proposed prices at the major ‘‘flat’’ price surface in the area. If those outlived its intended purpose and the cities in the Northeast, including plants, for producer pricing purposes, Secretary determines that it will not be Boston, New York City, Philadelphia, were zoned lower in value reflecting the retained in a consolidated Northeast Baltimore, and Washington, D.C., westerly and northerly distance from order. included specific Class I differential New York City or Philadelphia, ADCNE levels that are somewhat different from is of the view that the ability of both The Need for a Producer-Price those presented in the Option 1A Class distributing and supply plants to attract Mechanism I price surface. For example, the an adequate supply of milk could be in As discussed above, farm-point recommended decision recommended a jeopardy. Furthermore, the expectation pricing for producers did provide some New York City Class I differential of that Class I utilization of the proposed rational pricing incentives to promote $3.15, while ADCNE proposed $3.20. In Mideast order will be nearly 10 percent efficiency within the Order 2 marketing general, the ADCNE proposal assumed higher than the Class I utilization in the area. This can reasonably be summed up that the Class I differential structure that Northeast order was also offered in by concluding that farm-point pricing would be adopted was Option 1A, support of the ADCNE-proposed would not provide, as plant-point which is the Class I pricing option they producer differential level in this area. pricing would, incentives to haul direct- strongly support, and also is the Class The ADCNE proposal also shipped milk to city plants for I pricing option overwhelmingly recommended producer differential manufacturing uses, since there would supported in public comments received levels in areas that they believed should not be a credit from the pool for the full from interested parties from the be included in either the consolidated amount by which a uniform price northeast. Northeast order or the Mideast order. transportation differential at the city With respect to a producer differential Additionally, the ADCNE proposal also plant exceeds the transportation surface, the ADCNE proposed that a addressed producer differential levels at differential for the zone of the bulk tank debit of 5 cents per cwt. be made to the other locations outside of the Northeast unit. Adopting plant pricing would have blend price applicable at non- region. had the effect of encouraging milk to distributing plants in certain zones. The Additional supporting and amplifying move long distances to city plants for need for the debit, according to the comments were also provided by manufacturing uses when transportation ADCNE proposal, is to make deliveries Dairylea. These comments supported savings could be realized if such milk to distributing plants somewhat more the major themes offered in the ADCNE stayed nearer to manufacturing plants attractive to producers, while decreasing proposal for a producer differential generally located in the milkshed. the amount by which manufacturing overlay to Class I differential levels. In an effort to address the dairy plants draw on the marketwide pool for Dairylea stated that moving directly to industry structures that have evolved transportation values, offering also that a plant-point pricing method would over the past four decades in the three such a debit is economically justified accentuate ‘‘existing inequities and current northeast marketing areas, and authorized by the AMAA. market dysfunctions.’’ Dairylea further efforts were undertaken by a major According to ADCNE, it is distributing commented that a plant-point group of dairy farmer cooperatives in plants that provide the revenue—in the differential schedule would maintain the northeast to address what the form of Class I values—which form the current inter-plant price differences in pricing implications are to producers blend price paid to producers. the current New England and Middle and handlers as the region moves to a Deliveries to manufacturing plants do Atlantic orders, but would worsen them unified plant-point pricing method. not contribute to increasing the value to for New York manufacturing plants, This has resulted in a proposal by the the marketwide pool. The debit, many of which are cooperatively Association of Dairy Cooperatives in the according to ADCNE, is a reflection in owned. Their view of the ADCNE Northeast (ADCNE) that include St. part of the Order 2 system, which has pricing proposal was that it maintains Albans Cooperative Creamery, Inc., priced some 50 percent of the milk in economic incentives for milk to move to Land O’Lakes, Upstate Farms the northeast region, and which does Class I distributing plants, would Cooperative, Inc., Agri-Mark, Inc., Dairy not provide location-based provide for more balanced procurement Farmers of America, Inc., Dairylea transportation payments for movements equity among competing manufacturing Cooperative Inc., and Maryland & from farms to manufacturing plants. The plants, maintains equitable producer Virginia Milk Producers Cooperative ADCNE proposal provides that pricing when milk is marketed by Association Inc. These dairy farmer deliveries to Class I plants are rewarded transporting it from a higher priced zone cooperatives account for well over half under this system with an additional 5- to a lower priced zone, and provides a of the milk that would be pooled and cent payment from the pool for the structure that allows for adequate blend priced under the proposed consolidated marketwide benefit conferred by a price levels in all areas of the Northeast Northeast order. Their proposal calls for distributing plant’s utilization. milkshed. establishing a producer differential For the Western New York State order Dairylea further commented that structure that would ‘‘overlay’’ the Class area, ADCNE also proposed a broad area under plant-point pricing, existing I differential structure that would apply in which a producer differential of $2.40 ‘‘near-in’’ manufacturing plants (plants in the consolidated Northeast order. per cwt. to producers would be payable located in a relatively high differential The structure proposed is a county- on deliveries of producer milk at all location) would enjoy a procurement based plant-point price structure, plant locations in this area. This portion advantage relative to their competitors providing for 14 zones that of the price surface proposed by ADCNE that are located in a lower-priced accommodate the need to reflect purports to be reflective of the major location. Dairylea recommended existing and longstanding competitive historical movements of milk from east narrowing the price differences between price relationships among plants, while to west in the region which returned the manufacturing plants that compete for integrating the farm and plant point eastern farm point price to dairy farmers producer milk. To do this, Dairylea pricing systems currently used in under Order 2’s farm-point price supported lowering producer Orders 1, 2, and 4 and with currently system, and that the Western New York differentials for manufacturing plants

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00120 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.137 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16145 that are located in high-valued locations Agri-Mark noted, receive a higher price this observation, Agri-Mark noted that and increasing those differentials at than farms farther from the city, even existing Class I differentials have not manufacturing plants in areas that have though their milk ends up in the same been adjusted to more fully account for lower location values. Dairylea place. increases in hauling costs. advocated the ADCNE proposal for a Agri-Mark noted that most A producer pricing differential producer differential that is 5 cents manufacturing plants, especially cheese structure that differs from a Class I lower than those of Class I plants when plants, were built in the northeast prior differential is denied. The issue before such plants are located in the same to the adoption of farm-point pricing the Department is to minimize the pricing zones. Dairylea’s view of this and not in response to it. Rather, says impact of the change from farm-point to design results in maintaining, or slightly Agri-Mark, these plants were built at plant-point pricing on producers as part increasing, producer differentials their present locations because of their of adopting plant-point pricing for the applicable at Class I plants and reducing proximity to abundant milk supplies. new consolidated order. The change to those applicable at ‘‘near-in’’ The procurement problems for plant-point pricing will affect manufacturing plants. At the same time, manufacturing plants that Order 2 approximately one-half of the producers this would provide for increasing entities alert us to did not arise in New in the consolidated marketing area and producer differentials at manufacturing England manufacturing plants under is a significant departure from historical plants in central, western, and northern plant-point pricing even though these methods of distributing the revenue that New York. According to Dairylea, this plants were located as far north as accrues from classified pricing to producer pricing surface would present possible within the milkshed for New producers whose milk is pooled under a more equitable marketing environment England. the current New York-New Jersey order. than strict plant-point pricing currently Simply put, Agri-Mark believes that Plants, however, will not experience employed in Orders 1 and 4, while at rather than decreasing the differential significant change since plants currently the same time not threatening the between manufacturing plants and city regulated under Order 2 already account viability of manufacturing plants in distributing plants, an increase is to the marketwide pool at the Class I those areas of a consolidated Northeast justified. They are also of the opinion location differential value. The issue marketing area. that manufacturing plants located far then, tends to focus on how to pool and A major theme of Dairylea was its from higher-priced zones will maintain distribute the revenue as equitably as view that Federal milk orders and their an advantage even with the adoption of possible to producers. Of the few public provisions should foster an environment strict plant-point pricing because this comments that were received on this under which manufacturing plants are milk does not need to travel long issue in response to the January 30, provided equal cost and procurement distances to reach manufacturing plants. 1998, proposed rule, it was requested ability, and not disfavor such Agri-Mark indicates that the ADCNE that this issue be reconsidered. manufacturing plants located in high proposal would cause Agri-Mark However, no new or persuasive milk production areas where Class I producers to receive lower prices that arguments were advanced that would differentials are lower. Dairylea also competitive price relationships do not cause a change in denying this proposal. stated that the final rule of 1991 that warrant. Competitive equity between realigned intra-order prices in Order 2 The Agri-Mark view of Federal milk manufacturing plants is already ensured resulted in harm to producers in marketing orders differed substantially by the classified prices applicable to northern and western New York. While from the views expressed by Dairylea. handlers who operate such plants. In it is not appropriate to specifically Agri-Mark stated that the role of Federal fact, this decision adopts uniform Class revisit this issue and decision here, milk marketing orders is to treat all III and Class IV prices that are official notice is taken of the final producers equitably relative to how applicable for all locations. The more decision (55 FR 50934, December 11, their milk is used and not to weaken appropriate issue this proposal seems to 1990) that realigned Class I differentials price integrity by causing destructive address is that manufacturing plants are in the three existing northeast marketing competition among producers for sale to often cooperatively owned. All entities, areas. Class I outlets. This is best including cooperatives in their capacity Comments supporting the ADCNE accomplished, according to Agri-Mark, as handlers, account to the marketwide proposal for a producer pricing surface with appropriate pooling requirements pool at the manufacturing price for milk were also offered by Upstate Farms and Class I differentials to satisfy the received at their plants. The price paid Cooperative, Inc. The Upstate Farms Class I demands of the market. Agri- to producers is the blend price for all views served to reiterate the major Mark fears that if the regulatory pricing milk pooled on the market that was themes developed in the ADCNE plan gives a distributing plant an priced according to its use. proposal. advantage over a cooperative Cooperatively owned manufacturing Agri-Mark, a part of ADCNE, filed manufacturing/balancing plant in the plants located in higher priced areas separate and dissenting views on the same zone, that plant can use this will pay a higher blend price to ADCNE proposal. Conceptually, Agri- advantage for itself instead of passing it producers who deliver milk to that Mark noted that plant and farm-point along to farmers to offset transporting location provided they meet the pricing are different, but noted further their milk to market. performance requirements for being that the differences are not always Lastly, in their opposition to the pooled, thereby demonstrating the unfavorable. Agri-Mark submitted that ADCNE proposal, Agri-Mark noted that appropriate degree of association with under plant-point pricing, all producers no manufacturing plant has been built the market. In this regard, it is worthy shipping to the same plant receive the in any city zone for decades, noting that to note that not all manufacturing plants same minimum order blend price the only significant plants in such areas in the high-valued zones in the New regardless of where their farm is located. for the northeast are older plants York marketing area are pool plants. Under farm-point pricing, farmers producing nonfat dry milk and butter Blend prices are adjusted everywhere shipping to the same plant receive and which serve to balance the Class I according to the location value of the different prices under the order needs of city markets, concluding that plant. Adjusting producer blend prices depending on where their farm is such plants are there for common sense on the basis of whether or not milk was located. Farms closer to New York City, and efficiency reasons. In support of delivered to a distributing plant or to a

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00121 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.138 pfrm08 PsN: 02APP2 16146 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules manufacturing plant seems to create a administrator that it provides partial cost reimbursement of 4 cents form of producer price discrimination information with respect to market per cwt. Cooperatives would be eligible that classified pricing and the order prices and marketing conditions, to form common marketing agencies or mechanism of marketwide pooling and that it has retained legal and economic federations for purposes of qualifying its related provisions attempt to staff or consulting personnel available to for balancing payments. Such handlers mitigate. Such marketwide pooling participate in marketing order would include those who: (1) provisions provide a degree of equity to amendatory proceedings, to consult Demonstrate ownership or operation of producers in the form of a uniform with the market administrator with a balancing plant with the capacity to blend price adjusted only for the respect to marketing order issues, and process a million pounds of milk per location value on all milk pooled on the that the entity pool at least 2.5 percent day into storable products such as market. Classified pricing and of the order’s total milk volume. cheese, butter, and nonfat dry milk and marketwide pooling have served well to There is not a compelling reason to who also represent at least 2.5 percent mitigate the price competition between adopt this sort of compensatory plan to of the total volume of milk pooled under producers seeking preferred higher- reimburse those entities that incur these the order; (2) have under contract, and valued outlets for their milk, while at costs. Market administrators and their the obligation to pool on a year-round the same time ensuring handlers staffs make themselves available to meet basis, at least 8 percent of the market’s uniform prices, adjusted only for with, discuss, and aid in formulating milk volume; (3) own a balancing plant location, in the prices they pay for milk. positions that reflect marketing that must be made available to other conditions as a normal part of their handlers or cooperatives at the request Marketwide Service Payments duties. Additionally, there are of the market administrator; (4) qualify Cooperative Service Payments— numerous provisions in the order that to provide pool producers with a Cooperative service payments, as part of require as a matter of course the temporary market for their milk for up a marketwide service payment provision issuance of reports, prices, and other to 30 days at the request of the market for the consolidated Northeast order, information that affect all marketing administrator; and (5) demonstrate to should not be included in a order participants and that provide a the market administrator that their consolidated Northeast order. As service to the entities affected by the utilization of milk in Class I uses is originally proposed by ADCNE, a 2-cent regulatory plan of the order. Finally, no greater than the minimum shipments per cwt. payment would be made out of other current or consolidated order required for pool plant qualification the marketwide pool to cooperatives provides for such cost compensation. under the order. and non-cooperative entities for funding Cooperative and proprietary handlers in ADCNE modified the above described information-gathering and services the New England and Middle Atlantic original proposal for balancing related to amending Federal milk marketing areas included in the payments. The modified proposal calls marketing order provisions that would consolidated Northeast order, as well as for a balancing payment of 6 cents per be of marketwide benefit. Cooperative entities in all other marketing areas have cwt. and revised criteria for those service payments of this sort currently not experienced or have demonstrated entities eligible to receive balancing are provided for under terms of the New any of the harm or ‘‘disadvantage’’ that payments from the marketwide pool. As York-New Jersey order, but are not arises, or may arise, if such costs are not with their original proposal, they are of provided for in either the New England shared by the entire pool of producers the opinion that a system of or Middle Atlantic orders. However, in the marketing area. This decision can reimbursement is necessary to offset under the New York-New Jersey order, only assume that industry participants costs associated with absorbing, or cooperative service payments are made that have an interest in developing the balancing, the daily, weekly, and only to qualified cooperatives that meet promulgation and amendments to seasonal fluctuation in Class I demand the conditions specified under the order marketing orders would be willing to do in the market. Balancing payments and does not provide for such payments so at their own expense. The positions would be made on qualifying pounds of to non-cooperative entities. In and arguments offered are largely issues pooled milk delivered to manufacturing comments provided in response to the of the self-interest of entities. As such, milk plants. Additionally, this milk proposed rule published on January 30, self-interest may or may not be of would be subject to a ‘‘call’’ by the 1998, the ADCNE withdrew this marketwide benefit. market administrator during times when component of their marketwide service Balancing Payments—A marketwide there is additional need for milk by payment proposal. service payment plan which would distributing plants in the market. Rationale offered in support of a compensate qualified handlers that The modified proposal would provide cooperative service type payment to perform market balancing should not be balancing payments to any handler in cooperatives and non-cooperative included in the consolidated Northeast any month in which the handler’s entities was based on recognizing that in order at this time. deliveries of milk to distributing plants a regulatory pool structure, private The original proposal for providing are greater than 20 percent but less than parties provide important services that balancing payments from the 65 percent of its total pooled milk are of benefit to everyone involved in marketwide pool was intended to reflect volume. According to ADCNE, the lower the marketwide pool, including the the additional costs that handlers incur percentage requires handlers to promulgation, amendments to, and in balancing the Class I needs of the maintain a constant, significant administration of the order. Not to market and clearing the market of association with the Class I market and provide a mechanism for the recovery of temporary milk surpluses. According to is higher than the level required by a portion of the expense involved in the proponents, these balancing costs other handlers for pooling qualification. providing such services would are not fully recoverable from Class I Additionally, the 65 percent, says disadvantage those incurring these handlers; however, the benefit that ADCNE, serves to limit participation to expenses while everyone in the market results from this service being provided handlers with substantial quantities of benefits as a result of these services. is a benefit of all producers in the reserve milk not dedicated to the Class Qualification criteria presented for market. I market. Qualifying deliveries would be entities eligible to receive this payment Handlers that incur the costs would determined on a ‘‘net shipment’’ basis to included a demonstration to the market be those handlers that would receive prevent the reshipment of milk

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00122 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.140 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16147 deliveries that would otherwise qualify challenges to its suppliers with respect they should be made available to for balancing payments. Payment would to balancing daily, weekly and seasonal cooperative and proprietary handlers be made on the reserve volumes of milk. needs and sets the Northeast order apart alike. In the event that the market from other orders. The consolidated Northeast marketing administrator issues a ‘‘call’’ for The ADCNE offers additional area is expected to retain a unique additional milk deliveries to justification for balancing payments, in feature of the existing New York-New distributing plants, the volume of milk part, by drawing on the example of Jersey marketing area—a relatively high delivered to non-distributing plants in other orders providing for marketwide percentage of producers who are not the prior month by handlers subject to service payments for offsetting the members of cooperatives. As of the call would be used as a basis for additional costs of moving milk from December 1997, the current New York- requiring handlers to make additional assembly areas and for plant-to-plant New Jersey market had about 68 percent shipments to distributing plants on a movements of milk. ADCNE notes that of its milk and about 69 percent of its pro-rata basis. For example, if such payments from the marketwide producers represented by cooperatives. participating handlers in the prior pool are provided for in recognition of In the consolidated Northeast marketing month had delivered 100 million the marketwide benefit that accrues to area, the expected amount of milk pounds of milk to non-distributing all market participants when the costs of represented by cooperatives will plants and the market needed 10 million milk assembly and the movement of increase to about 76 percent with about pounds of milk delivered to distributing milk are shared by all producers. 75 percent of the number of producer plants, each handler subject to the call Other public comments similarly represented by cooperatives. While the would be obligated to deliver an articulated the uniqueness of the current percent of milk volume and number of additional volume of milk to New York market and its role as part of producers represented by cooperatives distributing plants equal to 10 percent the consolidated Northeast marketing is growing, the volume of milk and of its deliveries to non-distributing area. One commenter observed that the number of independent producers plants in the prior month. ADCNE Northeast marketing area, and New York remains significant. This is especially viewed their balancing payment in particular, is unique in terms of the important given the role of cooperatives provision as establishing a ‘‘standby mix of producers who are represented who operate manufacturing plants and pool’’ of milk among qualifying by cooperative membership and those who provide and incur the costs handlers who elect to participate. that are not. According to this associated with balancing the Class I Participation in the pool would entitle commenter, about 65 percent of the needs of the market. Without providing the qualified handler to a payment of 6 producers in New York are represented for some cost offset for balancing, about cents per hundredweight, determined by cooperatives, while the remaining 35 26 percent of the milk and about 25 monthly, on the handler’s deliveries to percent are independent producers to percent of the producers would not be manufacturing plants, but would also the market. Further, noted this sharing in the burden of balancing the obligate the handler to deliver commenter, it has been cooperatives market. additional quantities in the event of a that have, since the 1960’s, taken over The revised criteria presented by the ‘‘call’’ for up to one year after a the role of balancing the Class I needs ADCNE seem reasonable in determining balancing payment has been received. of the market by moving milk around on which handlers would be eligible to According to ADCNE, the costs a daily basis between distributing and receive balancing payments from the involved with matching the demands of manufacturing plants. According to this marketwide pool. The qualification the Class I market with the total commenter, such was and should standards for receiving balancing production of milk are costs which continue to be an important factor to payments (to any handler that ships at marketing handlers, proprietary and consider for the larger consolidated least 20 percent, but less than 65 cooperative alike, must absorb. These market that expects to need about two percent of the total volume of milk costs are neither fully reflected in Class thirds of its milk supply balanced pooled on the market to distributing I prices, nor in over-order handling between an expected 45 percent Class I plants) also seems reasonable in light of charges and are not uniformly shared and about 20 percent Class II utilization. the order’s pooling standards. Further, throughout the market, while the Class This commenter was of the opinion that determining qualifying shipments on a I value is shared equally within the markets characterized by very high ‘‘net shipment’’ basis is similarly a marketwide pool, says ADCNE. The cooperative membership already spread prudent safeguard to reasonably assure unique structural characteristics of the the costs of balancing uniformly over a that milk is delivered into, and not northeast’s markets and the large pool of producers. shipped back out of distributing plants preponderance of producers delivering All other public comments supported and supply plants for the sole purpose directly to proprietary Class I handlers inclusion of balancing payments in the of qualifying for balancing payments. It on a regular basis, says ADCNE, consolidated Northeast order. These also provides for ensuring a temporary prevents supplying handlers from comments similarly called attention to market (up to 31 days) to any producers recovering these costs from Class I the unique structure of the Northeast who would have lost their normal handlers. marketing area, primarily in terms of the market outlet as a condition for According to the ADCNE, the number of producers represented by eligibility in receiving balancing proposed Northeast marketing area will cooperatives and the relatively high payments. comprise the largest Class I market in number of independent milk producers However, the revised proposal would the Federal order system and also and the unequal costs that would be have payments made only on milk used represent the largest pool in the country incurred by producers who incur the in manufacturing products. In practice in terms of producer milk. According to additional costs of balancing the fluid this would mean that handlers with the ADCNE, monthly Class I sales will be needs of the market. While there was greatest volume of milk going to approximately 900 million pounds and specific recognition of the important manufacturing plants would receive a will be more than 65 percent greater role that cooperatives play in balancing larger share of balancing payments than the next largest consolidated the market, it was generally thought that while at the same time would be order’s Class I pool. ADCNE says this if balancing payments would be required to provide the least additional huge Class I market presents significant provided for in the consolidated order, Class I milk to the market. Observed

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00123 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.141 pfrm08 PsN: 02APP2 16148 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules another way, the less commitment a result in being able to extrapolate a few public comments supporting its handler has to the Class I market, the single cooperative entity’s cost for continuation, is not included in the larger the balancing payments. balancing, however, this measure may consolidated Northeast order for the Additionally, basing balancing or may not be appropriate for same compelling reasons articulated in payments criteria on only characterizing or determining the the proposed rule published on January manufacturing milk seems to provide a proposed payment level. 30, 1998. Class I prices charged to disincentive to handlers in serving the handlers that compete within the The ‘‘Pass-Through’’ Provision Class I market needs because handlers marketing area for fluid sales are that would provide additional Class I Currently, the New York order determined by the location value of milk would lose 6 cents per cwt. Lastly, provides for what is commonly referred milk delivered to their plants. The Class basing balancing payments on just to as the ‘‘pass-through’’ provision. The I differential structure adopted in this manufacturing milk seems to provide an intent of this provision is to provide for decision recognizes the location value of unwarranted monetary incentive to a degree of competitive equity for milk for Class I uses and is designed to cause additional milk to associate with handlers that must pay at least the cause milk to be delivered to bottling the marketwide pool for the sole order’s Class I price for milk so that they plants to satisfy fluid demands. purpose of receiving an additional 6 can compete with handlers in Accordingly, handlers located in high- cents per cwt. unregulated areas that do not. This valued pricing areas will be charged for In addition to the above concern on provision has been in place in the New the location value of Class I milk at their limiting balancing payments to York order since 1957 and is a part of plant locations regardless of whether or manufacturing milk, the reasons for not how the order allocates and classifies not they compete with other handlers recommending balancing payments for milk. In functional terms, the pass- for fluid sales in areas where the the consolidated Northeast order through provision removes the amount location value of Class I milk at these articulated in the proposed rule were of milk distributed outside of the plant locations are lower. This location not all sufficiently addressed. The marketing area from the full Class I value pricing principle is extended to proposed Northeast order consolidates allocation provisions of the order, handlers competing for sales with two current orders, New England and thereby providing a degree of price handlers who do not pay the same price the Middle Atlantic, that do not relief to handlers who compete with for Class I milk in unregulated areas. currently provide for balancing cost other handlers who are not held to the offsets to handlers for such purposes. pricing provisions of the order in Seasonal Adjustments to the Class III These markets have not experienced any unregulated areas. Regulated New York and Class IV Prices undue harm or disadvantage by not handlers currently compete with The three northeast orders to be providing for this sort of cost offset. To unregulated handlers in the unregulated consolidated into a single Northeast the extent that further analysis on the areas of Pennsylvania and other areas in order currently provide for a seasonal need for balancing payments can rest the northeast region. adjustor on Class III and Class IIIA milk upon the high percentage of The current provisions of the New prices. These provisions have been a independent milk that is expected to be England and Middle Atlantic orders do part of these three orders for more than represented in the consolidated not have this provision although they 30 years. Prior to the adoption of the Northeast order, such analysis does too adjoin similar non-Federally Minnesota-Wisconsin (M–W) price provide a legitimate and important regulated areas. Handlers regulated by series in the mid-1970’s, these markets factor in further considering the these two orders also compete with established the equivalent of the appropriateness of a balancing payment these same unregulated handlers for modern Class III price on the basis of provision. Class I sales. The merging and what was known as the U.S. Average The proposed rule also indicated that expansion of these three northeast Manufacturing Grade Milk Price Series balancing payments should not be orders continue to result in areas that (U.S. Average Price Series). adopted because an appropriate class adjoin the recommended Northeast The U.S. Average Price Series was a price has been provided for market order that would not be regulated. competitive pay price series, but clearing purposes—the Class IIIA price. While there were proposals both for differed from the M–W in that it It is a price that is applicable in all and against retaining a pass-through recorded price averages consistently current northeast orders, and is provision in the consolidated order, the below the M–W that was rapidly being continued in this decision as the Class need for it was expressed on the basis adopted elsewhere in the country as the IV price. While these two class prices of the extent to which the Northeast appropriate price for surplus uses of are not the same, (as explained in the consolidated order would be expanded milk and used as a price mover for BFP section of this decision) they are to include currently unregulated areas. higher-valued class prices. Given the conceptually similar in that handlers Generally, handlers support continuing national marketplace in which surplus have been provided with a market to provide for a pass-through provision, dairy products compete for sales, a clearing price and further compensation and this position can only be considered mechanism was needed to align these beyond this does not appear to be reinforced given the limited degree of two differing price series. Accordingly, warranted. expansion of the consolidated Northeast seasonal adjustments to the Class III Lastly, the proposed rule indicated order. If the entire Northeast region price were developed and made a part that the original 4-cent per cwt. would fall under Federal milk order of these orders. These seasonal adjustors balancing payment level was regulation, the need for the pass-through were found not only to be warranted for unexplained with respect to how would be moot. These observations better price coordination between these adequately it tends to offset balancing remain valid in light of the public two price series, but also served to costs. The same is also observed for the comments received in response to the encourage handlers to dispose of the modified payment level of 6 cents per proposed rule published on January 30, maximum amount of milk in Class I cwt. Subsequent to the publication of 1998. uses. the proposed rule, public comments The pass-through provision, By the mid-1970’s, the M–W was received in letters and from public notwithstanding the limited extent of adopted to replace the U.S. Average forums and ‘‘listening sessions’’ did marketing area expansion, or in light of Price Series and the seasonal adjustors

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00124 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.142 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16149 were retained. The reason for retaining Louisiana, Mississippi, North Carolina, The credits are also restricted to milk these adjustments were to encourage South Carolina, Tennessee, Virginia, received from producers who supply the handlers to make more milk readily and West Virginia) has been markets only during the short season available for fluid use in the short decreasing—from 15.4 billion pounds in and are not applicable to milk of production months and to facilitate the 1988 to 13.6 billion pounds in 1997. producers who supply the market orderly disposition of excess reserve The net result of these opposite trends throughout the year. milk supplies in flush production is a widening gap between the local Following the initial implementation months. Although some regional price supply of milk for fluid use and the of transportation credits in August 1996, disparity was acknowledged to result demand for such milk. This is evident the provisions were modified in a final from retaining these adjustments, they by the drop in per capita milk decision issued on May 12, 1997. The were nevertheless retained because production for these 12 states, from 265 amendments became effective on there was no evidence that providing for pounds per capita in 1988 to 210 August 1, 1997. such adjustment had led to any pounds per capita in 1997. Transportation credit provisions are interregional problems in the marketing Unlike other parts of the country, the retained in the new Southeast and of the reserve milk supply. Southeast has few facilities for handling Appalachian orders but have not been Agri-Mark, a major cooperative in the surplus milk. Consequently, surplus included in the Florida order. northeast, proposed that seasonal production during the months of Only a few comments filed in adjustments continue in the January through June must, in some response to the proposed rule consolidated Northeast order. The main cases, be shipped hundreds of miles for specifically addressed the issue of thrust of their proposal was that markets processing at manufacturing plants transportation credits. Two producers with relatively high Class I use create a generally to the north. For this reason, requested that transportation credits be burden on the manufacturing sector in the provisions in these orders must be removed from the orders because they their areas. They view seasonal aimed at the twin goals of encouraging have not performed as expected. A adjustments as also assisting in sending supplemental milk to move to these handler who supported transportation the proper economic signal to markets during the short production credits for the Southeast and manufacturers. This is important, months—generally July through Appalachian orders suggested that the according to Agri-Mark, because the December—and they must also provisions also be included in the seasonal adjustment provides an discourage supplemental milk from Florida order. economic ‘‘disincentive’’ for Class III moving to these markets when it is not In the past 5 years, dairy cooperatives and Class IV manufacturers to use milk needed in the flush production representing the large majority of in the fall when less producer milk is months—generally January through producers in the Southeast have available and additional supplies are June—because such milk would simply strongly supported transportation credit needed for Class I uses. displace local milk and increase the cost provisions for the Southeast and Seasonal adjustors to the Class III and of disposing of such milk for surplus Appalachian orders because the Class IV prices are not incorporated into use. provisions have been helpful in the provisions of the consolidated Very few comments were received obtaining supplemental supplies of milk Northeast order. This decision provides with respect to the order provisions for fluid use and in sharing the costs a much more permanent replacement proposed for the Appalachian, Florida, associated with those supplemental for the current BFP. Because Class III and Southeast orders. Most of the supplies more equitably among all and Class IV product price formulas are comments that were received endorsed handlers in the market. They have not, incorporated in all consolidated orders, the proposed provisions. A few however, been supported by the 2 there is no compelling reason offered to comment letters stated that seasonal cooperative associations which supply contemplate continuing seasonal pricing provisions should be included the Florida market and there is no adjustments to Class III and Class IV in the Southeast orders and a few indication that such provisions are prices. They are also not provided in comment letters suggested that the Class needed to more equitably share the costs orders that are expected to have Class I I price mover for the Southeast should of supplying that market with utilizations similar to that anticipated in be a 12-month moving average rather supplemental milk. There was no the consolidated Northeast order and than the proposed 6-month moving indication from the public comments who similarly have important average. These comments are discussed that were received that these manufacturing activity. in the pricing sections of this final cooperative positions have changed. decision. Other comments received are With the addition of northwest 6b. Southeast Region discussed below. Arkansas and southern Missouri to the The 3 proposed orders for the Transportation credits. As a result of Southeast marketing area, milk from Southeastern United States—Florida, the need to import milk to the Southeast these 2 areas will be ineligible for Southeast, and Appalachian—are faced from many areas outside the Southeast transportation credits under the with a different set of marketing during certain months of the year, Southeast and Appalachian orders. This conditions than other orders. The transportation credit provisions were change in the application of the credits Southeastern United States is one of the incorporated in the Carolina, Southeast, is consistent with the logic for fastest growing areas of the country in Tennessee Valley, and Louisville- incorporating these 2 areas in the terms of population growth and is the Lexington-Evansville orders in August Southeast marketing area. Specifically, most deficit area in terms of milk 1996. These provisions provide credits northwest Arkansas and southern production per capita. From 1988 to to handlers who incur additional costs Missouri are regular sources of supply 1997, the population of the 12 to import supplemental milk for fluid for handlers in the Southeast marketing Southeastern states rose from 57.9 use for markets during the short area and, in addition, include plants million to 65.1 million. production months of July through that compete for sales with handlers While population has been increasing December. The provisions restrict the regulated under the Southeast order. in the Southeast, milk production in the use of credits by handlers to milk Accordingly, the producers in these 2 12 Southeast States (i.e., Alabama, received from producers and plants areas will share in the pool proceeds of Arkansas, Florida, Georgia, Kentucky, located outside of the marketing areas. the Southeast market. Of course, since

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At truck and its contents, the date and time regularly associated with the market, present, the market administrator must of weighing, and the location of the transportation credits should not apply determine an origination point for this truck stop. to a farm or a plant in northwest milk and once the point is determined The latter option has never been used Arkansas or that portion of southern ascertain what the Class I differential, to establish an origination point during Missouri that is to be included in the adjusted for location, would be at that the life of this provision, perhaps Southeast marketing area. point. If the origination point is within because it is not cost effective to stop Two other changes have been made in a Federal order marketing area, the and weigh a load of milk. For this the transportation credit provisions of applicable Class I differential is the one reason, it should be removed from the Orders 5 and 7. First, at the present that would apply at the origination order. time, if a dairy farmer is a producer point under the order regulating that Pooling standards. Several comment under the order for more than 2 months area. However, if the origination point is letters from producers and producer of the January through June period and in an unregulated county, a Class I organizations expressed support for the more than 50 percent of the dairy differential, adjusted for location, is pooling provisions recommended in the farmer’s milk is received as producer computed based upon the provisions of proposed rule for the proposed milk under the order during those 2 the order receiving the milk (i.e., at southeast orders. The comments months, the dairy farmer’s milk is present Order 5, 7, or 46). emphasized the necessity to incorporate ineligible for transportation credits The different methods now used to strict performance standards in these during the following months of July compute the Class I differential at the orders. Commentors argued that such through December. This rule should be origination point for a load of milk standards would ensure that the markets modified. occasionally leads to very different are adequately supplied throughout the Experience with the transportation transportation credits for a load of milk year in an orderly manner and prevent credit provision in the Southeast originating within a Federal order opportunistic pooling which, they indicates that the months of January and marketing area compared to another contend, would lower the blend prices June are transition months. In some load of milk that originates from a point to producers serving these markets years, supplemental milk is needed just outside of that marketing area. At throughout the year, thereby decreasing during those months, but in other years the time when the transportation credit production in these already-deficit it is not. Indeed, it is for this reason that provisions were adopted, there was not markets and forcing handlers to pay the market administrator has been given a better way of determining the Class I higher prices to obtain supplementary the authority to extend transportation differential at an origination point milk. credits to these months upon finding outside of a marketing area because The comments leading to the that the extension is necessary to assure there was no single Class I pricing proposed rule and those submitted in the market of an adequate supply of surface. Consequently, with 31 different response to it endorsed pooling milk for fluid use. When the market orders, there were probably 31 different standards at levels that are as strict or administrator makes a finding that Class I differentials that would have stricter than current regulations and January or June should be included in applied in that unregulated county emphasized that the southeastern milk the transportation credit period, these based on the location adjustments marketing orders should provide months are excluded from the provided in the 31 different orders. pooling standards that reflect the deficit restriction of the orders, as described Under the circumstances, it appeared to nature of these markets. These above. Sometimes, however, in these 2 be most reasonable to use the Class I comments are embodied in the months it is not apparent that differential that would apply under the standards adopted for these orders. supplemental milk will be needed until order receiving the milk. The pool plant provisions adopted for after the month begins. In this case, it With the national Class I price surface the Appalachian, Florida, and Southeast is too late for the market administrator adopted in this final decision, there is orders closely follow the provisions to include these months in the a single Class I differential for every now contained in the southeast orders. transportation credit period, but it is not county in the 48 states. Consequently, These provisions are appropriate for the too late for a cooperative association or § 1005.82(d)(3)(v) and § 1007.82(d)(3)(v) needs of these seasonally-deficit handler needing supplemental milk have been changed to use the Class I markets. from arranging for such milk to be differential specified in § 1000.52 for Section 7(a) of each Federal milk brought into the market. The problem in purposes of determining the price to be order describes the pooling standards doing so, however, is that without being used at the origination point of a load for a distributing plant. To qualify for very careful it is easy to disqualify a of milk shipped directly from pooling under each of the 3 orders, a dairy farmer’s milk for transportation producers’ farms. This change will distributing plant must have route credits by receiving producer milk from remove the large disparities that can disposition equal to at least 50 percent the dairy farmer for more than 2 months now exist in computing transportation of the total fluid milk products or by exceeding the 50 percent limit. credits for similarly-located milk. physically received at the plant. In In view of this problem, the months One final change has been made in addition, at least 25 percent of the during which a dairy farmer may not be paragraph (d)(3)(i) of §§ 1005.82 and plant’s receipts must be disposed of as a producer have been changed from 1007.82. At the present time, 2 methods route disposition in the marketing area. January through June to February are provided for determining the These standards will ensure that a through May. This will provide greater origination point for a load of distributing plant meeting them is flexibility to receive supplemental milk supplemental milk directly from closely associated with the fluid market when needed without disqualifying a producers’ farms. The origination point and, therefore, should be part of the dairy farmer’s milk from transportation may be the city nearest to the farm of marketwide pool. credits. the last producer whose milk is on a At the present time, the Carolina The other change that has been made tank truck. Alternatively, the hauler order has a 15 percent in-area route to the transportation credit provisions may stop at an independently-operated disposition standard, while the

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Southeast, Upper Florida, Tampa Bay, plant are ultimately delivered from the Southeast order, arguing that it should Southeastern Florida, and Louisville- 2nd plant to a retail or wholesale outlet, be permitted to pool its Bentonville, Lexington-Evansville orders have a 10 these sales are considered to be the Arkansas, cheese plant based on milk percent standard. This level is raised to route disposition of the 2nd plant. diverted from this plant directly from 25 percent under the merged orders. However, as adopted in this final producers’ farms to pool distributing The reason for raising this standard to decision, such transfers will be treated plants. Kraft argues that the proposed 25 percent is to better identify those as route disposition from the 1st plant pool supply plant provision of Order 7 plants which should be fully regulated for the purpose of determining its pool would require it to physically receive under the larger, merged orders. With 11 status. Since some plants specializing in milk at its plant, reload it onto a truck, large markets, instead of 31 smaller extended shelf-life products transfer and ship it to pool distributing plants in markets, the higher 25 percent standard, such products between plants, this order for the Bentonville plant to meet which is uniform for all 11 markets, will change will make it more likely that the supply plant shipping standards of better maintain the regulatory status of such plants will have route disposition Order 7. plants throughout the country. It will in the marketing area. Currently, there are no pool supply leave unregulated, or partially regulated, Almost all of the dairy product plants on the Southeast, Appalachian, those plants which have only a small manufacturing plants in the Southeast or Florida orders. When supplemental amount of their sales within a Federal are ‘‘balancing plants’’ operated by milk is needed for these markets, most order marketing area. cooperative associations. These of the milk comes directly from Paragraph (b) of section 7 will ‘‘balancing plants’’ qualify for pooling producers’ farms, some of which can fill accommodate the pooling of plants that based upon the performance of the an over-the-road tank truck several specialize in extended shelf-life fluid cooperative association, not upon times a day. With farms of this size, milk products (i.e., 60–90 days) shipments from the plant alone. there is obviously no need to aggregate requiring refrigeration. There are at least A balancing plant may qualify for the milk from several farms at a supply 3 such plants in the southeast markets: pool plant status based upon shipments plant. the Ryan Foods Company plants in directly from producers’ farms as well A primary mission of most Jacksonville, Florida, and Murray, as shipments from the plant. To qualify cooperatives supplying the Southeast is Kentucky, and the Dasi Products plant as a balancing plant, the plant must be to provide milk to handlers for fluid use in Decatur, Alabama. located within the order’s marketing and to dispose of milk when not needed Unlike a typical distributing plant, a area. This requirement ensures that milk for fluid use efficiently. The order plant specializing in extended shelf-life pooled through the balancing plant is provisions should accommodate and products may have a more erratic economically available to processors of encourage efficient milk handling processing schedule, reflecting the fluid milk if needed. However, in the practices. longer shelf life of the products case of the Appalachian order only, a The cooperative balancing plant packaged at the plant. Consequently, a balancing plant also may be located in provision is intended to allow plant’s Class I utilization may vary the State of Virginia. This provision has cooperatives to supply the fluid market considerably from month to month. In been in the Carolina order and should in the most efficient manner possible the past, such variability has resulted in be continued in the Appalachian order. and also to process milk efficiently shifting pool status for some of these The performance standards for a when such milk is not needed for fluid plants from one order to another. In balancing plant require that 60 percent use. In the Southeast region, the some months, the plant may have been of a cooperative’s producer receipts be dominant cooperative operates butter- partially regulated, even though all of delivered to pool distributing plants powder plants in Kentucky and the milk received at the plant was every month of the year. This provision Louisiana and one cheese plant in priced under the order. This type of is identical under the 3 southeast Tennessee. Oftentimes during the year, regulatory instability is not conducive to orders. these plants are completely idle when orderly marketing. To provide greater Each of the 3 orders also contains all available milk is needed for Class I regulatory stability for these plants, they pooling standards for a supply plant. and II use. should be fully regulated pool plants if For the Appalachian and Southeast In the Southeast, where fluid handlers they are located in the marketing area, orders, a supply plant must ship at least are subject to relatively high Class I have route disposition in the marketing 50 percent of the milk received during prices, order provisions should aid them area during the month, and process a the month from dairy farmers and in procuring milk supplies by providing majority of their milk receipts into fluid cooperative bulk tank handlers. The stringent pooling standards. This will milk products. This provision will not plant’s receipts include milk that is help to ensure that the Class I prices guarantee that a plant qualifies as a diverted from the plant as well as milk applicable to these handlers will serve fully-regulated pool plant every month; physically received at the plant. In the their purpose in generating uniform some months a plant may fail to process case of the Florida order, the shipping prices that will attract milk for fluid use. a ‘‘majority’’ of its milk receipts into percentage is slightly higher at 60 The supply plant provisions proposed fluid milk products. Nevertheless, the percent. by Kraft are neither needed nor provision will guarantee that when a Unlike supply plant provisions in supported by the vast majority of plant qualifies for pool plant status, it other orders, the supply plant participants in these markets and will be qualified under the same order provisions in the 3 southeast orders do therefore are not adopted. all the time unless it fails to have any not recognize shipments directly from It is not necessary to seasonally adjust route disposition in the marketing area producers’ farms as qualifying the supply plant and balancing plant in which it is located. shipments for a supply plant. At the shipping requirements for the 3 One change in section 7(a) and (b) of present time, there are no plants southeast orders because the standards each order will help to stabilize the pool qualifying as ‘‘pool supply plants’’ proposed are flexible enough to status of an extended shelf-life plant. At under any of the southeast orders. accommodate the disposal of surplus the present time in most orders, when Kraft Foods, Inc., submitted a milk during the flush production packaged fluid milk products that are comment in opposition to the supply season. In addition, each of the 3 orders transferred from one plant to another plant provision proposed for the contains a provision to allow the market

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00127 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.146 pfrm08 PsN: 02APP2 16152 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules administrator to increase or decrease farmer must provide proof satisfactory comparable to those required under the shipping requirements and other to the market administrator that the care separate Florida orders. pooling standards by up to 10 and management of the dairy animals The total quantity of milk which may percentage points. This provision also is and other resources necessary to be diverted by a pool plant operator or included in the producer milk section of produce all Class I milk handled, and cooperative association during the all 3 orders with respect to the the processing and packaging month also varies by market as well as percentage of milk that may be diverted operations, are his/her own enterprise by month. Under the Appalachian and in the number of days that a and are operated at his/her own risk. order, a pool plant operator or producer’s milk must be received at a At the present time, there are fewer cooperative association is permitted to pool plant. than 5 producer-handlers operating in divert 25 percent of its producer milk In addition to the provisions the southeast markets. The status of during the months of July through described above, each of the southeast these handlers occasionally fluctuates November, January and February. orders contains a provision to allow unit between being fully regulated plants in During the months of December and pooling of distributing plants operated some months and producer-handlers in March through June, the total diversion by the same handler. This provision has other months. None of these operations limit increases to 40 percent of producer been in the Southeast order since 1995. would lose their status as producer- milk receipts. In the Southeast order, a Some distributing plants may meet handlers under the provision adopted total diversion limit of 33 percent is the pooling standards of more than one for the new southeast orders. provided during the months of July order. Consequently, it is necessary to Producer/Producer milk. The through December, and 50 percent specify the rules for determining where producer and producer milk definitions during the other months. The diversion a plant will be regulated. Under the adopted for the 3 southeast orders are limits under the Florida order are 20 southeast orders, if a plant meets the nearly identical to the provisions now percent during the months of July pooling standards of the order and is in the individual orders. These through November, 25 percent during located in the order’s respective provisions define which dairy farmers the months of December through marketing area, the plant will be are eligible to share in the proceeds of February, and 40 percent during all regulated under that order even if it has the marketwide pool. other months. greater sales in some other order’s The ‘‘touch base’’ requirements and A producer is defined as a dairy marketing area. This provision has gross diversion limits described above farmer whose milk is received at a pool evolved as a result of several price are adjustable by the market plant, diverted to a nonpool plant, or alignment problems in the Southeast administrator to assure orderly involving a plant located in one received by a cooperative association marketing and/or efficient handling of marketing area but regulated under acting as a bulk tank handler. It milk in the marketing area. This another order. In every such case, a excludes a producer-handler, a dairy procedure is described in plant’s supply of milk was put in farmer whose milk is delivered to an §§ 1005.13(d)(7), 1006.13(d)(6), and jeopardy as a result of a lower blend exempt plant, or a dairy farmer whose 1007.13(d)(7). price under the order in which it milk is reported as diverted milk under Although a ‘‘dairy farmer for other became regulated based on its sales. the provisions of another Federal order. markets’’ provision was requested for Notwithstanding the merging of several The diversion limits that are specified the new orders by some producer of the smaller markets in the Southeast, in the producer milk section of the new organizations, it was opposed by others. this provision should be retained for the orders are slightly different among the 3 This provision is not included in the 3 southeast orders to preclude a repetition southeast orders. To qualify for southeast orders at this time. Such a of this problem. There was widespread diversion to a nonpool plant, a provision could restrict the free support in comment letters for retention minimum amount of a producer’s milk movement of milk as needed among of this provision. must be received at a pool plant during markets. The proposed diversion limits In the case of a distributing plant that the month (i.e., this is called a ‘‘touch- and touch-base requirements in the is not located within any order’s base’’ requirement). Under the southeast orders should preclude the marketing area, a different standard Appalachian order, 6 days’’ production association of milk with these markets should apply. Since, in this case, it must be received at a pool plant during when such milk is not needed at pool cannot be presumed with certainty that each of the months of July through plants. a plant is most closely associated with December, and 2 days’ production must Reports of receipts and utilization. To the market in which it is located, its be received at a pool plant during each accommodate the payment schedule association with a market should be of the other months of the year. Under desired for the 3 southeast orders, the determined based upon where it has the the Southeast order, 10 days’ production handler’s report of receipts and most sales. is required to be delivered to a pool utilization must be in the market Producer-handler. The producer- plant during each of the months of July administrator’s office no later than the handler provision for the 3 southeast through December to qualify a 7th day of the month. The producer orders is very similar to the current producer’s milk for diversion to a payroll report will be required by the provisions. There were no comments nonpool plant. During the months of 20th day of the month. The information received in opposition to this provision. January through June, 4 days’ to be included in these proposed reports To qualify as a producer-handler, a production is be required to be is essentially identical to the current dairy farmer would have to have route delivered to a pool plant. order provisions. disposition in excess of 150,000 pounds Under the proposed Florida order, Payments for milk. The southeast per month; otherwise, the producer’s which will have a higher Class I orders provide uniform payment plant would be exempt from regulation utilization and less need to divert milk, schedules for payments to and from the pursuant to a provision that has been a producer is required to deliver at least producer-settlement fund. Payment to uniformly adopted for all orders. In 10 days’ production to a pool plant the producer-settlement fund must be addition, a dairy farmer may receive no during every month of the year in order made by the 12th day of the month and fluid milk products from sources other to be eligible for diversion to a nonpool payment from the producer-settlement than his or her farm. Finally, the dairy plant. These proposed standards are fund must be made one day later.

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In the case of payments to producers which varies from 30 percent to 45 manufacturing plants, all of which must and cooperative associations, the percent depending on the month. be located within the marketing area. merged Florida order will maintain the However, the current Upper Midwest The unit would have to meet the longstanding 3-payment schedule that order uses a percentage based on the requirements for a pool distributing has been part of the present Florida marketwide Class I percentage for the plant and at least one of the plants in orders for many years. The partial same month of the previous year. the unit must meet the pool distributing payments to producers under the new During ‘‘normal’’ months this plant requirements as a separate plant. Florida order must be made on the 20th percentage is approximately 15 percent. Plants not meeting the pool distributing day of the month for milk received When some milk is held off the pool for plant definition will be required to have during the first 15 days of the month economic reasons (primarily unusual disposition of packaged fluid milk and on the 5th day of the following price differences between classes), the products, packaged fluid cream month for milk received during the percentage may vary considerably, products, or cottage cheese and other remainder of the month. The rate of ranging from the ‘‘normal’’ 15 percent to soft manufactured products of at least payment will be at not less than 85 over 50 percent. half of their receipts of Grade A bulk percent of the preceding month’s In addition to specifying the route fluid milk products, including milk uniform price, adjusted for plant disposition percentage at 15 percent, the diverted by the plant operator. location and for proper deductions percentage would be calculated on the Manufacturing plants traditionally authorized in writing by the producer. basis of the total receipts of fluid milk have been included in units with The final payment for milk received products physically received at the distributing plants because the during the previous month must be distributing plant. Currently both the manufacturing plants produced made on or before the 15th day of the Chicago Regional and Upper Midwest products such as packaged fluid cream, month. orders include milk diverted from the sour cream, and cottage cheese that are The Appalachian and Southeast distributing plant in the total bulk marketed in conjunction with bottled orders adopted here have identical receipts used to compute the route fluid milk products. In addition, some payment schedules. The partial disposition percentage. Use of a of these plants produce a limited payment for milk received during the constant percentage at approximately quantity of fluid milk products. first 15 days of the month must be made the market Class I percentage, and Handlers have argued that the operator on the 26th day of the month, and the removing diverted milk from a of a free-standing manufacturing plant rate of payment must be 90 percent of distributing plant’s receipts in that manufactures these complementary the preceding month’s uniform price. determining its regulatory status, will products should be able to pool its milk The final payment must be received by reduce the current opportunities supply for both (or for several) plants as the producer on or before the 14th day available to distributing plants to if all of the products were made in the of the following month. The rate of final become partially regulated by bottling plant. payment for all 3 orders is the preceding manipulating their reported receipts and Both the Chicago Regional and Upper month’s uniform price adjusted for diversions of milk. In addition, the Midwest orders contain a provision for butterfat, plant location, partial language adopted should eliminate a distributing plant unit. Although the payments, marketing services, and month-to-month uncertainty caused by current Chicago Regional order does not proper deductions authorized in writing basing handlers’ regulatory status on the specify the types of products that may by the producer. Each order will require market’s fluctuating utilization be manufactured at plants in the unit, payment to a cooperative association to percentage. the Upper Midwest order does. It is be made one day earlier than the The Identical Provisions Committee reasonable to place restrictions on the payment to an individual producer. recommended that the in-area types of products that are disposed of It should be noted that the payment distribution criteria for pool distributing from the manufacturing plants in the dates described above may be delayed if plants be 15 percent of total route unit, since these plants will receive the the payment is due on a Saturday, disposition, and that percentage was benefits reserved for pool distributing Sunday, or national holiday. In such included in the proposed rule. However, plants and shipments from supply case, the payment will be due on the it was determined that a 25-percent plants to the plants in the unit will be next day that the market administrator’s standard for in-area sales would be considered in determining pool supply office is open for business. This new appropriate for all markets to assure that plant qualifications. rule is provided in § 1000.90. handlers not already regulated would A pool supply plant operator should not become regulated solely because of ship as qualifying shipments at least 10 6c. Midwest Region order consolidation. The Committee percent of the plant’s receipts of milk Upper Midwest Order explained that use of total route from producers, including milk diverted disposition rather than bulk receipts as by the handler, each month. As in the Pool Plant the denominator would reduce current Chicago Regional order, such The pool distributing and pool supply opportunities for handlers to shipments may be made to pool plant definitions of the consolidated manipulate the manner in which they distributing plants, pool distributing Upper Midwest order should use the may report their operations to avoid plant units, plants of producer-handlers, standard order language used in other regulation. Currently in the Chicago partially regulated distributing plants, orders, adapted to marketing conditions Regional and Upper Midwest orders the or distributing plants fully regulated by in the Upper Midwest. in-area route disposition standard (10 other Federal milk orders. The extent of The pool distributing plant definition percent in Chicago Regional and 15 shipments to partially regulated specifies that for a plant to be a pool percent in Upper Midwest) is computed distributing plants to be used for distributing plant, it must have 15 using the same basis (bulk receipts, qualification would be limited to the percent or more of its total receipts of including diversions) as is used to quantity classified as Class I. Qualifying fluid milk distributed as route determine whether a plant meets the shipments to distributing plants disposition. This percentage is definition of a pool distributing plant. regulated by other Federal milk orders considerably lower than the percentage Provision is made for a single handler should be limited to the quantity used in the Chicago Regional order, to form a unit of distributing plants and shipped to pool distributing plants, and

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00129 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.149 pfrm08 PsN: 02APP2 16154 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules may not be agreed-upon Class II, Class the percentage of milk pooled directly benefits of participating in the III or Class IV utilization. Shipments by distributing plant handlers would marketwide pool without having an directly from farms to pool distributing appear sufficient to meet anticipated actual association with the market. plants and to plants contained in pool Class I needs in the consolidated Upper Several plants located outside the distributing plant units should be Midwest order. The 10 percent supply boundaries of the consolidated included as shipments that help to meet plant shipping percentage also should marketing area currently are included in the percentage qualification standard. be appropriate to avoid unnecessary and supply plant units by a ‘‘grandfather The 10 percent shipping requirement uneconomic shipments. clause’’ in the Upper Midwest order. adopted in this decision is It should be remembered that the The order will provide that these plants approximately 5 percentage points less provisions adopted in this decision will may continue to be included in a supply than the anticipated Class I percentage allow the market administrator to plant system if they so desire as long as for the consolidated Upper Midwest increase or decrease the required they maintain continuous pool plant order. The 10 percent shipping standard shipping percentage on a marketwide or status. is greater than the current individual selected area basis if deemed necessary Handlers may form supply plant supply plant shipping standard and to assure an adequate supply of milk to systems by filing a written request by equal to the maximum shipping pool distributing plants or to prevent July 15, listing the plants to be in the percentage required of pool units during uneconomic shipments of milk. If the system. Such a system will remain in the qualifying period in the current shipping percentage is increased by the effect from August 1 through July 31 of Chicago Regional order. The standard market administrator, shipments made the following year. These dates deviate under the current Upper Midwest order, for the purpose of meeting the increased from those provided for other orders which uses the Class I use percentage of percentage may be made only to pool because of the difference in seasonal the same month in the previous year as distributing plants or plants contained production variations between this and the supply plant shipping percentage, in pool distributing plant units. other orders. The handler or handlers would exceed the adopted percentage. A comment filed by a cheesemakers’ establishing the system may also delete Also under the current Upper Midwest organization expressed concern about a plant from the system or dissolve the order, a reserve supply plant must ship the potential competitive inequities of a system by submitting a written request 10 percent of its receipts to pool provision enabling the market to the market administrator. Any plant distributing plants during January administrator to change the shipping deleted from a system, or plants that through June, and the marketwide Class percentage for a selected portion of the were part of a system that was I percentage for the same months of the marketing area. This provision has discontinued, may not be part of a preceding year for the months of July existed in the current Upper Midwest system until the following August. through December. order for some time without resulting in Provisions that allow handlers to add Several handlers, including a large any controversy. The provision probably plants to a system under certain cooperative association, a cheesemakers’ will be more useful with the circumstances and to allow systems to organization, and a fluid milk handler, considerable enlargement of the reorganize in the event a plant changes filed comments stating that the 10 marketing area through consolidation. It ownership or in the event of a business percent shipping standard for supply may be more inequitable to require failure by a handler are also plants is too high for this market with increased shipments from plants in, for incorporated in the order. A system a Class I utilization percentage that instance, Grand Forks, North Dakota, to failing to meet pooling standards will be rarely would exceed 20 percent. supply deficits in the Chicago area (700 allowed to drop plants from the system The 10-percent shipping percentage is miles distant) than it currently would be until the system does qualify. The below the estimated Class I percentage to require those plants to increase handler responsible for assuring that the for the consolidated Upper Midwest qualifying shipments so that system qualifies must notify the market order and should be appropriate, even distributing plants in the Twin Cities administrator of which plants are to be in view of the fact that many area (300 miles away) will be able to deleted from the system. If the handler distributing plants have a supply of obtain needed supplies. It should be does not notify the market milk from their own producers. In remembered that there are plentiful administrator, the market administrator September 1997, approximately 27 supplies of milk produced within 100– will exclude plants from the system percent of the milk pooled or received 200 miles of any part of this marketing beginning with the plant at the bottom at distributing plants in the Chicago area. Certainly care will be taken to of the list of plants submitted by the Regional order was pooled as producer assure that handlers are not placed at handler responsible for qualifying the milk with the distributing plant significant competitive disadvantage. system, and continuing up the list until operators as the handlers, rather than as Groups of two or more supply plants the system qualifies. producer milk pooled by cooperatives will be allowed to form systems of The provisions for supply plant and other handlers. The milk pooled by supply plants for the purpose of meeting systems are very similar to the distributing plant handlers accounted the shipping requirements, by shipping provisions currently contained in both for approximately 12 percent of the total the same percentage as that required for the Chicago Regional and Upper milk pooled in September 1997 (or individual pool supply plants that are Midwest orders. Unlike the Chicago approximately 5 percent of the total not part of such a system. These pool Regional and the Upper Midwest orders, milk that would have been pooled if all supply plant systems may consist of however, this order does not contain a of the milk eligible to be pooled in plants of the same handler or more than specific shipping requirement for September 1997 had been pooled). one handler, and may contain both individual plants within a supply plant Approximately 7 percent of the Class I proprietary and cooperative handlers. system. In the current Chicago Regional producer milk, or approximately 2 The only requirement affecting an order, pool supply plant systems have percent of the total producer milk, individual plant within the unit is that twice the percentage shipping standard pooled under the Upper Midwest order the plant must be physically located of individual supply plants, with is pooled by distributing plant within the marketing area. This individual plants within the systems operators. The combination of the restriction is necessary to prevent required to ship 47,000 pounds or three supply plant shipping percentage and distant plants from receiving the percent of their producer receipts,

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00130 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.150 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16155 whichever is less, in five of the six must deliver at least 10 percent of the the pool plant at which the milk is months of August through January. The milk for which it is the handler reported during the first month in current Upper Midwest order requires pursuant to § 1030.9(c) to pool which the producer’s milk is considered handlers with supply plants in a supply distributing plants, units of pool to be producer milk eligible for plant system to ship five percent of each distributing plants, plants of producer- diversion to a nonpool plant. In handler’s Grade A receipts, including handlers, or partially regulated addition, at least one day’s production milk diverted by the handler to nonpool distributing plants. The shipments to of a producer’s milk must be received at plants, during one of the months of partially regulated distributing plants a pool plant in each of the months of August through December. are limited to the quantity classified as August through January to be eligible for This decision does not provide for the Class I. These are the same performance diversion to a nonpool plant. The category of supply plants referred to as requirements that apply to supply current Upper Midwest order requires reserve supply plants. Reserve supply plants, with the exception of the that a new producer or a producer who plants ceased to be included in the treatment of milk shipped direct from has broken association with the market Chicago Regional order in 1987, while farms to distributing plants regulated be received at a pool plant prior to the the Upper Midwest continues to provide under other orders. If such milk is milk being diverted to a nonpool plant. for them. With year-round shipping allocated to Class I under the other There is little or no justification for requirements, the unlimited ability of order, it will become producer milk forcing producer milk to be received at the market administrator to change under that order. The same performance a pool plant to maintain or prove shipping percentages both in level and requirements that apply to supply association with the market. Supply in area, and the ability of supply plants plants apply to cooperative associations plants and cooperatives will be required to form systems, there is no compelling acting as handlers if the market to ship a fixed percentage of their total reason to have two categories of supply administrator adjusts the shipping milk supply, not just that portion plants. percentages. received at their plants, to the fluid A provision to allow plants to remain No significant differences in the market. Since both cooperatives and qualified for up to two consecutive treatment of milk received at pool plants proprietary handlers can move milk months due to unavoidable are provided under this decision than directly from the farm to the fluid circumstances, such as a natural under the current Chicago Regional or market there is little reason to force milk disaster, fire, breakdown of equipment, Upper Midwest orders. There are, into a pool plant solely for regulatory or work stoppage is included in this however, several differences relating to purposes. Certainly the extra cost to the decision. The provision is contained in diverted milk. This decision allows the handler of moving milk for regulatory the Chicago Regional order and has operator of a pool plant to divert, or purposes does not enhance economic worked quite well in giving handlers ship milk directly from the farm to efficiency or milk quality and in fact some administrative relief in the face of another pool plant, the milk of decreases economic efficiency and milk certain unavoidable circumstances. producers for which it is the handler, quality to the detriment of the entire Comments filed by a cooperative and account for the milk as producer market. association and a fluid milk handler milk at the shipping plant. Allowing This decision provides that producer urged that the unit reporting, accounting either a proprietary pool plant or a milk be priced in the month in which and allocation provisions of the Chicago cooperative pool plant to divert milk to it is delivered to the plant of first Regional order be retained in the another pool plant is consistent with the receipt, although the proposed rule consolidated order. This issue is Chicago Regional order. In the Upper would have priced milk in the month in considered and addressed in the Midwest order, milk that is received at which it is picked up at the farm. Some Classification section of this decision. a pool plant and for which a cooperative orders have allowed milk picked up on association is the handler is considered the last day of a month but delivered to Producer Milk producer milk at the receiving plant. a plant in the next month to be priced The definition of producer milk The Upper Midwest order specifies that in the month in which it was picked up. determines which milk will be eligible a proprietary handler may divert milk to A comment filed by Wisconsin to participate in the Federal order pool. another pool plant and that such milk Cheesemakers favored continuation of This decision provides that milk will be considered producer milk of the this regulatory treatment. For purposes received at a pool plant directly from diverting proprietary handler. The of uniformity between the consolidated producers or from a cooperative language adopted under this decision orders (which apply to many handlers, association acting as a handler should leaves to the discretion of the cooperative and proprietary, who be eligible to be producer milk. Milk for cooperative association the option of operate in more than one order area) which the operator of a pool plant is the diverting milk to another pool plant and clarity of plant accounting for milk handler that is delivered directly from from its own pool plant or delivering received and used during each month the farm to another pool plant should the milk to the pool plant in its capacity all orders now will provide that also be considered producer milk. as a handler of producer milk pursuant producer milk is not received until it Under certain circumstances, milk to § 1030.9(c). actually enters a plant. delivered to a nonpool plant may also The consolidated Upper Midwest Under the consolidated order, as in be considered producer milk. Milk order requires that a new producer or a the proposed rule, producer milk will be delivered directly from a farm to a producer who has broken association priced at the location of the plant at nonpool plant may be considered with the market have at least one day’s which the milk is physically unloaded producer milk if at least one day’s production received at a pool plant into processing facilities or a storage production is received at a pool plant during the first month in which the tank. In the current Chicago Regional during the dairy farmer’s first month as producer’s milk is reported as producer order milk is priced where milk is a producer. milk. Currently the Chicago Regional pumped within the confines of a plant. In order to qualify as producer milk order requires a new producer on the The adopted order language will the milk pooled by a cooperative market or a producer who has broken eliminate the pricing of milk where it is association acting as a handler association with the market to have at pumped from truck to truck and price described in § 1030.9(c), the cooperative least one day’s production received at the milk where it is eventually unloaded

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Handlers and tank. distributing plant’s Class I price for milk producers who supply the Class I in Class I uses will assure that market on a regular basis should not be Location Adjustments and cooperative associations are being paid expected to bear the entire cost of Transportation Credits the order minimum price for such milk. supplying the Class I market while To help move milk to the fluid market The distributing plant, then, is handlers and producers who meet only a transportation credit and an assembly/ responsible for the cost of getting the the minimum requirements derive the procurement credit for Class I milk are milk from the supply plant location to benefits of marketwide pooling. contained in the Upper Midwest order. its own, with some assistance from the Incorporation of a transportation credit The transportation credit will be transportation credit to the extent that and procurement credit on Class I milk computed by multiplying the the calculated cost exceeds the in the marketwide pool will assure that hundredweight of milk contained in difference in the Class I prices between at least some of the cost of supplying the transfers of bulk fluid milk from pool the shipping and receiving plants. Class I market is shared among all plants to pool distributing plants and There must be some contribution from market participants. used in Class I by the value obtained by consumers to the cost of moving milk to multiplying .0028 times the number of deficit locations. However, Reporting and Payment Dates miles between the transferor plant and incorporating the entire cost of hauling Comments filed by two handlers transferee plants with an offset for a milk in the transportation credit could opposed changing the reporting dates positive difference between the Class I have the effect of encouraging handlers for the consolidated order from the 10th prices at the transferee and transferor to procure milk from greater distances to the 9th of the month following receipt plants. The transportation credit should than necessary. If milk is moved from a and use of the milk. It should be be paid to the receiving handler, as the higher-priced zone to a lower-priced apparent, especially to the cooperative milk will be pooled at the location from zone (which may be necessary to obtain association that filed this comment, that which it is shipped and the credit will, needed supplies of milk at outlying payment to producers cannot be to some extent, duplicate the function of distributing plants), there will be no determined until the marketwide the location adjustment in helping to offset for differences in Class I prices pooling process is completed and cover the cost of moving it from supply between the shipping and receiving minimum producer pay prices plants to fluid milk handlers. plants. calculated. The earlier the pooling The transportation credit is similar to Unlike the transportation credit, process can begin, the sooner producers the transportation credit currently which is based on mileage and paid can be paid. The reporting date of the contained in the Chicago Regional only on transfers of bulk milk to pool 9th, adopted in this decision, is the order. Both the transportation credit distributing plants, the assembly/ latest date for filing handler reports in adopted in this decision and the current procurement credit is paid at the rate of any of the consolidated orders. Two credit, which uses the same .0028 rate, 8 cents per hundredweight of Class I other orders specify the 9th, with one are applied to Class I milk only. milk transferred or diverted by a pool order requiring reporting on the 8th and However, in the current Chicago plant to a pool distributing plant. An the other seven orders specifying that Regional order the credit is based on assembly/ procurement credit also will handler reports be filed on or before the 110 percent of the Class I milk received be applied to milk received from 7th of the following month. Because at the pool distributing plant. The producers and from cooperative reporting should be somewhat more proposed rule would have provided that associations acting as handlers pursuant uniform among the Upper Midwest the transportation credit be paid to the to § 1030.9(c) based on the pro rata handlers after consolidation of the shipping handler on the basis of Class share of producer milk delivered to a orders, their reporting burdens should I milk transferred to fluid milk plants. pool distributing plant and allocated to be reduced accordingly. Further, Several interested persons Class I. technology certainly has improved the commented on the use of transportation A comment filed by a cooperative ability of all businesses to keep records credits and assembly credits in this association stated that assembly credits and organize data for reporting purposes consolidated order, with most favoring should not apply to distributing plants’ since the current reporting dates were such provisions but disagreeing to some own milk supplies, but only to milk established (over 35 years ago). extent with their proposed application. obtained from supply plants or Wisconsin Cheesemakers’ comment There was disagreement between the cooperatives. If such a change were opposed reducing the time lag between comments on whether the credit should made, distributing plant operators who when producers deliver milk to apply to the shipping or the receiving have arranged for their own milk handlers and when they are paid for handler and whether it should apply to supplies would have an 8-cent that milk. The current dates for paying all Class I milk, both direct-shipped and disadvantage in procuring milk in producers for the milk delivered in the from plants, or just to milk transferred comparison with their competitors who first half of each month (the 3rd and 4th from plants and used in Class I. One obtain milk only from supply plants and of the following month) under these two commenter also stated that the proposed cooperatives. orders are among the latest, if not the rate did not cover enough of the actual A transportation credit and latest, in the entire Federal milk order cost of moving milk. procurement credit are incorporated in system. The date adopted in this In the case of milk received at a the order to assist handlers in supplying decision, the 26th of the same month, is distributing plant from a supply plant the Class I market. These transportation the same as in three other consolidated operated by a cooperative association, and procurement credits, to be paid on orders, later than in five of the other the order provides that a distributing Class I milk only in combination with orders, and earlier than in two of the plant pay the supply plant from which the Class I price surface discussed orders (none of which is later than the it receives milk at not less than the price elsewhere in this final decision, will last day of the month). The date applicable at the distributing plant. The help handlers move milk to the fluid specified for final payment to producers shipping plant must account to the market by distributing the cost of ranks similarly. Producers need to be marketwide pool at the price applicable supplying the fluid market to all market paid for the milk they’ve delivered at the shipping plant, where the milk participants who share in the several weeks before on as timely a basis

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00132 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.153 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16157 as possible. The adopted provisions will fluid cream, sour cream, and cottage during which milk production levels are accomplish that goal. cheese that are marketed in conjunction low and demand for fluid milk is high. with bottled fluid milk products. In The Iowa order has reduced shipping Central Order addition, some of these plants produce standards for such months. The order Many of the provisions of the a limited quantity of fluid milk provisions adopted with this decision consolidated Central order are products. Handlers have argued that the include a period during which supply explained in the ‘‘Identical Provisions’’ operator of a free-standing plants that have served the needs of the portion of this decision, and need not be manufacturing plant that manufactures market when milk supplies are tight are addressed here. The provisions that these complementary products should not required to meet shipping standards, deviate somewhat from those adopted be able to pool its milk supply for both but it is reduced from the 5–7 month for other order areas are the provisions (or for several) plants as if all of the period existing in the current orders to dealing with standards for determining products were made in the bottling a 3-month period from May through the pool status of producers and plant. July. handlers. An effort is made to explain The pool supply plant definition of The percentage of receipts as significant differences between the the consolidated Central order contains qualifying shipments to distributing pooling provisions of the 9 individual provisions that assure continued pool plants currently ranges from 30 to 50 orders included in this consolidation qualification for any handlers or milk percent for these orders, with the Iowa and those of the consolidated order. currently associated with the markets percentage reduced to 20 for the months Pool Plant included in the consolidated Central of December through August. The market. The Iowa order contains no adopted shipping standards for pool The Central pool distributing plant limit on the amount of direct-shipped supply plants under the consolidated definition follows closely the provisions milk that can be used to qualify a Central order are 35 percent for the contained in most of the other supply plant, and several of the other months of September through November consolidated orders. The provisions orders allow such deliveries to make up and January and 25 percent for all other adopted would make no difference in a portion of qualifying shipments. The months, with plants meeting the the pool status of distributing plants consolidated order allows direct- percentage standard for the months of currently pooled under the individual shipped milk to be counted as pool August through April being allowed to orders. qualifying shipments without limit. retain their pool status for the Specifically, the percentage of a The Greater Kansas City, Nebraska- immediately following months of May handler’s total route disposition Western Iowa, Southern Illinois-Eastern through July. distributed within the marketing area Missouri, and Southwest Plains orders Groups of two or more supply plants that will result in the handler being contain cooperative balancing plant are allowed to form systems of supply fully regulated under the Central order provisions, allowing cooperative- plants for the purpose of meeting the is the same 25-percent standard adopted operated plants to be pooled if the shipping requirements by shipping the for all of the other 10 orders. The cooperative delivers a given percentage same percentage as that required for minimum percentage of a pool of the milk for which it is the handler individual pool supply plants that are distributing plant’s actual physical to pool distributing plants. The not part of such a system. These pool receipts of fluid milk products that consolidated Central order also contains supply plant systems may consist of would have to be distributed on routes such a provision, including in the pool plants of the same handler or more than is 25. Currently most of the orders plant definition a plant operated by a one handler, and may contain both included in the consolidated Central cooperative association that supplies at proprietary and cooperative handlers. order include milk diverted from the least 35 percent of the milk for which The only requirement affecting each distributing plant in the total bulk it is the handler to pool distributing plant within the system is that the plant receipts used to compute the route plants, either during the current month must be physically located within the disposition percentages. or for the immediately preceding 12- marketing area. This restriction is The consolidated Central order month period. The deliveries to pool necessary to prevent distant plants from provides that a single handler be distributing plants may include receiving the benefits of participating in allowed to form a unit of distributing deliveries directly from the farms of the marketwide pool without having an plants and Class II manufacturing producers for whom the co-op is the actual association with the market. plants, all of which must be located handler, as well as transfers from the As in the other consolidated orders, within the marketing area. The unit cooperative’s plant. the market administrator will have the must meet the requirements for a pool Cooperative association ‘‘balancing authority to increase or reduce the distributing plant, and at least one of the plants’’ serve the market as the outlet of required shipping percentage as plants in the unit is required to meet the last resort. When surplus milk has no marketing conditions change for the pool distributing plant requirements as other place to go on weekends, holidays, purpose of assuring that an adequate a separate plant. Plants in the unit that or during months of surplus production, supply of milk will be available for fluid do not meet the pool distributing plant it moves to cooperative association use, or to assure that the order does not definition are required to have ‘‘balancing plants’’ where it is require handlers to undertake disposition of packaged fluid milk manufactured into storable products. uneconomic movements of milk to products, packaged fluid cream When production decreases, these maintain the pool status of their plants. products, or cottage cheese and other plants operate at minimal capacity or In addition, as in the consolidated Class II products of at least half of their may be shut down completely. Upper Midwest order, the provisions receipts of Grade A bulk fluid milk Cooperative members assume the adopted in this decision will allow the products, including milk diverted by the burden and cost of processing surplus market administrator to increase or plant operator. milk through such plants. decrease the required shipping Class II manufacturing plants are Most of the Central orders allow a percentage on a selected area basis, as included in units with distributing period during which supply plants do well as a marketwide basis, if deemed plants because the manufacturing plants not have to meet shipping percentages necessary to reflect needed milk produce products such as packaged if they have done so for the months movements within this geographically

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00133 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.154 pfrm08 PsN: 02APP2 16158 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules extensive marketing area. This provision Multiple Component Pricing in the section of this decision dealing has existed in the current Upper The reporting and payment provisions with Provisions Common to all Orders. As in the other consolidated orders, Midwest order for some time without of the consolidated Central order the total route disposition percentage resulting in any controversy, and is include those common to other orders will be calculated on the basis of the expected to be useful in view of the with multiple component pricing. These total receipts of fluid milk products considerable enlargement of the markets have a significant amount of marketing area through consolidation. physically received at the distributing milk used in manufactured products, Care in using the provision must be plant. Currently all four of the larger and component pricing will enable exercised to avoid placing handlers in orders to be included in the producers to be paid according to the areas in which shipping percentages are consolidated Mideast order include valuable components of their milk. temporarily increased or decreased at a milk diverted from the distributing competitive disadvantage or advantage Mideast Order plant in the total receipts used to compute the total route disposition to handlers in areas that have not been Many of the provisions of the order percentage. so affected. However, it would be more for the consolidated Mideast marketing inequitable to require increased One comment urged that a pass- area are explained in the ‘‘Identical through provision similar to that in the shipments from plants in, for instance, Provisions’’ portion of this final Eastern Colorado, to ship milk to plants current New York-New Jersey order decision, and need not be addressed in eastern Illinois to supply deficits in (Order 2) be incorporated in the here. The provisions that deviate that portion of the marketing area. consolidated order to deal with the in- somewhat from those provided for other area route dispositions of handlers who Producer Milk order areas are the provisions dealing do not meet the order’s pooling The producer and producer milk with standards for determining the pool requirements. Continuation of such a provisions of the orders consolidated in status of producers and handlers. A provision in Order 2 was considered the Central order are quite similar to significant change from the proposed and rejected in this decision, in the each other and differ little from those to rule is that the uniform multiple regional discussion of the Northeast be incorporated in the other component pricing plan provided for order. There would be no valid basis for consolidated orders. The principal the six other orders that use multiple adopting such a provision in the difference between some of the component pricing is also incorporated Mideast order when it has been found individual orders and the consolidated into the Mideast order, in place of the not appropriate for use in the Northeast. order is the limit on the percentage of proposed pricing plan that differed To assure continued pool a handler’s pooled producer milk that slightly from the one common to the qualification for all of the handlers who may be diverted to nonpool plants. The other orders with multiple component currently are associated with the percentage of a handler’s milk that may pricing provisions. This change is Mideast markets, the pool supply plant be diverted to nonpool plants varies discussed more fully later in this section definition of the consolidated Mideast under the individual orders from 20 of this decision. order provides for all of the types of percent of milk received at pool plants For the most part, pooling provisions supply plants that currently qualify for during some months under the Eastern have less effect on the current Michigan pooling under the 4 principal orders. Colorado order to 70 percent for some Upper Peninsula market than on the 4 The Eastern Ohio-Western Pennsylvania months under the Nebraska-Western other markets included in this pool plant provision includes a plant Iowa and Iowa orders. Most of the consolidated order because Michigan operated by a cooperative if the orders require each producer’s milk to Upper Peninsula is the only remaining cooperative association delivers to be received at a pool plant at least once individual handler pool in the current distributing plants at least 35 percent of each month. The consolidated Central Federal order system. Therefore, pooling the milk for which it is the handler order requires that a new producer or a provisions are discussed in relation to during the current month or over the producer who has broken association the 4 principal markets included in the preceding 12 months. The Southern with the market have at least one day’s consolidated Mideast order. Michigan order (Order 40) includes as pool supply plants: (a) A plant that has production physically received as Pool Plant producer milk at a pool plant before the been a pool plant for 12 consecutive producer’s milk is eligible to be diverted The Mideast pool distributing plant months and has a marketing agreement to nonpool plants. definition, in which the in-area route with a cooperative association, and (b) In order to assure that all of the milk disposition qualification was proposed a system of supply plants operated by that has been pooled under these orders to exceed that contained in most of the one or more handlers. Order 40 also continues to qualify for pooling, the other proposed orders (30 percent includes some shipments to other diversion limit adopted for the Central instead of 15 percent) to make less Federal order plants and partially order is 65 percent for the months of likely the full Federal regulation of three regulated distributing plants, in September through November and State-regulated plants, will instead use addition to pool distributing plants, as January, and 75 percent for the months the same 25-percent standard of in-area qualifying shipments by supply plants. of February through April and route dispositions of receipts that is The percentage of receipts as December. Allowable diversions for the being provided in all of the other orders. qualifying shipments to distributing months of May through July are Several comments opposed use of an plants currently ranges from 30 to 40 unlimited. There is no requirement that in-area standard higher than 15 percent, percent for these orders, with direct each producer’s milk be received at pool arguing that the standard in the Mideast deliveries from farms rather than plant plants for a minimum number of days area should not be higher than in other transfers limited to half of the required per month. At the same time, the market areas, and that handlers outside the deliveries under three of the orders. All administrator is authorized to increase market should be held to the ‘‘current’’ four of the orders require performance or reduce the diversion limit as needed 15-percent standard. The adoption of a of pooling standards by supply plants to maintain orderly marketing and uniform 25-percent standard of in-area for the months of September through efficient handling of milk in the sales as a percentage of total route February, followed by a ‘‘free ride’’ marketing area. dispositions for all orders is discussed period during which shipping

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00134 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.156 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16159 percentages need not be met by supply Multiple Component Pricing paid a day earlier. The cooperative also plants that met the shipping standards In a change from the proposed rule, advocated that producers be paid with during the required period. The Indiana the reporting and payment provisions of two partial payments instead of one (on order contains a provision allowing the the consolidated Mideast order adopted the 21st day of the month for the first continued pooling of a plant that fails to in this decision now conform to those 15 days’ production and the 6th of the meet pooling standards because of of the other consolidated orders that next month for the second half of the circumstances beyond the handler’s provide for multiple component pricing month’s production instead of one control. (MCP). The proposed rule would have partial payment on the 26th day of the The shipping standards adopted incorporated a pricing plan similar to month for the first 15 days’ production, under this decision for pool supply the current Southern Michigan MCP as proposed). Final payment for each plants are 30 percent for all months, plan in the consolidated order instead of month’s milk would then be made no with plants meeting the standard for the the MCP plan proposed for the other later than the 16th of the following months of September through February consolidated orders. The Southern month, instead of the 17th. The being allowed to retain their pool status Michigan MCP plan differs from that cooperative stated that reducing the for the immediately following months of included in the other current MCP time lag between delivering milk and March through August. For the purpose orders only by pricing ‘‘fluid carrier’’ being paid for it would better of making the 30 percent level of instead of ‘‘other solids.’’ accommodate the cash flow shipping standard less burdensome, up The Farm Bill authorizes adoption of requirements of modern larger dairy to 90 percent of required shipments are a ‘‘uniform’’ multiple component farms. allowed to be made directly from farms pricing plan. As a result, the component The Southern Michigan order to distributing plants. The cooperative pricing plan has been modified to be the currently requires that handler reports association plant defined as a pool plant same as the plan contained in other be filed no later than the 5th of the next in the Eastern Ohio-Western MCP orders. The differences between Pennsylvania order is retained, as are month, and that nonmember producers the adopted MCP plan and that be paid on the 15th. These dates are the supply plant provisions peculiar to originally proposed for the consolidated the Southern Michigan order. These very early compared to most other Mideast order are not significant. The Federal orders. Two of the orders provisions reflect marketing conditions same prices would be used to compute specific to these current areas, and will included in the consolidated Mideast component values, the same protein and order currently have a reporting date of assure that plants currently qualified for butterfat prices would be used, and the the 8th and payment dates of the 18th. pooling will retain such status. proposed ‘‘fluid carrier’’ price was The dates included in the proposed Producer Milk derived directly from the ‘‘other solids’’ price. The Mideast order language is rule and adopted in this decision The producer and producer milk changed accordingly, and will result in represent an effort to find a middle provisions of the orders consolidated in very little difference in total payments, ground between significant differences the Mideast order are quite similar to either by handlers or to producers in the orders to be consolidated. The and differ little from those incorporated whose milk is pooled under the desire to accelerate payment to in the other consolidated orders. The differing provisions. producers, both by increasing the principal difference between some of number of partial payments and the individual orders and the Somatic Cell Adjustment advancing the final payment date, is consolidated order would be the limit Michigan Milk Producers Association understandable. However, other on the percentage of a handler’s pooled (MMPA), a large cooperative association interested parties in the consolidated producer milk that may be diverted to in Michigan, opposed changing the area had no opportunity to indicate nonpool plants. The Ohio Valley, present Southern Michigan (Order 40) agreement with or opposition to such Indiana and Eastern Ohio-Western somatic cell count (SCC) adjustment changes. These proposals would more Pennsylvania orders all contain 50 schedule to the adjustment schedule properly be addressed in a formal percent diversion limits for the months proposed uniformly for all of the MCP rulemaking proceeding after this of September through November, orders with SCC adjustments. Changing proceeding is completed. January and February and a 60 percent the current Michigan SCC adjustment limit for the month of December, with schedule to the uniform schedule 6d. Western Region no diversion limit for the months of included in the proposed rule would This final decision adopts four March through August. The Southern have the effect of reducing (from the Federal milk orders (i.e., Southwest, Michigan order contains a 60-percent current Order 40 level) the positive Arizona-Las Vegas, Western, and Pacific diversion limit for the months of value adjustments on milk containing Northwest orders) for the western September through February, with no less than 200,000 SCCs and reducing the region. A number of comments were limit for the months of March through negative value adjustments on milk received in response to the proposed August. In order to assure that all of the containing more than 700,000 SCCs. rule. These comments are addressed milk that has been pooled under these Incorporating the proposed adjustment below under the applicable order orders continues to qualify for pooling, in all of the consolidated orders that discussion. the diversion limit adopted for the have somatic cell adjustments will make Mideast order is 60 percent for the for a more uniform system of pricing A number of changes have been made months of September through February, and may better reflect measurable to the consolidated orders since the with no limit for the March through differences in value. proposed rule. The significant changes August period. At the same time, the that have been made to all or most of the market administrator is authorized to Reporting and Payment Dates consolidated orders are explained at the increase or reduce the diversion limit as MMPA proposed that handler reports end of this regional discussion, whereas, needed to maintain orderly marketing be submitted one day earlier (on the 6th those modifications that are unique to and efficient handling of milk in the instead of the 7th day after the end of an individual order are discussed under marketing area. each month) so that producers can be the applicable order.

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Southwest Order of the orders while pooling all of their producer milk of members of such The consolidated Southwest milk supplies. For this reason, the cooperative association is delivered marketing area is comprised principally pooling standards for the Southwest directly from farms to pool distributing of the current Texas and New Mexico- order have been relaxed. plants or is transferred to such plants as As adopted in this final decision, the West Texas marketing areas. With a fluid milk product from the pooling standards for a distributing regard to milk production and cooperative’s plant. The requirement plant require the plant to have route population (consumption), these areas that the plant be located in the disposition equal to at least 25 percent are both in the process of change, but in marketing area ensures that milk pooled of its fluid milk receipts at the plant through the balancing plant is different ways. Texas has one of the during the month. In addition, at least economically available to processors of fastest-growing populations in the U.S., 25 percent of the plant’s route fluid milk if needed. and until recently has been able to disposition must be in the marketing One comment was received regarding maintain milk production on a per area. the proposed pooling standards for capita basis. After a significant increase One partially regulated plant located supply plants. Kraft Foods, Inc. (Kraft), in milk production during the 1988– in the Texas marketing area will become stated that the Southwest order should 1994 period, Texas milk production has fully regulated under this provision. adopt all the options and pooling been declining somewhat, accompanied The plant has been partially regulated efficiencies contained in Section 7 of by the exit of approximately 29 percent under the Texas order and, periodically, the proposed Central marketing order. of the State’s Grade A dairy farmers. If fully regulated under the Chicago Kraft asserts that the two markets have the current trend continues, the Texas Regional order. The lowering from 50 virtually identical populations (21 market could come to resemble more percent to 25 percent of total route million) and Class I utilization (48 closely those of the Southeast portion of disposition for a pool distributing plant percent–49 percent). In addition, the the U.S., relying significantly on more by the Southwest order will cause this handler contends that the pool supply distant milk supplies to meet the plant to become fully regulated under plant provisions of the Southwest order market’s Class I and II needs. This the Southwest order and, thereby, provide intra-market inequity among situation currently exists for the alleviate the disorderly conditions handlers in the Southwest market. Kraft southern parts of Texas. caused by its shifts in regulation. There indicated that a proprietary supply The State of New Mexico has should be no change in the plant’s costs, plant could qualify for pooling only by experienced relatively slow population since their supply of milk comes from transferring 50 percent of milk growth, but dramatic increases in milk Southwest pool sources. physically received at the plant and production—from 1.099 billion pounds The pool plant provisions of the noted that no farm to plant shipments in 1988 to an estimated 4.020 billion Southwest order have been revised in are permitted to count towards pounds in 1997. With the declining this final decision. The modification qualifying. However, the handler stated, production in Texas, the New Mexico provides for the pooling of plants that a plant in the marketing area operated milk-shed will be drawn upon more specialize in ultra-pasteurized or by a cooperative association may make often to supply Class I and II needs in aseptically-processed fluid milk qualifying shipments directly from the Texas demand centers, 500–600 products. A detailed explanation of the farms. The performance level, Kraft miles distant. Procurement costs would changes is located at the end of the indicates, is 30 percent of all milk be expected to increase dramatically. In western regional discussion. pooled by the cooperative. light of these circumstances, provisions There are no pool supply plants A primary mission of most in the Southwest order must provide regulated under the present Texas and cooperatives supplying the Southwest flexibility to cooperatives and handlers New Mexico-West Texas orders. market is to provide milk to handlers for supplying the market to prevent Nevertheless, as recommended in the fluid use and to dispose of milk inefficient movements of milk and proposed rule and adopted in this final efficiently when not needed for fluid unnecessary costs of operation incurred decision, provision is made for such an use. The order provisions should for the purpose of participating in the operation under the Southwest order. accommodate and encourage efficient market-wide pool. As proposed, to qualify as a pool plant, milk handling practices. The Prior to enactment of the 1996 Farm a supply plant must ship 50 percent or cooperative balancing plant provision is Bill, cooperatives operating in the more of the total quantity of milk that intended to allow cooperatives to southwestern markets had determined is physically received during the month supply the fluid market in the most that the two milk orders in the region from dairy farmers and handlers efficient manner possible and also to were being operated as one and should described in § 1000.9(c) to pool process milk efficiently when such milk be merged. Much discussion took place, distributing plants. The supply plant is not needed for fluid use. Almost all and proposed order provisions were provisions have been modified in this of the dairy product manufacturing developed by the principal cooperatives final decision to include milk that is plants in the current Texas and New involved. These comments, with diverted to other plants as well as milk Mexico-West Texas marketing orders are numerous others, were considered in physically received at the plant to allow operated by cooperatives. the development of this final decision for more efficient movement of milk to As stated in the proposed rule, the for the Southwest marketing area. distributing plants when needed. pooling provisions for the Southwest A provision for the pooling of order are similar to the provisions in the Pooling standards cooperative association balancing plants present Texas and New Mexico-West Most of the pooling standards in the is also included in the consolidated Texas orders. The pool supply plant Texas and New Mexico-West Texas order. A plant located within the standards are consistent with and reflect orders have been suspended for some marketing area that is operated by a the current marketing conditions of the time. The rapid expansion of milk cooperative association would qualify as consolidated Southwest order. The production in the region during the late a pool plant if pool plant status is standards should ensure that milk of 1980’s created a situation in which requested for such plant by the producers servicing the Class I needs of cooperatives and handlers operating in cooperative association and during the the market will be pooled. The the region could not meet the provisions month at least 30 percent of the provisions for a supply plant in this

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00136 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.159 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16161 final decision does not recognize (rather than before diversions are regarding the inclusion of multiple shipments directly from producers’ allowed). This dual ‘‘touch base’’ component pricing in the consolidated farms as qualifying shipments for a standard has been developed to Southwest order. Leprino strongly supply plant. However, there currently accommodate a market that is supports multiple component pricing are no supply plants regulated under the characterized by substantial differences for both handlers and producers and Texas or New Mexico-West Texas in size among dairy farmers. The states that it has a direct interest in the orders. Accordingly, the provisions requirement that one day’s production consolidated Southwest order. Thus, should not place proprietary handlers at be delivered to a pool plant, is there is support on both the producer, a competitive disadvantage and are appropriate for many producers but is as represented by cooperative appropriate to meet the needs of the unreasonable for those who produce as associations, and handler side of the market. much as seven tanker loads a day. Southwest dairy industry. It is not necessary to seasonally adjust The current Texas order allows an the supply plant and balancing plant amount equal to one-third of the milk Transportation Credits for Surplus Milk shipping requirements for the delivered to pool plants to be diverted The Texas order currently has a Southwest order because the standards (this provision is currently suspended), market-wide service payment provision proposed are flexible enough to while the (currently suspended) New that gives credits for hauling surplus accommodate the disposal of surplus Mexico-West Texas provision allows 50 milk located in certain zones in Texas milk during the flush production percent of a handler’s total milk supply to nonpool plants outside the State for season. Also, this order, like the other to be diverted. In addition, the current use in manufactured products. The new consolidated orders, contains a Texas order provisions base allowable provision has not been included in the provision to allow the market diversions on deliveries to individual consolidated Southwest order language administrator to increase or decrease pool plants, greatly exacerbating the because of declining production and these shipping requirements. time and effort required to keep track of increasing balancing plant capacity in In addition to the provisions milk movements. In the proposed rule the affected areas of Texas. described above, the Southwest order the provision set the limit on diversions Payment Provision contains a provision to allow unit of producer milk on the basis of at least pooling of distributing plants operated 50 percent of the milk pooled by a The Texas order is one of only a few by the same handler. handler being received at pool plants for marketing orders that requires handlers to remit the full classified value during Producer-Handler the handler’s entire milk supply to be pooled. The diversion limit in this final the month to the Market Administrator. The producer-handler provisions that decision is continued at 50 percent of a In turn, the Market Administrator acts were proposed have been revised in this handler’s total milk supply. The total as a clearing house and forwards these final decision to be very similar to the performance standard will allow proceeds on to the respective provisions in the current Texas and handlers to meet diversion limits more organizations. Interested persons have New Mexico-West Texas orders. The easily with more efficient movements of expressed an interest in retaining these revisions should assure that the status of milk. In addition, the increased provisions, not only for the proposed current producer-handlers will be percentage of allowable diversions will Southwest order, but for all other unchanged. assure that all of the producers whose orders. The current Texas payment provision Producer Milk milk would qualify for pooling under either of the two orders being was found necessary because of The current Texas and New Mexico- consolidated will continue to meet problems encountered in assuring West Texas orders have provisions that pooling qualifications. A provision to timely payments by pooled handlers. require a producer’s milk to be received allow the market administrator to make The provision has been in the Texas at a pool plant, or touch base, before adjustments is included in the producer order since 1979, and the earlier milk of the producer is eligible to be milk section of the order with respect to payment problems have been remedied. diverted. The proposed rule indicated the percentage of milk that may be Such a provision involves a rather large that milk produced by producers diverted. degree of regulatory intervention located in the marketing area should be between milk processors and their eligible for pooling without a particular Multiple Component Pricing suppliers that should be shown to be percentage or number of days’ The reporting and payment provisions necessary to correct existing problems. production being required to be of the consolidated Southwest order in There is no indication that such received at a pool plant. For producers the final decision include those problems currently exist, or would exist located outside the marketing area the common to other orders with multiple in the absence of the provision. Nearly touch base provision of the proposed component pricing. The multiple all of the milk that will be pooled under rule required that at least 15 percent of component pricing plan does include a the consolidated Southwest order is the production of producers be somatic cell adjustment for milk used in produced by cooperative members and delivered to pool plants during the Classes II, III, and IV. The current Texas pooled by the cooperatives. These large, month in order to be eligible for and New Mexico-West Texas orders do business-oriented organizations should pooling. Based on comments and a not provide multiple component be able to assure that they receive full review of the different touch base pricing. However, the proposed payment for their members’ milk in a requirements for producers both in and provisions that were developed by the timely manner. In addition, there are out of the area, the provision in the final cooperatives involved in discussions to provisions in the General provisions decision has been changed. The merge the current orders did include a (Part 1000) that provide for enforcement provision in the final decision will multiple component pricing plan. As of late or under-payment charges at one allow diversion of producer milk of a stated above, those comments were percent per month of the amount due. new producer, provided there is a considered in the development of this delivery of at least 40,000 pounds or one final decision. Arizona-Las Vegas Order day’s milk production, which ever is A comment was received from Many of the provisions of the less, to a pool plant during the month Leprino Foods Company (Leprino) consolidated Arizona-Las Vegas order

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00137 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.160 pfrm08 PsN: 02APP2 16162 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules are explained in the ‘‘Identical The proposed order suggested reducing Producer Milk Provisions’’ portion of this final this percentage to 35 percent and The percentage of a handler’s pooled decision and need not be addressed authorizing the market administrator to milk that may be diverted to nonpool here. Those provisions that deviate to increase or reduce the percentage in plants is 50 percent in any month. The some extent from the ‘‘Identical response to market conditions. The 35 proposed rule recommended a diversion Provisions’’ are addressed in this percent and the authorization to make limit of 20 percent in any month. discussion. adjustments in the level is contained in Currently, diversions under the Central this final decision. The reduced Pool Plant Arizona order are limited to eight days’ performance standard should enable the production of a producer during four The pool distributing plant definition continued pooling of producer milk that months of the year, with unlimited is similar to that contained in most of currently is pooled without resulting in diversions the remainder of the year. the other consolidated orders. The uneconomic handling or disorderly The recommended 20 percent diversion minimum percentage of a pool marketing. The Arizona-Las Vegas order limit was suggested because it was distributing plant’s physical receipts of provides that a single handler be thought that this would have resulted in bulk fluid milk products that are allowed to form a unit of distributing the amount of milk eligible for diversion disposed of as route disposition is 25 plants and Class II manufacturing plants being approximately equivalent to eight percent. The percentage of a handler’s provided each plant is located within days’ production and would have been total route disposition into the the marketing area. The unit in total easier to administer than the current marketing area that would result in a would be required to meet the distributing plant becoming fully requirements for a pool distributing order provisions. In addition, the regulated under the Arizona-Las Vegas plant and at least one of the plants in proposed rule stated that the 20 percent order is also 25 percent. While this the unit would be required to meet the limit year round would have assured definition differs slightly from the pool distributing plant definition that pooled milk will have a close current order language, it provides individually. This provision would association with the market’s fluid uniformity with other consolidated provide uniformity with other federal processing plants. orders and should result in no orders and would not change the status Security Milk Producers Association additional distributing plants being of any plants currently pooled. Class II (SMPA) expressed concern regarding pooled under the Arizona-Las Vegas manufacturing plants are included for the recommended 20 percent limit on order or any change in the pool status unit pooling with distributing plants the volume of a handler’s pooled milk of distributing plants currently pooled. operated by the same handler because that may be diverted during any month. The pool plant provisions of the such plants produce products that are SMPA states that diversion Arizona-Las Vegas order have been marketed in conjunction with fluid milk requirements set at anything less than revised in this final decision. The products. 50 percent would be financially modification provides for the pooling of A provision permitting the market detrimental to its producers. The plants that specialize in ultra- administrator to adjust the percentages cooperative requests that a limit be pasteurized or aseptically-processed specified in the pool plant definition implemented that will not detract from fluid milk products. A detailed will provide the flexibility to respond in the orderly flow of milk. explanation of the changes is located at a timely manner to changing marketing Based on the comments received by the end of the western regional conditions without the need for a formal SMPA and an reevaluation of the discussion. hearing process. marketing conditions in the The proposed pool supply plant consolidated Arizona-Las Vegas order, definition would have required a supply Producer-Handler and noting that eight days production is plant to ship at least 50 percent of its The producer-handler provisions that about 40 percent, this final decision physical receipts of milk from dairy were proposed have been revised in this adopts for the Arizona-Las Vegas order farmers to pool distributing plants final decision to be very similar to the a diversion limit of 50 percent for each during the month in order to be a pool provisions in the current Arizona order. month of the year. The 50 percent supply plant. In the proposed rule it The revisions should assure that the diversion limit year round is more was indicated that this definition would status of current producers-handlers flexible than the current order and the provide for easy, effective order will be unchanged. 20 percent limit recommended in the administration and would result in no proposed rule and it would be easy to additional handlers being regulated Producer administer. In addition, the 50 percent under the order. The supply plant The consolidated order contains a diversion limit is consistent with the definition has been modified in this dairy farmer for other markets diversion limit included in the final decision to include milk that is definition. A producer could not be Southwest order, which is adjacent to diverted from the plant as well as milk pooled under the Arizona-Las Vegas the Arizona-Las Vegas Order. Thus, the physically received at the plant. There order unless all of the milk from the 50 percent diversion limit each month are currently no pool supply plants in same farm was pooled under this or should allow the Class I needs of the the proposed marketing area. some other federal order or unless such market to be met while ensuring the The current Central Arizona order non-pooled milk went to a plant with orderly disposition of milk. In addition, permits a manufacturing plant located only Class III or Class IV utilization. the market administrator will have the in the marketing area that is operated by This differs slightly from the current authority to adjust the diversion a cooperative association to be a pool definition in the Central Arizona order. percentage. plant, provided that the cooperative Such a provision is needed in the ships at least 50 percent of its member consolidated order to prevent dairy Multiple Component Pricing milk to pool plants of other handlers farms whose milk is regularly used for The Arizona-Las Vegas order does not during the current month or the fluid disposition in other markets from provide for multiple component pricing previous 12-month period ending with pooling the surplus portion of their (MCP). There are six plants that are the current month. This percentage production under the Arizona-Las Vegas expected to be regulated under the requirement is currently suspended. order. consolidated order: five proprietary

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00138 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.161 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16163 distributing plants, and one seller), the implementation of MCP in Pool plant manufacturing plant operated by a the consolidated Arizona-Las Vegas The pool distributing plant definition cooperative association. The Class I order would only benefit some of the is similar to that contained in most of utilization for the order is expected to producers of the order. All of the the other orders. The minimum be less than 50 percent, a level that producers in the marketing area would percentage of a pool distributing plant’s would, in some other orders, be an not share equitably. As stated in the physical receipts of bulk fluid milk indication that component pricing proposed rule and explained above, the products that are disposed of as route would be appropriate. However, the fluid nature of much of the market and disposition is 25 percent. The Class I utilization at the five distributing the current marketing situations do not percentage of a handler’s total route plants is more than 80 percent. With the warrant MCP at this time. disposition distributed into the exception of the one cooperative marketing area that would result in a balancing plant, the handlers to be Payment Obligation of a Partially distributing plant becoming fully regulated constitute predominantly a Regulated Distributing Plant regulated under the Western order is Class I market. SMPA recommended a proposal Prior to the issuance of the proposed also 25 percent. While this definition designed to equalize Class I costs rule, there were no comments received differs slightly from the current between California distributing plants in support of MCP for the Arizona-Las language of the orders included in this and handlers fully regulated under the Vegas order. However, Schreiber Foods, consolidated Western order, it provides proposed Arizona-Las Vegas order. Inc. (Schreiber), Leprino, and SMPA uniformity with other consolidated SMPA explained that the proposal is have indicated support for MCP in the orders and should result in no essentially a modification of the consolidated order. Schreiber agrees additional distributing plants being with National Milk Producers ‘‘Wichita Option,’’ which represents a pooled under the order or any change in Federation that MCP is important in reasonable method for computing a the pool status of distributing plants some but not all orders, and the rule to partially regulated distributing plant’s currently pooled. adopt such a plan and quality obligation to the producer-settlement The pool plant provisions of the adjustments to minimum prices should fund. Western order have been revised in this be based on the dairy industry’s The ‘‘Wichita Option’’ compares the final decision. The modification to the preference in each area. The handler amounts paid to producers for milk pool plant definition provides for the asserts that its Class III utilization of received by a nonpool distributing plant pooling of plants that specialize in ultra- over 50 percent of the milk from the with the full class-use value of milk that pasteurized or aseptically-processed Arizona-Las Vegas market is a strong would have applied if the plant were fluid milk products. A detailed indication for the need of MCP in the fully regulated under the order. To explanation of the changes is located at order. equalize the competitive positions of the end of the western regional Leprino indicates that less than half of both fully regulated plants and those discussion. the milk in the proposed Arizona-Las plants not regulated under an order, any The proposed pool supply plant Vegas order is used for Class I purposes. amount by which the class-use value definition would have required a supply The handler argues that competitive exceeds the value paid to producers is plant operator to ship at least 35 percent inequities due to differences between due to the producer-settlement fund or of the milk pooled at the supply plant, fat-skim and MCP across manufacturers can be paid to the producers who either by transfer or diversion, to pool operating in different orders will supplied the handler. However, this distributing plants during the month in become more significant as the option does not function appropriately order to qualify for pooling. The 35 manufacturing sector grows. It claims to handle milk from plants regulated percent level is included in the final that the lack of MCP in the order will under a State order that provides for decision. The percentage is slightly stimulate some disorderly marketing market-wide pooling. Thus, the higher than that contained in the conditions as low component milk from modified ‘‘Wichita Option’’ includes current Southwest Idaho-Eastern Oregon New Mexico seeks higher revenue that payment provisions for any plant order and slightly lower than that will be available through the fat-skim regulated under such a State-operated contained in the current Great Basin pricing to the west. Additionally, SMPA program. order. This change should result in no strongly suggests that a system that milk that is currently associated with The current Great Basin order prices the butterfat and protein either of the two orders losing such components be incorporated in the provides payment provisions for any association. order because it is in the best interest of handler operating a State-regulated The pool supply plant definition in producers. distributing plant having route the final decision includes provision for This final decision does not adopt disposition in the Great Basin order. a March through August period during MCP for the consolidated Arizona-Las This provision has been incorporated in which a supply plant that has met the Vegas order. The current Central Section 76 of the General provisions in order’s shipping percentages for the Arizona order does not contain a this final decision and is applicable to preceding months of September through multiple component pricing plan. The all orders. February to be able to continue to be a handlers proposed to be regulated under Western Order pool plant without meeting the shipping the consolidated order are currently all, standards. As with other consolidated with one exception, regulated under the Many of the provisions of the orders, the market administrator will current Central Arizona order. The consolidated Western order are have the authority to increase or manufacturing of milk in the explained in the ‘‘Identical Provisions’’ decrease the order’s supply plant consolidated order is anticipated to be portion of this final decision and need pooling standards as marketing done primarily by Schreiber, at a non- not be addressed here. Those provisions conditions change. pool plant. Schreiber is almost totally that differ from those explained in the The Western order final decision supplied by United Dairymen of ‘‘Identical Provisions,’’ or those contains a provision that would permit Arizona (UDA). Due to these marketing currently contained in the orders to be a manufacturing plant operated by a situations (i.e., one buyer and one consolidated, are discussed below. cooperative association and located in

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00139 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.162 pfrm08 PsN: 02APP2 16164 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules the marketing area to be a pool plant if farmers whose milk is regularly used for opportunistic entry of outside milk into 35 percent of the milk for which the fluid disposition in other markets from the Utah Class I pool. cooperative is the handler is received at pooling the surplus portion of their As adopted in this final decision, the pool distributing plants during the production on the consolidated order. 90 percent diversion limitation is the month or during the immediately Security Milk Producers Association same as that adopted in the preceding 12-month period. This supports this provision and states that it consolidated Upper Midwest order. The provision is similar to one currently is needed to prevent the pooling of 90 percent limitation on movements of contained in the Great Basin order and surplus milk from farms whose milk is pooled milk to nonpool plants should in some of the other consolidated regularly associated with other markets. permit all milk associated with the orders. market that is not needed at pool plants Although the two current orders that Producer Milk during the month to be pooled and have been consolidated do not contain The percentage of a handler’s pooled priced under the order. The 90 percent such a provision, the Western order milk for the Western order final standard provides handlers more would provide that a single handler be decision that may be diverted to non- flexibility to efficiently move milk. allowed to form a unit of distributing pool plants is 90 percent in any month. Although unlimited diversions are not plants and Class II manufacturing plants The proposed rule recommended a limit incorporated in the consolidated order, provided each plant is located within of 80 percent, which is identical to the the 90 percent standard should not the marketing area, as suggested by the percentage currently included in the preclude most producers associated Identical Provisions committee. The Southwestern Idaho-Eastern Oregon with the current individual orders from unit in total would be required to meet order and is only slightly higher than having their milk pooled under the the requirements for a pool distributing that for the present Great Basin order consolidated Western order. The 90 plant and at least one of the plants in (i.e., 75 percent for cooperatives and 70 percent standard is an appropriate level the unit would be required to meet the percent for proprietary handlers). for the consolidated order given the pool distributing plant definition Avonmore West Inc. (Avonmore), a provisions contained in the current individually. This provision would handler in the Southwestern Idaho- individual orders and should not create provide uniformity with other federal Eastern Oregon order in Twin Falls, any disorderly marketing conditions. orders and would not change the status Idaho, favors the more liberal The recommended standard also should of any plants currently pooled. Class II qualification rules proposed for the ensure that additional amounts of manufacturing plants are proposed to be Western Order whereby only one day’s unneeded milk would not be pooled. In included for unit pooling with production of producer milk has to be addition, as contained in other distributing plants operated by the same received at a pool plant. However, the consolidated orders the market handler because such plants produce handler opposed the 80 percent administrator will have the authority to products that are marketed in standard of a handler’s pooled milk that adjust the diversion percentage. conjunction with fluid milk products. may be diverted to non-pool plants as The order language allowing two or recommended in the proposed rule. more cooperative associations to jointly Proprietary Bulk Tank Handler Avonmore indicated that the 80 percent met the diversion limits was The consolidated Western order final diversion limitation is identical to the inadvertently excluded from the decision retains the bulk tank handler one currently in the Southwestern proposed rule. Order language to allow provision that is currently in the Idaho-Eastern Oregon Federal order and this to occur has been included in this Southwestern Idaho-Eastern Oregon stated that this standard was suspended final decision. order, permitting a handler other than a indefinitely in December 1989. The Darigold Farms opposes the touch- cooperative association to divert milk to handler contends that the argument that base requirement that was nonpool plants for the handler’s account the 80 percent diversion limitation recommended in the proposed rule. The based on shipments of milk to pool caused uneconomic movements of milk cooperative contends that the exclusion plants of other handlers. is still valid today. of this provision may present an In 1997, Avonmore notes, an average opportunity to obtain unified support Producer-Handler of 217 million pounds of producer milk for a provision that would prevent or The producer-handler provisions that was diverted to nonpool plants each reduce opportunistic pooling. were proposed have been revised in this month. Accordingly, Avonmore argues The current Southwestern Idaho- final decision to be very similar to the that the reintroduction of the 80 percent Eastern Oregon and Great Basin orders provisions in the current Great Basin diversion limitation would allow only contain such a touch-base provision. and Southwestern Idaho-Eastern Oregon 80 million pounds of producer milk to The provision ensure that a producer orders. The revisions should assure that be diverted to nonpool plants. The whose milk is pooled on the order is the status of current producers-handlers handler contends this would preclude indeed servicing the Class I needs of the will be unchanged. many dairy producers in Idaho from market. Accordingly, the touch-base having their milk associated with the provision recommended in the Producer Western order, which could cause proposed rule is adopted in this final The Western order contains a dairy significant price disparities between decision. The provision provides that farmer for other markets definition. A producers and create disorderly during the month at least one day’s milk producer would not qualify for pooling marketing conditions that Federal production of a dairy farmer new to the under the Western order unless all of orders are intended to prevent. order must be physically received at a the milk from the same farm was pooled Utah Farm Bureau Federation filed a pool plant so that milk of such producer under this or some other federal order comment regarding the consolidation of is eligible for diversion. or unless such non-pooled milk went to the Great Basin and Southwestern a plant with only Class III or Class IV Idaho-Eastern Oregon orders into the Reports of Receipts and Utilization and utilization. This differs slightly from the Western order. In their comments the Payroll Reports current definition in the Great Basin federation states that the pooling The Western order requires pool order. Such a provision is contained in provisions of the current Great Basin handlers to file a ‘‘report of receipts and the Western order to prevent dairy order must be maintained to prohibit utilization’’ on or before the seventh day

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Almost all handlers currently file adjustment for somatic cells is a quality 9 to 23 days. reports by FAX or some other form of issue that may be better dealt with Pacific Northwest Order electronic data transfer, which between the buyer and seller. In eliminates delays due to mail handling. addition, the nearby Pacific Northwest Many of the provisions of the Pacific A seven-day reporting period should order will not have a somatic cell Northwest order are explained in the allow adequate time for handlers to adjustment. The somatic cell count of ‘‘Identical Provisions’’ portion of this prepare reports and will allow the milk produced in the western U.S. is at final decision, and need not be computation and release of producer an average level of 250,000. This level addressed here. The provisions that price information to occur on or before is significantly lower than the 350,000 deviate somewhat from those the 12th day after the end of the month. level, which provides no adjustment in incorporated in other order areas are the The date on which the report of the consolidated orders that adjust for provisions dealing with standards for payments to producers is due to the somatic cell count. For the reasons determining the pool status of producers market administrator under the Western stated above and due to the high quality and handlers, the definition of order is on or before the 21st day after of milk produced in the consolidated producer-handlers, the factors upon the end of the month. This is the same Western marketing area, a quality which payments to producers are date as that under the Great Basin order, adjustment is unnecessary and need not calculated, and reporting and payment but one day earlier than under the be included in the order. dates. Because this order is not Southwestern Idaho-Eastern Oregon proposed to be consolidated with any Payments To and From the Producer order. The earlier reporting date and other orders, there is little reason for Settlement Fund announcement of producer prices changing the substance of many of the should assure that an earlier payroll Payments to the producer settlement provisions that are not included in the reporting date would not be fund under the consolidated order are General Provisions. burdensome. due on or before the 14th day after the end of the month. This is two days after Pool Distributing Plant Multiple Component Pricing the announcement of uniform producer The pool distributing plant provisions Both the Great Basin order and the prices, which is an identical time period of the proposed Pacific Northwest Order Southwestern Idaho-Eastern Oregon to that which exists in the two current are changed from the current definition order currently have multiple orders that are being consolidated. to one that more closely resembles the component pricing based on protein Payments from the producer definition suggested in the identical without a somatic cell adjustment. The settlement fund under the consolidated provisions report. Rather than basing multiple component pricing provisions order would be due on or before the the identification of a pool distributing of the consolidated Western order 15th day after the end of the month. plant on only 10 percent of the plant’s should be the same as those for other This is the same date as under the receipts as in-area route dispositions, proposed orders that provide for current Great Basin order and three days the order should specify that such a multiple component pricing based on earlier than under the Southwestern plant have at least 25 percent of its protein but without a somatic cell Idaho-Eastern Oregon order. This physical receipts distributed as route adjustment. The Western order has a payment date should be practicable, disposition, and at least 25 percent of its significant amount of milk used in given the use of current banking and route disposition distributed within the manufactured products, especially transmission techniques. marketing area. cheese, and component pricing will It is expected that the modified Payments to Producers and Cooperative enable producers to be paid according to pooling standard will not affect the pool Associations the value of the components of their status of any plant that currently does milk. However, the somatic cell Under the Western order, partial or does not meet the pooling standard adjustment included in some of the payments would be due from handlers of the Pacific Northwest order. In consolidated orders for which to producers who are not members of addition, it would remedy a provision component pricing is proposed is not cooperative associations on or before the that could result in fully regulating a warranted by marketing conditions 25th day of the month in an amount not plant that has minimal association with under the Western order, and such an less than 1.2 times the lowest class price the marketing area. adjustment is not included in the final for the preceding month multiplied by The pool plant provisions of the decision. the hundredweight of milk received Pacific Northwest order have been Avonmore expressed support for the from such producers during the first 15 revised in this final decision. One use of multiple component pricing in days of the month. Final payments modification provides for the pooling of the Western Order and strongly would be due on or before the 17th day plants that specialize in ultra- recommended the inclusion of a somatic after the end of the month. pasteurized or aseptically-processed cell count price adjuster. Avonmore Partial payments to cooperative fluid milk products. A detailed states the SCC adjuster is necessary associations would be due on or before explanation of the changes is located at because the manufacture of cheese is the the 24th day of the month at the same the end of the western regional predominant use of milk in the Western rate as above, with final payments due discussion. Order. Avonmore notes that it has been on or before the 16th day after the end documented that elevated levels of SCC of the month. These final payment dates Pool Supply Plant impact cheese yield. In addition, the represent very little or no change from For the most part, the current pool handler contends that dairy products the orders’ present payment dates. The supply plant definition of the Pacific (i.e., cheese, NFDM, butter, whey partial payment dates are earlier than Northwest order and the performance products) exported to the European those required under the current orders, standard of shipping 20 percent of the

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State institutions Under the terms of the present moved directly to pool distributing may have any number of cost provision, the cooperative members of plants in the shipments on which pool advantages over regulated handlers in the reserve supply unit must be located plant performance is calculated is the production and processing of milk, near a pool distributing plant, as a changed to allow the handler to include such as not having to pay a minimum reserve supply plant must be located in such movements if the handler wants to wage and not having to pay property the marketing area. Both the reserve qualify its plant for pooling. A plant taxes. It would be unjust to allow such supply unit and the reserve supply operator who receives milk at a plant institutions to compete with fully plant provisions require that the plant only for manufacturing use also will be regulated handlers in regular or unit operator request prior approval able to supply producer milk directly to commercial channels as if the playing of the market administrator to initiate distributing plants without a field were level. Therefore, state and and cancel their status, both require requirement that the manufacturing other institutions that compete with long-term association with the market, plant be a supply plant. regulated handlers in regular and both provide substantial penalties In the Pacific Northwest order the commercial channels, such as bids for for failing to meet all required current March through August period school milk programs, would be conditions. Although the cooperative during which supply plants do not have regulated on those sales. unit does not have monthly to ship the minimum percentage to qualification requirements, it is subject distributing plants if they have done so Producer-Handler to a call by the market administrator during the previous September through The current Pacific Northwest after the market administrator’s February period is included in the pool producer-handler provisions remain investigation of the need for supply plant definition. essentially untouched. Some of the supplemental supplies of milk. Because As in the other consolidated orders, ‘‘Identical Provisions’’ features of the of the current existence of this the market administrator will have the producer-handler definition, such as the provision, based on the need shown at authority to increase or decrease the 150,000-pound thresholds for route a public hearing, and its similarities to order’s pooling provisions as marketing dispositions, own farm production, and a pooling mechanism suggested for conditions change for the purpose of receipts from pool plants are adopted in other orders, provision for the assuring that an adequate supply of milk this final decision. The rest of the cooperative reserve supply unit will will be available for fluid use, or to current producer-handler provisions continue to be included in the Pacific assure that the order does not require remain in effect for administrative Northwest order. handlers to undertake uneconomic purposes. The order language regarding the movements of milk to maintain: (1) The Producer-handlers represent a much exemption from diversion limits for a pool status of their plants, or (2) the larger portion of the Class I dispositions cooperative reserve supply unit was pooling of producers who have in the Pacific Northwest marketing area inadvertently excluded from the historically been associated with the than in most other Federal order areas. proposed rule. The order language for market and who help serve Class I In many marketing areas, producer- this exemption has been included in needs. handlers supply one percent or less of this final decision. The order language allowing two or Nonpool Plant the Class I sales. In the Pacific Northwest area, however, they furnish more cooperative associations to jointly The current definition and exemption almost 10 percent of the market’s Class met the diversion limits was also for milk produced and processed by I dispositions. The larger average size of inadvertently excluded from the state institutions, as contained in the the dairy farms in the western United proposed rule. Order language to allow present order’s producer-handler States makes more likely the existence this to occur has been included in this definition, is expanded and moved to be of a producer-handler that is a final decision. included in the ‘‘Nonpool plant’’ significant factor in the market. Producer and Producer Milk definition contained in the General The current order’s producer–handler Provisions. Such entities, along with provisions are based on the history of The consolidated Pacific Northwest colleges and universities and charitable producer–handler operations in the order would contain a ‘‘dairy farmer for organizations, will not be subject to the marketing area, reflecting difficulties other markets’’ provision for each orders’ pricing and pooling provisions encountered in order administration, month of the year. The large volume of as long as they have no sales in attempts to circumvent order milk production in California and commercial channels. provisions, and court challenges. California’s quota system give dairy The present Pacific Northwest order In addition to the current order farmers an incentive to pool production provisions allow a state institution to provisions, the producer–handler in a volume equal to their quota pounds avoid any regulation on the portion of definition contains language clarifying on the California order, and then its milk that is used only within the that milk received by the producer– attempt to share in the Pacific institution, and apply some pricing handler at a location other than the Northwest Class I market with their regulation to that portion that is producer–handler’s processing plant for over-quota production, for which distributed in commercial channels. In distribution on routes will be included returns under the California order are some respects, this arrangement is as a receipt from another handler. much less. At the same time, none of the similar to the situation of partially California Class I returns would be regulated distributing plants. However, Reserve Supply Unit shared with Pacific Northwest partially regulated distributing plant The Pacific Northwest order will producers. Similarly, producers subject operators, to avoid obligations under continue to provide for a cooperative to other state programs should not be Federal orders, must show that they pay reserve supply unit. The existing allowed to pool the reserve supplies the dairy farmers who ship milk to them provision has many similarities to a from the State-regulated markets and at a rate at least commensurate with that reserve supply plant, which is not share in returns from the Pacific

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Northwest pool while enjoying the standards have not been overly specialize in ultra-pasteurized or benefits of the State orders’ Class I restrictive nor associated unneeded aseptically-processed fluid milk returns. supplies with the market and should be products (i.e., fluid milk products with The current provisions of the Pacific allowed to continue basically a shelf life of at least 60–90 days Northwest order do not require that a unchanged. However, the change from without refrigeration.) At the present producer’s milk be received at pool without limit to a percentage amount time, there are no plants processing this plants for the producer’s first pooled will allow the market administrator, as type of product in the Southwest, delivery on the market or for any provided for in other orders the Arizona-Las Vegas, or Pacific Northwest specified period. If a handler meets its authority to adjust the percentage of marketing areas. However, there is one overall performance requirements for milk that may be diverted. plant in the Western order market area. supplying milk to the market, it should Unlike a typical distributing plant, a make no difference which individual Payments to Producers and Cooperative Associations plant specializing in extended shelf-life producer’s milk is actually delivered to products may have a more erratic pool plants as long as the milk of each Although the current Pacific processing schedule, reflecting the producer participating in the pool is Northwest order contains a multiple longer shelf life of the products Grade A and available to the market if component pricing plan very like that packaged at the plant. Consequently, a and when needed. It is expensive, proposed to be standard for the plant’s Class I utilization may vary inefficient, and unnecessary to move consolidated orders, it does not now considerably from month to month. In milk from areas close to nonpool and would not under this reform certain areas of the country, such manufacturing plants to bottling plants process contain a somatic cell variability has resulted in shifting pool in the city markets when that milk is not adjustment provision. The level of status for this type of plant from one needed for bottling. For the above somatic cells in the western U.S. is order to another. Such regulatory reasons and furthermore because there generally lower than in the east, with an instability is not conducive to orderly are often great distances and overall average of approximately marketing. To provide greater regulatory mountainous terrain between plants and 250,000 instead of 350,000. This lower stability for these plants, they should be farms in the more sparsely populated somatic cell count would seem to fully regulated pool plants if they are West, no ‘‘touch base’’ requirements reduce the need for such a provision. located in the marketing area and should be included. As stated Historically, the principal argument for process at least 25 percent of their fluid previously, Darigold Farms supports the a somatic cell adjuster has been the milk product receipts during the month exclusion of ‘‘touch base’’ requirements. negative effect of somatic cells on the into ultra-pasteurized or aseptically- The cooperative states that the cheese yields. Although cheese processed fluid milk products. This exclusion may present an opportunity to manufacturing in the Northwest is provision will not guarantee that a plant obtain unified support for a provision increasing, most cheese manufacturing qualifies as a fully-regulated pool plant that would prevent or reduce is done by cooperative associations who every month; some months a plant may opportunistic pooling. have expressed the opinion that an This order and other western orders fail to process 25 percent of its milk adjustment for somatic cells is a quality receipts into ultra-pasteurized or have allowed producers to pool milk on issue best dealt with internally. The more than one order during the same aseptically-processed fluid milk somatic cell adjustments in the products. Nevertheless, the provision month. Because of the locations of a consolidated orders of the final decision number of dairy farmers, their milk may will guarantee that if a plant meets the are not incorporated in the Pacific 25 percent standard described above, it be used by pool plants regulated under Northwest order. more than one order in a single month. will be qualified under the same order These producers also represent a reserve Announcement of Producer Prices all the time. supply for more than one market. Large, The dates on which handler reports, 7. Miscellaneous and Administrative multi-market handlers should be given market administrator’s announcement of (a) Consolidation of the marketing the flexibility to market and transport producer prices, and payment to service, administrative expense, and their milk to fulfill the needs of their producers would remain unchanged producer-settlement funds. To complete customers in the most efficient way from those of the current order. possible. the consolidation of the present 31 The small changes in the final General Comment Related to Orders Federal orders effectively and equitably, decision from the current pooling Darigold Farms suggests that the new the reserve balances in the marketing provisions of the Pacific Northwest orders provide some performance service, administrative expense, and order result in very little change in the requirements attached to each producer-settlement funds that have order’s diversion limits. The limit of 80 individual market, but recommends that resulted under the individual orders percent of the handler’s supply of a producer, once qualified, should be would be combined. producer milk remains unchanged, with locked into the pool for a minimum of The balances in these three funds the months during which the percentage four months. This recommendation has should be combined on the same basis is effective changed from September not been incorporated in the final that the marketing areas are through April to September through decision for any of the western orders. consolidated into regional orders herein. February. These months will correspond The provisions adopted in each order For instance, the Texas and New to the months during which supply should ensure that the Class I needs of Mexico-West Texas marketing areas are plants must ship 20 percent of their the markets are met. merged into a new regional Southwest receipts to pool distributing plants. order. Accordingly, the reserve balances In the current order there is no limit Major Changes to Orders From the in the marketing service, administrative on diversions during May through Proposed Rule expense and producer-settlement funds August. In this final decision there will The pool plant provisions of the of the two individual orders likewise be a limit of 99 percent on diversions of orders in the western region have been should be combined into three separate producer milk for the months of March revised. Paragraph (b) of section 7 will funds established under the through August. The current delivery accommodate the pooling of plants that consolidated Southwest order.

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The marketing areas of the 11 West. In the third instance, two zones of The money paid to the administrative consolidated orders essentially the Michigan Upper Peninsula (Order expense fund is each handler’s represent the territory covered by the 31 44) marketing area are included in the proportionate share of the cost of individual orders plus the territory consolidated Upper Midwest marketing administering the order. For the most included in the former Tennessee Valley area and the other zone of the Order 44 part, handlers currently regulated under marketing area. Because of this, the marketing area is included in the the individual orders will continue to be handlers and producers servicing the marketing area for the Mideast regional regulated under the consolidated orders. milk needs of the individual markets order. In view of this, it would be an will continue to furnish the milk needs In each of these 3 cases, some of the unnecessary administrative and of the applicable regional market for the producers and handlers of each of the financial burden to allocate the reserve most part. current order areas that are being funds of the individual orders back to In that regard, the reserve balances in divided will become pooled under one handlers and then accumulate an the funds that have resulted under the consolidated order, while the other adequate reserve for each of the 31 individual orders should be producers and handlers of each of these consolidated orders. It would be as combined on a marketing area basis into areas will become pooled under another equitable and more efficient to combine the appropriate separate fund regional order. Accordingly, any reserve the remaining administrative monies established for each of the 11 regional balances in the marketing service, accumulated under the individual orders. Any liabilities of such funds administrative expense and producer- orders in the same manner as the under the individual orders would be settlement funds of these three marketing areas are combined. paid from the appropriate newly individual orders should be divided For the orders where the consolidated established fund of the applicable equitably among the applicable marketing area includes the regulated regional order. Similarly, obligations consolidated orders. territory of one or more of the that are due the separate funds under The money accumulated in the individual orders, any remaining the individual orders would be paid to marketing service funds of the balance in the administrative expense the appropriate combined fund of the individual orders is that which has been fund of the individual order or orders applicable consolidated order. paid by producers for whom the market would be combined into the In most cases, the entire marketing administrators are performing such administrative expense fund established area of an order or orders is included in for the applicable consolidated order. In the consolidated marketing area of one services. Since the marketing areas of the situations where the current of the 11 regional orders. Four present the 11 regional orders encompass the individual marketing area is split and marketing areas would be split between territory covered by the individual the regulatory status of producers and two consolidated orders. One county of orders, for the most part, the producers handlers is divided (as in the case of the the present Louisville-Lexington- who have contributed to the marketing Michigan Upper Peninsula, Southwest Evansville (Order 46) marketing area service funds of the individual orders Plains, and Great Basin orders) between would be included in the Southeast are expected to continue supplying milk order, and the rest of the territory in the for the consolidated orders. Since two consolidated marketing areas, the Order 46 marketing area would be marketing service programs will be remaining balance in the administrative included under the Appalachian order. continued for these producers under the expense fund should be prorated Even though one Order 46 county is regional orders, it would be appropriate between the two regional orders on the included in the consolidated Southeast to combine the reserve balances in the basis of the amount of milk that would order, all of the present Order 46 marketing service funds of the order or be pooled and priced under each producers and handlers are expected to orders that are represented in the respective consolidated order (using be covered under the consolidated consolidation of each of the 11 regional producer milk deliveries during the last Appalachian order. Accordingly, the orders. month the individual orders are in effect balances in the Order 46 marketing When the consolidated marketing area but assuming that the orders had been service, administrative expense, and includes the marketing area of one or consolidated). producer settlement funds should be more individual orders, any remaining Likewise, the producer-settlement consolidated into the three separate balance in the marketing service fund of fund balances of the individual orders funds established for the consolidated the individual order or orders should be should be combined. They should be Appalachian market. combined in the marketing service fund combined on the same basis as the Different regulatory situations, established for the applicable marketing areas are consolidated herein. however, will occur in the other three consolidated order. If a current This will enable the producer- instances where a current marketing marketing area is split between two settlement funds of the consolidated area is divided between two consolidated markets and the regulatory orders to continue without interruption. consolidated orders. The southwest status of producers and handlers is The producers currently supplying Missouri and northwest Arkansas divided between the two regional the individual markets are expected to portions of the current Southwest Plains orders, as is the case with the Michigan supply milk for the consolidated order area are included in the Upper Peninsula, Southwest Plains, and markets. Thus, monetary balances in the consolidated Southeast marketing area, Great Basin orders, any balance in the producer-settlement funds of the while the remainder of the Southwest marketing service fund of the individual individual orders now would be Plains area is combined with the order should be prorated between the reflected in the pay prices of the marketing areas of eight other orders in two consolidated orders on the basis of producers who will benefit from the the consolidated Central marketing area. the amount of milk subject to the applicable consolidated orders. The Similarly, one county of the current marketing service deduction that will be combined fund for each consolidated Great Basin (Order 139) marketing area covered by each respective regional order also would serve as a contingency is included in the consolidated Arizona- order (using producer deliveries in the fund from which money would be Las Vegas order and the rest of the last month the individual orders are in available to meet obligations (resulting Order 139 marketing area is included in effect but assuming that the marketing from audit adjustments and otherwise) the consolidated marketing area for the areas had been consolidated). occurring under the individual orders.

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The same procedure used in transferred to the consolidated fully considered in conjunction with the combining the remaining balances in Southeast order, which includes all of rulemaking record. the marketing service and the marketing area of the present Marketing Agreements and Order administrative expense funds of the Southeast order. These procedures will Amending the Orders individual orders should be followed in enable the transportation credits to combining the producer-settlement fund continue without interruption under The marketing agreements regulating balances when the individual orders are these two consolidated orders. the handling of milk in each of the consolidated. For orders where the (c) General findings. consolidated orders are not included in consolidated marketing area includes The findings and determinations this final decision because the the marketing area of one or more hereinafter set forth supplement those regulatory provisions thereof would be orders, any remaining balance in the that were made when the aforesaid the same as those contained in the producer-settlement fund of the orders were first issued and when they orders, as hereby amended. The individual order or orders would be were amended. The previous findings following order amending the orders combined into the producer-settlement and determinations are hereby ratified regulating the handling of milk in the fund established for the applicable and confirmed, except where they may respective marketing areas of these consolidated order. In the three conflict with those set forth herein. orders is proposed as the detailed and situations (Michigan Upper Peninsula, (1) The tentative marketing appropriate means by which the Southwest Plains, and Great Basin) agreements and the orders, as hereby foregoing conclusions may be carried where the marketing area of a current proposed to be amended, and all of the out. order is split between two consolidated terms and conditions thereof, will tend to effectuate the declared policy of the Referendum Order to Determine orders and some of the individual Producer Approval market’s producers and handlers would Act; be regulated under one consolidated (2) The parity prices of milk as This decision does not provide for order and others would be regulated determined pursuant to section 2 of the conducting referendums of producers to under another consolidated order, the Act are not reasonable in view of the determine if they approve of the balance in the producer-settlement fund price of feeds, available supplies of issuance of the consolidated orders. A should be divided equitably between feeds, and other economic conditions notice to conduct a referendum on each the two consolidated orders. Since the which affect market supply and demand of the consolidated orders will be issued Michigan Upper Peninsula order is an for milk in each of the aforesaid at a future date. individual-handler pool market, no marketing areas, and the minimum List of Subjects in 7 CFR Parts 1000, producer-settlement fund is provided. prices specified in the tentative 1001, 1002, 1004, 1005, 1006, 1007, In the 2 remaining instances in which marketing agreements and the orders, as 1012, 1013, 1030, 1032, 1033, 1036, current marketing areas are divided hereby proposed to be amended, are 1040, 1044, 1046, 1049, 1050, 1064, between 2 consolidated orders, the such prices as will reflect the aforesaid 1065, 1068, 1076, 1079, 1106, 1124, remaining balance in the producer- factors, insure a sufficient quantity of 1126, 1131, 1134, 1135, 1137, 1138 and settlement funds of the Southwest pure and wholesome milk, and be in the 1139 public interest; Plains and Great Basin orders should be Milk marketing orders. prorated between the consolidated (3) The tentative marketing orders on the basis of the amount of agreements and the orders, as hereby Dated: March 12, 1999. milk that will be pooled and priced proposed to be amended, will regulate Michael V. Dunn, under each respective consolidated the handling of milk in the same Under Secretary, Marketing and Regulatory order (using producer milk deliveries manner as, and will be applicable only Programs. during the last month the individual to persons in the respective classes of industrial and commercial activity Order Amending the Orders Regulating orders are in effect but assuming that the Handling of Milk in the Northeast the orders had been consolidated). specified in the marketing agreements; (4) All milk and milk products and Other Marketing Areas (b) Consolidation of the transportation handled by handlers, as defined in the This order shall not become effective credit balancing funds. To complete the tentative marketing agreements and the unless and until the requirements of consolidation process, the reserve orders as hereby proposed to be § 900.14 of the rules of practice and balances in the transportation credit amended, are in the current of interstate procedure governing proceedings to balancing funds that are in effect now commerce or directly burden, obstruct, formulate marketing agreements and under three Southeast orders (Carolina, or affect interstate commerce in milk or marketing orders have been met. Order 5; Southeast, Order 7; and its products; and Louisville-Lexington-Evansville, Order (5) It is hereby found that the Findings and Determinations 46) also should be consolidated. These necessary expense of the market The findings and determinations funds should be combined on a administrator for the maintenance and hereinafter set forth supplement those marketing area basis. In that regard, the functioning of such agency will require that were made when the orders were reserve balances in the transportation the payment by each handler, as his pro first issued and when they were credit balancing funds of the Carolina rata share of such expense, 5 cents per amended. The previous findings and and Louisville-Lexington-Evansville hundredweight or such lesser amount as determinations are hereby ratified and orders should be consolidated into a the Secretary may prescribe, with confirmed, except where they may newly established transportation credit respect to milk specified in § 1000.85 of conflict with those set forth herein. balancing fund for the consolidated the General Provisions. (a) The said orders as hereby Appalachian order, which also includes amended, and all of the terms and the current marketing areas of these two Comments conditions thereof, will tend to orders with the exception of one county. In arriving at the findings and effectuate the declared policy of the Act; Similarly, the reserve balance in the conclusions, and the regulatory (b) The parity prices of milk, as transportation credit balancing fund of provisions of this decision, each of the determined pursuant to section 2 of the the present Southeast order should be comments received was carefully and Act, are not reasonable in view of the

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00145 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.170 pfrm08 PsN: 02APP2 16170 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules price of feeds, available supplies of PART 1000ÐGENERAL PROVISIONS 1000.92 [Reserved] feeds, and other economic conditions OF FEDERAL MILK MARKETING 1000.93 OMB control number assigned which affect market supply and demand ORDERS pursuant to the Paperwork Reduction Act. for milk in the aforesaid marketing Subpart AÐScope and Purpose areas. The minimum prices specified in Authority: 7 U.S.C. 601—674. Sec. the orders as hereby amended are such Subpart AÐScope and Purpose prices as will reflect the aforesaid 1000.1 Scope and purpose of this Part 1000. factors, insure a sufficient quantity of Subpart BÐDefinitions § 1000.1 Scope and purpose of this Part pure and wholesome milk, and be in the 1000.2 General definitions. 1000. public interest; and 1000.3 Route disposition. This part sets forth certain terms, 1000.4 Plant. definitions, and provisions which shall (c) The said orders as hereby amended 1000.5 Distributing plant. be common to and part of each Federal regulate the handling of milk in the 1000.6 Supply plant. milk marketing order in 7 CFR, chapter same manner as, and are applicable only 1000.8 Nonpool plant. X, except as specifically defined to persons in the respective classes of 1000.9 Handler. 1000.14 Other source milk. otherwise, or modified, or otherwise industrial or commercial activity provided, in an individual order in 7 specified in, the marketing agreements; 1000.15 Fluid milk product. 1000.16 Fluid cream product. CFR, chapter X. (d) All milk and milk products 1000.17 [Reserved] Subpart B—Definitions handled by handlers, as defined in the 1000.18 Cooperative association. orders as hereby amended, are in the 1000.19 Commercial food processing § 1000.2 General definitions. establishment. current of interstate commerce or (a) Act means Public Act No. 10, 73d directly burden, obstruct, or affect Subpart CÐRules of Practice and Congress, as amended and as reenacted interstate commerce in milk or its Procedure Governing Market and amended by the Agricultural products; and Administrators Marketing Agreement Act of 1937, as (e) It is hereby found that the 1000.25 Market administrator. amended (7 U.S.C. 601 et seq.). necessary expense of the market Subpart DÐRules Governing Order (b) Order or Federal milk order means administrators for the maintenance and Provisions the applicable part of 7 CFR, chapter X, functioning of such agency will require 1000.26 Continuity and separability of issued pursuant to section 8c of the Act the payment by each handler, as his pro provisions. as a Federal milk marketing order (as amended). rata share of such expense, 5 cents per Subpart EÐRules of Practice and (c) Department means the U.S. hundredweight or such lesser amount as Procedure Governing Handlers Department of Agriculture. the Secretary may prescribe, with 1000.27 Handler responsibility for records (d) Secretary means the Secretary of respect to milk specified in § 1000.85 of and facilities. Agriculture of the United States or any the General Provisions. 1000.28 Termination of obligations. officer or employee of the Department to Order Relative to Handling Subpart FÐClassification of Milk whom authority has heretofore been 1000.40 Classes of utilization. delegated, or to whom authority may It is therefore ordered, that on and 1000.41 [Reserved] hereafter be delegated, to act in his after the effective date hereof, the 1000.42 Classification of transfers and stead. handling of milk in the Northeast and diversions. (e) Person means any individual, other marketing areas shall be in 1000.43 General classification rules. partnership, corporation, association, or conformity to and in compliance with 1000.44 Classification of producer milk. other business unit. the terms and conditions of the orders, 1000.45 Market administrator’s reports and announcements concerning § 1000.3 Route disposition. as amended, and as hereby amended, as classification. Route disposition means a delivery to follows: Subpart GÐClass Prices a retail or wholesale outlet (except a The provisions of the proposed plant), either directly or through any marketing agreements and order 1000.50 Class prices, component prices, and advanced pricing factors. distribution facility (including amending the orders contained in the 1000.51 [Reserved] disposition from a plant store, vendor, proposed rule issued by the 1000.52 Adjusted Class I differentials. or vending machine) of a fluid milk Administrator, Agricultural Marketing 1000.53 Announcement of class prices, product in consumer-type packages or Service, on January 21, 1998, and component prices, and advanced pricing dispenser units classified as Class I published in the Federal Register on factors. milk. January 31, 1998 (63 FR 4802), as 1000.54 Equivalent price. § 1000.4 Plant. modified herein, shall be and are the Subpart HÐPayments for Milk (a) Except as provided in paragraph terms and provisions of this order, 1000.70 Producer-settlement fund. amending the orders, and are set forth 1000.76 Payments by a handler operating a (b) of this section, plant means the land, in full herein. partially regulated distributing plant. buildings, facilities, and equipment constituting a single operating unit or For the reasons set forth in the 1000.77 Adjustment of accounts. 1000.78 Charges on overdue accounts. establishment at which milk or milk preamble and under the authority of products are received, processed, or Title 7, chapter X, parts 1000, 1001, Subpart IÐAdministrative Assessment and Marketing Service Deduction packaged, including a facility described 1005, 1006, 1007, 1030, 1032, 1033, in paragraph (b)(2) of this section if the 1124, 1126, 1131, and 1135 are revised 1000.85 Assessment for order facility receives the milk of more than and parts 1002, 1004, 1012, 1013, 1036, administration. 1000.86 Deduction for marketing services. one dairy farmer. 1040, 1044, 1046, 1049, 1050, 1064, (b) Plant shall not include: 1065, 1068, 1076, 1079, 1106, 1134, Subpart JÐMiscellaneous Provisions (1) A separate building without 1137, 1138 and 1139 are removed and 1000.90 Dates. stationary storage tanks that is used only reserved as follows: 1000.91 [Reserved] as a reload point for transferring bulk

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Such products Distributing plant means a plant that (4) A plant that has route disposition include, but are not limited to: Milk, fat- is approved by a duly constituted and packaged sales of fluid milk free milk, lowfat milk, light milk, regulatory agency for the handling of products to other plants of 150,000 reduced fat milk, milk drinks, eggnog Grade A milk at which fluid milk pounds or less during the month. and cultured buttermilk, including any such beverage products that are products are processed or packaged and § 1000.9 Handler. from which there is route disposition or flavored, cultured, modified with added Handler means: transfers of packaged fluid milk nonfat milk solids, sterilized, products to other plants. (a) Any person who operates a pool concentrated, or reconstituted. As used plant or a nonpool plant. in this part, the term concentrated milk § 1000.6 Supply plant. (b) Any person who receives packaged means milk that contains not less than Supply plant means a plant approved fluid milk products from a plant for 25.5 percent, and not more than 50 by a duly constituted regulatory agency resale and distribution to retail or percent, total milk solids. for the handling of Grade A milk that wholesale outlets, any person who as a (b) The term fluid milk product shall receives milk directly from dairy broker negotiates a purchase or sale of not include: farmers and transfers or diverts fluid fluid milk products or fluid cream milk products to other plants or products from or to any pool or nonpool (1) Plain or sweetened evaporated manufactures dairy products on its plant, and any person who by purchase milk/skim milk, sweetened condensed premises. or direction causes milk of producers to milk/skim milk, formulas especially be picked up at the farm and/or moved prepared for infant feeding or dietary § 1000.8 Nonpool plant. to a plant. Persons who qualify as use (meal replacement) that are Nonpool plant means any milk handlers only under this paragraph packaged in hermetically-sealed receiving, manufacturing, or processing under any Federal milk order are not containers, any product that contains by plant other than a pool plant. The subject to the payment provisions of weight less than 6.5 percent nonfat milk following categories of nonpool plants §§ ll.70, ll.71, ll.72, ll .73, solids, and whey; and are further defined as follows: ll.76, and ll.85 of that order. (2) The quantity of skim milk (a) A plant fully regulated under (c) Any cooperative association with equivalent in any modified product another Federal order means a plant respect to milk that it receives for its specified in paragraph (a) of this section that is fully subject to the pricing and account from the farm of a producer and that is greater than an equal volume of pooling provisions of another Federal delivers to pool plants or diverts to an unmodified product of the same order. ll (b) Producer-handler plant means a nonpool plants pursuant to § .13 of nature and butterfat content. the order. The operator of a pool plant plant operated by a producer-handler as § 1000.16 Fluid cream product. defined under any Federal order. receiving milk from a cooperative (c) Partially regulated distributing association may be the handler for such Fluid cream product means cream plant means a nonpool plant that is not milk if both parties notify the market (other than plastic cream or frozen a plant fully regulated under another administrator of this agreement prior to cream), including sterilized cream, or a Federal order, a producer-handler plant, the time that the milk is delivered to the mixture of cream and milk or skim milk or an exempt plant, from which there is pool plant and the plant operator containing 9 percent or more butterfat, route disposition in the marketing area purchases the milk on the basis of farm with or without the addition of other during the month. bulk tank weights and samples. ingredients. (d) Unregulated supply plant means a § 1000.14 Other source milk. supply plant that does not qualify as a § 1000.17 [Reserved] Other source milk means all skim pool supply plant and is not a plant § 1000.18 Cooperative association. fully regulated under another Federal milk and butterfat contained in or order, a producer-handler plant, or an represented by: Cooperative association means any exempt plant. (a) Receipts of fluid milk products cooperative marketing association of (e) An exempt plant means a plant and bulk fluid cream products from any producers which the Secretary described in this paragraph that is source other than producers, handlers determines is qualified under the exempt from the pricing and pooling described in § 1000.9(c) and § 1135.11, provisions of the Capper-Volstead Act, provisions of any order provided that or pool plants; has full authority in the sale of milk of the operator of the plant files reports as (b) Products (other than fluid milk its members, and is engaged in prescribed by the market administrator products, fluid cream products, and marketing milk or milk products for its of any marketing area in which the plant products produced at the plant during members. A federation of 2 or more distributes packaged fluid milk products the same month) from any source which cooperatives incorporated under the to enable determination of the handler’s are reprocessed, converted into, or laws of any state will be considered a exempt status: combined with another product in the cooperative association under any (1) A plant that is operated by a plant during the month; and Federal milk order if all member governmental agency that has no route (c) Receipts of any milk product cooperatives meet the requirements of disposition in commercial channels; (other than a fluid milk product or a this section.

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§ 1000.19 Commercial food processing including the market administrator’s shall become effective at such time as establishment. compensation; the Secretary may declare and shall Commercial food processing (3) Keep records which will clearly continue in force until suspended or establishment means any facility, other reflect the transactions provided for in terminated. than a milk plant, to which fluid milk the order and upon request by the (b) Suspension or termination. The products and fluid cream products are Secretary, surrender the records to a Secretary shall suspend or terminate disposed of, or producer milk is successor or such other person as the any or all of the provisions of the order diverted, that uses such receipts as Secretary may designate; whenever he/she finds that such ingredients in food products and has no (4) Furnish information and reports provision(s) obstructs or does not tend other disposition of fluid milk products requested by the Secretary and submit to effectuate the declared policy of the other than those received in consumer- office records for examination by the Act. The order shall terminate whenever type packages (1 gallon or less). Secretary; the provisions of the Act authorizing it Producer milk diverted to commercial (5) Announce publicly at his/her cease to be in effect. food processing establishments shall be discretion, unless otherwise directed by (c) Continuing obligations. If upon the subject to the same provisions relating the Secretary, by such means as he/she suspension or termination of any or all to diversions to plants, including, but deems appropriate, the name of any of the provisions of the order there are not limited to, §§ ll.13 and ll.52 of handler who, after the date upon which any obligations arising under the order, each Federal milk order. the handler is required to perform such the final accrual or ascertainment of act, has not: which requires acts by any handler, by Subpart C—Rules of Practice and (i) Made reports required by the order; the market administrator or by any other (ii) Made payments required by the Procedure Governing Market person, the power and duty to perform order; or Administrators such further acts shall continue (iii) Made available records and § 1000.25 Market administrator. facilities as required pursuant to notwithstanding such suspension or (a) Designation. The agency for the § 1000.27; termination. administration of the order shall be a (6) Prescribe reports required of each (d) Liquidation. (1) Upon the market administrator selected by the handler under the order. Verify such suspension or termination of any or all Secretary and subject to removal at the reports and the payments required by provisions of the order the market Secretary’s discretion. The market the order by examining records administrator, or such other liquidating administrator shall be entitled to (including such papers as copies of agent designated by the Secretary, shall, compensation determined by the income tax reports, fiscal and product if so directed by the Secretary, liquidate Secretary. accounts, correspondence, contracts, the business of the market (b) Powers. The market administrator documents or memoranda of the administrator’s office, dispose of all shall have the following powers with handler, and the records of any other property in his/her possession or respect to each order under his/her persons that are relevant to the control, including accounts receivable, administration: handler’s obligation under the order), by and execute and deliver all assignments (1) Administer the order in examining such handler’s milk handling or other instruments necessary or accordance with its terms and facilities, and by such other appropriate to effectuate any such provisions; investigation as the market disposition; and (2) If a liquidating agent is so (2) Maintain and invest funds outside administrator deems necessary for the designated, all assets and records of the of the United States Department of the purpose of ascertaining the correctness market administrator shall be Treasury for the purpose of of any report or any obligation under the transferred promptly to such liquidating administering the order; order. Reclassify skim milk and butterfat (3) Make rules and regulations to received by any handler if such agent. If, upon such liquidation, the effectuate the terms and provisions of examination and investigation discloses funds on hand exceed the amounts the order; that the original classification was required to pay outstanding obligations (4) Receive, investigate, and report incorrect; of the office of the market administrator complaints of violations to the (7) Furnish each regulated handler a and to pay necessary expenses of Secretary; and written statement of such handler’s liquidation and distribution, such (5) Recommend amendments to the accounts with the market administrator excess shall be distributed to Secretary. promptly each month. Furnish a contributing handlers and producers in (c) Duties. The market administrator corrected statement to such handler if an equitable manner. (e) Separability of provisions. If any shall perform all the duties necessary to verification discloses that the original provision of the order or its application administer the terms and provisions of statement was incorrect; and to any person or circumstances is held each order under his/her (8) Prepare and disseminate publicly invalid, the application of such administration, including, but not for the benefit of producers, handlers, provision and of the remaining limited to, the following: and consumers such statistics and other provisions of the order to other persons (1) Employ and fix the compensation information concerning operation of the or circumstances shall not be affected of persons necessary to enable him/her order and facts relevant to the thereby. to exercise the powers and perform the provisions thereof (or proposed duties of the office; provisions) as do not reveal confidential information. Subpart EÐRules of Practice and (2) Pay out of funds provided by the Procedure Governing Handlers administrative assessment, except Subpart DÐRules Governing Order expenses associated with functions for Provisions § 1000.27 Handler responsibility for which the order provides a separate records and facilities. charge, all expenses necessarily § 1000.26 Continuity and separability of Each handler shall maintain and incurred in the maintenance and provisions. retain records of its operations and functioning of the office and in the (a) Effective time. The provisions of make such records and its facilities performance of the duties of the office, the order or any amendment to the order available to the market administrator. If

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The market which such handler claims is due under adequate records are not available shall administrator shall give further written the terms of the order shall terminate 2 be considered as used in the highest- notification to the handler promptly years after the end of the month during priced class. upon the termination of the litigation or which the skim milk and butterfat (a) Records to be maintained. (1) Each when the records are no longer involved in the claim were received; or handler shall maintain records of its necessary in connection therewith. (2) To refund any payment made by operations (including, but not limited a handler (including a deduction or to, records of purchases, sales, § 1000.28 Termination of obligations. offset by the market administrator) shall processing, packaging, and disposition) (a) Except as provided in paragraphs terminate 2 years after the end of the as are necessary to verify whether such (b) and (c) of this section, the obligation month during which payment was made handler has any obligation under the of any handler to pay money required to by the handler. order and if so, the amount of such be paid under the terms of the order obligation. Such records shall be such as shall terminate 2 years after the last day Subpart FÐClassification of Milk to establish for each plant or other of the month during which the market receiving point for each month: administrator receives the handler’s § 1000.40 Classes of Utilization. (i) The quantities of skim milk and report of receipts and utilization on Except as provided in § 1000.42, all butterfat contained in, or represented which such obligation is based, unless skim milk and butterfat required to be by, products received in any form, within such 2-year period, the market reported pursuant to § lll.30 of each including inventories on hand at the administrator notifies the handler in Federal milk order shall be classified as beginning of the month, according to writing that such money is due and follows: form, time, and source of each receipt; payable. Service of such written notice (a) Class I milk shall be all skim milk (ii) The utilization of all skim milk shall be complete upon mailing to the and butterfat: and butterfat showing the respective handler’s last known address and it (1) Disposed of in the form of fluid quantities of such skim milk and shall contain, but need not be limited to, milk products, except as otherwise butterfat in each form disposed of or on the following information: provided in this section; hand at the end of the month; and (1) The amount of the obligation; (2) In packaged fluid milk products in (iii) Payments to producers, dairy (2) The month(s) on which such inventory at the end of the month; and farmers, and cooperative associations, obligation is based; and (3) In shrinkage assigned pursuant to including the amount and nature of any (3) If the obligation is payable to one § 1000.43(b). deductions and the disbursement of or more producers or to a cooperative (b) Class II milk shall be all skim milk money so deducted. association, the name of such and butterfat: (2) Each handler shall keep such other producer(s) or such cooperative (1) In fluid milk products in specific records as the market association, or if the obligation is containers larger than 1 gallon and fluid administrator deems necessary to verify payable to the market administrator, the cream products disposed of or diverted or establish such handler’s obligation account for which it is to be paid. to a commercial food processing under the order. (b) If a handler fails or refuses, with establishment if the market (b) Availability of records and respect to any obligation under the administrator is permitted to audit the facilities. Each handler shall make order, to make available to the market records of the commercial food available all records pertaining to such administrator all records required by the processing establishment for the handler’s operations and all facilities order to be made available, the market purpose of verification. Otherwise, such the market administrator finds are administrator may notify the handler in uses shall be Class I; necessary to verify the information writing, within the 2-year period (2) Used to produce: required to be reported by the order provided for in paragraph (a) of this (i) Cottage cheese, lowfat cottage and/or to ascertain such handler’s section, of such failure or refusal. If the cheese, dry curd cottage cheese, ricotta reporting, monetary, or other obligation market administrator so notifies a cheese, pot cheese, Creole cheese, and under the order. Each handler shall handler, the said 2-year period with any similar soft, high-moisture cheese permit the market administrator to respect to such obligation shall not resembling cottage cheese in form or weigh, sample, and test milk and milk begin to run until the first day of the use; products and observe plant operations month following the month during (ii) Milkshake and ice milk mixes (or and equipment and make available to which all such records pertaining to bases), frozen desserts, and frozen the market administrator such facilities such obligation are made available to dessert mixes distributed in half-gallon as are necessary to carry out his/her the market administrator. containers or larger and intended to be duties. (c) Notwithstanding the provisions of used in soft or semi-solid form; (c) Retention of records. All records paragraphs (a) and (b) of this section, a (iii) Aerated cream, frozen cream, sour required under the order to be made handler’s obligation under the order to cream, sour half-and-half, sour cream available to the market administrator pay money shall not be terminated with mixtures containing nonmilk items, shall be retained by the handler for a respect to any transaction involving yogurt, and any other semi-solid period of 3 years to begin at the end of fraud or willful concealment of a fact, product resembling a Class II product; the month to which such records material to the obligation, on the part of (iv) Custards, puddings, pancake pertain. If, within such 3-year period, the handler against whom the obligation mixes, coatings, batter, and similar the market administrator notifies the is sought to be imposed. products; handler in writing that the retention of (d) Unless the handler files a petition (v) Buttermilk biscuit mixes and other such records, or of specified records, is pursuant to section 8c(15)(A) of the Act buttermilk for baking that contain food necessary in connection with a and the applicable rules and regulations starch in excess of 2% of the total

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00149 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.175 pfrm08 PsN: 02APP2 16174 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules solids, provided that the product is transferred or diverted in the form of a is available for such classification labeled to indicate the food starch fluid milk product or transferred in the pursuant to the allocation provisions of content; form of a bulk fluid cream product from the other order; (vi) Formulas especially prepared for a pool plant or a handler described in (ii) If diverted, the diverting handler infant feeding or dietary use (meal § 1135.11 to another pool plant shall be must request a classification other than replacement) that are packaged in classified as Class I milk unless the Class I. If the plant receiving the hermetically-sealed containers; handlers both request the same diverted milk does not have sufficient (vii) Candy, soup, bakery products classification in another class. In either utilization available for the requested and other prepared foods which are case, the classification shall be subject classification and some of the diverted processed for general distribution to the to the following conditions: milk is consequently assigned to Class public, and intermediate products, (1) The skim milk and butterfat I use, the diverting handler shall be including sweetened condensed milk, to classified in each class shall be limited given the option of designating the be used in processing such prepared to the amount of skim milk and entire load of diverted milk as producer food products; butterfat, respectively, remaining in milk at the plant physically receiving (viii) A fluid cream product or any such class at the receiving plant after the milk. Alternatively, if the diverting product containing artificial fat or fat the computations pursuant to handler so chooses, it may designate substitutes that resembles a fluid cream § 1000.44(a)(9) and the corresponding which dairy farmers whose milk was product, except as otherwise provided step of § 1000.44(b); diverted during the month will be in paragraph (c) of this section; and (2) If the transferring plant received designated as producers under the order (ix) Any product not otherwise during the month other source milk to physically receiving the milk. If the specified in this section; and be allocated pursuant to § 1000.44(a)(3) diverting handler declines to accept (3) In shrinkage assigned pursuant to or the corresponding step of either of these options, the market § 1000.43(b). § 1000.44(b), the skim milk or butterfat administrator will prorate the portion of (c) Class III milk shall be all skim milk so transferred shall be classified so as to diverted milk in excess of Class II, III, and butterfat: allocate the least possible Class I and IV use among all the dairy farmers (1) Used to produce: utilization to such other source milk; whose milk was received from the (i) Cream cheese and other spreadable and diverting handler on the last day of the cheeses, and hard cheese of types that (3) If the transferring handler received month, then the second-to-last day, and may be shredded, grated, or crumbled; during the month other source milk to continuing in that fashion until the (ii) Plastic cream, anhydrous milkfat, be allocated pursuant to § 1000.44(a)(8) excess diverted milk has been assigned and butteroil; and or (9) or the corresponding steps of as producer milk under the receiving (iii) Evaporated or sweetened § 1000.44(b), the skim milk or butterfat order; and condensed milk in a consumer-type so transferred, up to the total of the skim (iii) If information concerning the package; and milk and butterfat, respectively, in such classes to which such transfers or (2) In shrinkage assigned pursuant to receipts of other source milk, shall not diversions were allocated under the § 1000.43(b). be classified as Class I milk to a greater other order is not available to the market (d) Class IV milk shall be all skim extent than would be the case if the administrator for the purpose of milk and butterfat: other source milk had been received at establishing classification under this (1) Used to produce: the receiving plant. paragraph, classification shall be Class I, (i) Butter; and (b) Transfers and diversions to a plant subject to adjustment when such (ii) Any milk product in dried form; regulated under another Federal order. information is available. (2) In inventory at the end of the Skim milk or butterfat transferred or (c) Transfers and diversions to month of fluid milk products and fluid diverted in the form of a fluid milk producer-handlers and to exempt cream products in bulk form; product or transferred in the form of a plants. Skim milk or butterfat that is (3) In the skim milk equivalent of bulk fluid cream product from a pool transferred or diverted from a pool plant nonfat milk solids used to modify a plant to a plant regulated under another to a producer-handler under any Federal fluid milk product that has not been Federal order shall be classified in the order or to an exempt plant shall be accounted for in Class I; and following manner. Such classification classified: (4) In shrinkage assigned pursuant to shall apply only to the skim milk or (1) As Class I milk if transferred or § 1000.43(b). butterfat that is in excess of any receipts diverted to a producer-handler; (e) Other uses. Other uses include at the pool plant from a plant regulated (2) As Class I milk if transferred to an skim milk and butterfat used in any under another Federal order of skim exempt plant in the form of a packaged product described in this section that is milk and butterfat, respectively, in fluid fluid milk product; and dumped, used for animal feed, milk products and bulk fluid cream (3) In accordance with the utilization destroyed, or lost by a handler in a products, respectively, that are in the assigned to it by the market vehicular accident, flood, fire, or similar same category as described in paragraph administrator if transferred or diverted occurrence beyond the handler’s (b)(1) or (2) of this section: in the form of a bulk fluid milk product control. Such uses of skim milk and (1) As Class I milk, if transferred as or transferred in the form of a bulk fluid butterfat shall be assigned to the lowest packaged fluid milk products; cream product to an exempt plant. For priced class for the month to the extent (2) If transferred or diverted in bulk this purpose, the receiving handler’s that the quantities destroyed or lost can form, classification shall be in the utilization of skim milk and butterfat in be verified from records satisfactory to classes to which allocated under the each class, in series beginning with the market administrator. other order: Class IV, shall be assigned to the extent § 1000.41 [Reserved] (i) If the operators of both plants so possible to its receipts of skim milk and request in their reports of receipts and butterfat, in bulk fluid cream products, § 1000.42 Classification of transfers and utilization filed with their respective and bulk fluid milk products, diversions. market administrators, transfers in bulk respectively, pro rata to each source. (a) Transfers and diversions to pool form shall be classified as other than (d) Transfers and diversions to other plants. Skim milk or butterfat Class I to the extent that such utilization nonpool plants. Skim milk or butterfat

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00150 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.176 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16175 transferred or diverted in the following nonpool plant from pool plants and (a) Each month the market forms from a pool plant to a nonpool plants regulated under other Federal administrator shall correct for plant that is not a plant regulated under orders; mathematical and other obvious errors another order, an exempt plant, or a (iv) Transfers of bulk fluid milk all reports filed pursuant to § lll.30 producer-handler plant shall be products from the nonpool plant to a of each Federal milk order and shall classified: plant regulated under any Federal order, compute separately for each pool plant, (1) As Class I milk, if transferred in to the extent that such transfers to the for each handler described in § 1000.9(c) the form of a packaged fluid milk regulated plant exceed receipts of fluid and § 1135.11, the pounds of skim milk product; and milk products from such plant and are and butterfat, respectively, in each class (2) As Class I milk, if transferred or allocated to Class I at the receiving in accordance with §§ 1000.40 and diverted in the form of a bulk fluid milk plant, shall be assigned to the extent 1000.42, and paragraph (b) of this product or transferred in the form of a possible in the following sequence: section. bulk fluid cream product, unless the (A) Pro rata to receipts of fluid milk (b) Shrinkage and overage. For following conditions apply: products at such nonpool plant from purposes of classifying all milk reported lll (i) If the conditions described in pool plants; and by a handler pursuant to § .30 of paragraphs (d)(2)(i)(A) and (B) of this (B) Pro rata to any remaining each Federal milk order the market section are met, transfers or diversions unassigned receipts of fluid milk administrator shall determine the in bulk form shall be classified on the products at such nonpool plant from shrinkage or overage of skim milk and basis of the assignment of the nonpool plants regulated under other Federal butterfat for each pool plant and each plant’s utilization, excluding the milk orders; handler described in § 1000.9(c) and equivalent of both nonfat milk solids (v) Any remaining unassigned Class I § 1135.11 by subtracting total utilization and concentrated milk used in the plant disposition from the nonpool plant shall from total receipts. Any positive during the month, to its receipts as set be assigned to the extent possible in the difference shall be shrinkage, and any forth in paragraphs (d)(2)(ii) through following sequence: negative difference shall be overage. (viii) of this section: (A) To such nonpool plant’s receipts (1) Shrinkage incurred by pool plants (A) The transferring handler or from dairy farmers who the market qualified pursuant to § ——.7 of any diverting handler claims such administrator determines constitute Federal milk order shall be assigned to classification in such handler’s report of regular sources of Grade A milk for such the lowest-priced class to the extent that receipts and utilization filed pursuant to nonpool plant; and such shrinkage does not exceed: § lll.30 of each Federal milk order (i) Two percent of the total quantity (B) To such nonpool plant’s receipts for the month within which such of milk physically received at the plant of Grade A milk from plants not fully transaction occurred; and directly from producers’ farms on the (B) The nonpool plant operator regulated under any Federal order basis of farm weights and tests; maintains books and records showing which the market administrator (ii) Plus 1.5 percent of the quantity of the utilization of all skim milk and determines constitute regular sources of bulk milk physically received on a basis butterfat received at such plant which Grade A milk for such nonpool plant; other than farm weights and tests, are made available for verification (vi) Any remaining unassigned excluding concentrated milk received purposes if requested by the market receipts of bulk fluid milk products at by agreement for other than Class I use; administrator; the nonpool plant from pool plants and (iii) Plus .5 percent of the quantity of (ii) Route disposition in the marketing plants regulated under other Federal milk diverted by the plant operator to area of each Federal milk order from the orders shall be assigned, pro rata among another plant on a basis other than farm nonpool plant and transfers of packaged such plants, to the extent possible first weights and tests; and fluid milk products from such nonpool to any remaining Class I utilization and (iv) Minus 1.5 percent of the quantity plant to plants fully regulated then to all other utilization, in sequence of bulk milk transferred to other plants, thereunder shall be assigned to the beginning with Class IV at such nonpool excluding concentrated milk transferred extent possible in the following plant; by agreement for other than Class I use. sequence: (vii) Receipts of bulk fluid cream (2) A handler described in § 1000.9(c) (A) Pro rata to receipts of packaged products at the nonpool plant from pool or § 1135.11 that delivers milk to plants fluid milk products at such nonpool plants and plants regulated under other on a basis other than farm weights and plant from pool plants; Federal orders shall be assigned, pro tests shall receive a lowest-priced-class (B) Pro rata to any remaining rata among such plants, to the extent shrinkage allowance of .5 percent of the unassigned receipts of packaged fluid possible to any remaining utilization, in total quantity of such milk picked up at milk products at such nonpool plant sequence beginning with Class IV at producers’ farms. from plants regulated under other such nonpool plant; and (3) Shrinkage in excess of the amounts Federal orders; (viii) In determining the nonpool provided in paragraphs (b)(1) and (2) of (C) Pro rata to receipts of bulk fluid plant’s utilization for purposes of this this section shall be assigned to existing milk products at such nonpool plant paragraph, any fluid milk products and utilization in series starting with Class from pool plants; and bulk fluid cream products transferred I. The shrinkage assigned pursuant to (D) Pro rata to any remaining from such nonpool plant to a plant not this paragraph shall be added to the unassigned receipts of bulk fluid milk fully regulated under any Federal order handler’s reported utilization and the products at such nonpool plant from shall be classified on the basis of the result shall be known as the gross plants regulated under other Federal second plant’s utilization using the utilization in each class. orders; same assignment priorities at the second (c) If any of the water contained in the (iii) Any remaining Class I disposition plant that are set forth in this paragraph. milk from which a product is made is of packaged fluid milk products from removed before the product is utilized the nonpool plant shall be assigned to § 1000.43 General classification rules. or disposed of by the handler, the the extent possible pro rata to any In determining the classification of pounds of skim milk in such product remaining unassigned receipts of producer milk pursuant to § 1000.44, that are to be considered under this part packaged fluid milk products at such the following rules shall apply: as used or disposed of by the handler

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00151 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.178 pfrm08 PsN: 02APP2 16176 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules shall be an amount equivalent to the milk received in the form of an Class I, in sequence beginning with nonfat milk solids contained in such unconcentrated fluid milk product or a Class IV, the pounds of skim milk in product plus all of the water originally fluid cream product) that is used to receipts of bulk fluid milk products associated with such solids. produce, or added to, any product in from a handler regulated under another (d) Skim milk and butterfat contained Class II (excluding the quantity of such Federal order that are in excess of bulk in receipts of bulk concentrated fluid skim milk that was classified as Class IV fluid milk products transferred or milk and nonfluid milk products that milk pursuant to § 1000.40(d)(3)). To the diverted to such handler, if other than are reconstituted for fluid use shall be extent that the receipts described in this Class I classification is requested, but assigned to Class I use, up to the paragraph exceed the gross Class II not in excess of the pounds of skim milk reconstituted portion of labeled utilization of skim milk, the excess remaining in these classes combined. reconstituted fluid milk products, on a receipts shall be subtracted pursuant to (7) Subtract from the pounds of skim pro rata basis (except for any Class I use paragraph (a)(3)(vi) of this section. milk remaining in each class, in series of specific concentrated receipts that is (3) Subtract from the pounds of skim beginning with Class IV, the pounds of established by the handler) prior to any milk remaining in each class, in series skim milk in fluid milk products and assignments under § 1000.44. Any beginning with Class IV, the pounds of bulk fluid cream products in inventory remaining skim milk and butterfat in skim milk in: at the beginning of the month that were concentrated receipts shall be assigned (i) Receipts of bulk concentrated fluid not previously subtracted in this to uses under § 1000.44 on a pro rata milk products and other source milk section. basis, unless a specific use of such (except other source milk received in (8) Subtract from the pounds of skim receipts is established by the handler. the form of an unconcentrated fluid milk remaining in each class at the plant milk product); § 1000.44 Classification of producer milk. receipts of skim milk in fluid milk (ii) Receipts of fluid milk products products from an unregulated supply For each month the market and bulk fluid cream products for which plant that were not previously administrator shall determine for each appropriate health approval is not subtracted in this section and that were handler described in § 1000.9(a) for each established and from unidentified not offset by transfers or diversions of pool plant of the handler separately and sources; fluid milk products to the unregulated for each handler described in § 1000.9(c) (iii) Receipts of fluid milk products supply plant from which fluid milk and § 1135.11 the classification of and bulk fluid cream products from an products to be allocated at this step producer milk by allocating the exempt plant; were received. Such subtraction shall be handler’s receipts of skim milk and (iv) Fluid milk products and bulk pro rata to the pounds of skim milk in butterfat to the handler’s gross fluid cream products received from a Class I and in Classes II, III, and IV utilization of such receipts pursuant to producer-handler as defined under this combined, with the quantity prorated to § 1000.43(b)(3) as follows: order or any other Federal order; Classes II, III, and IV combined being (a) Skim milk shall be allocated in the (v) Receipts of fluid milk products subtracted in sequence beginning with following manner: from dairy farmers for other markets; Class IV. (1) Subtract from the pounds of skim and milk in Class I the pounds of skim milk (vi) The excess receipts specified in (9) Subtract in the manner specified in: paragraphs (a)(1)(iv) and (a)(2) of this below from the pounds of skim milk (i) Receipts of packaged fluid milk section. remaining in each class the pounds of products from an unregulated supply (4) Subtract from the pounds of skim skim milk in receipts of bulk fluid milk plant to the extent that an equivalent milk remaining in all classes other than products from a handler regulated under amount of skim milk disposed of to Class I, in sequence beginning with another Federal order that are in excess such plant by handlers fully regulated Class IV, the receipts of fluid milk of bulk fluid milk products transferred under any Federal order is classified products from an unregulated supply or diverted to such handler that were and priced as Class I milk and is not plant that were not previously not subtracted in paragraph (a)(6) of this used as an offset for any other payment subtracted in this section for which the section. Such subtraction shall be pro obligation under any order; handler requests classification other rata to the pounds of skim milk in Class (ii) Packaged fluid milk products in than Class I, but not in excess of the I and in Classes II, III, and IV combined, inventory at the beginning of the month. pounds of skim milk remaining in these with the quantity prorated to Classes II, This paragraph shall apply only if the other classes combined. III, and IV combined being subtracted in pool plant was subject to the provisions (5) Subtract from the pounds of skim sequence beginning with Class IV, with of this paragraph or comparable milk remaining in all classes other than respect to whichever of the following provisions of another Federal order in Class I, in sequence beginning with quantities represents the lower the immediately preceding month; Class IV, receipts of fluid milk products proportion of Class I milk: (iii) Fluid milk products received in from an unregulated supply plant that (i) The estimated utilization of skim packaged form from plants regulated were not subtracted in previous milk of all handlers in each class as under other Federal orders; and paragraphs, and which are in excess of announced for the month pursuant to (iv) To the extent that the receipts the pounds of skim milk determined § 1000.45(a); or described in paragraphs (a)(1)(i) through pursuant to paragraphs (a)(5)(i) and (ii) (ii) The total pounds of skim milk (iii) of this section exceed the gross of this section; remaining in each class at this Class I utilization of skim milk, the (i) Multiply by 1.25 the pounds of allocation step. excess receipts shall be subtracted skim milk remaining in Class I at this (10) Subtract from the pounds of skim pursuant to paragraph (a)(3)(vi) of this allocation step; and milk remaining in each class the pounds section. (ii) Subtract from the above result the of skim milk in receipts of fluid milk (2) Subtract from the pounds of skim pounds of skim milk in receipts of products and bulk fluid cream products milk in Class II the pounds of skim milk producer milk and fluid milk products from another pool plant and from a in the receipts of skim milk in bulk from other pool plants. handler described in § 1135.11 concentrated fluid milk products and in (6) Subtract from the pounds of skim according to the classification of such other source milk (except other source milk remaining in all classes other than products pursuant to § 1000.42(a).

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(11) If the total pounds of skim milk utilization of producer milk by the (g) Class II butterfat price. The Class remaining in all classes exceed the handler. II butterfat price per pound shall be the pounds of skim milk in producer milk, butterfat price plus $.007. subtract such excess from the pounds of Subpart GÐClass Prices (h) Class III price. The Class III price skim milk remaining in each class in § 1000.50 Class prices, component prices, per hundredweight, rounded to the series beginning with Class IV. and advanced pricing factors. nearest cent, shall be .965 times the (b) Butterfat shall be allocated in Class prices per hundredweight of Class III skim milk price plus 3.5 times accordance with the procedure outlined milk containing 3.5 percent butterfat, the butterfat price. for skim milk in paragraph (a) of this component prices, and advanced (i) Class III skim milk price. The Class section. pricing factors shall be as follows. The III skim milk price per hundredweight, (c) The quantity of producer milk in rounded to the nearest cent, shall be the each class shall be the combined prices and pricing factors described in paragraphs (a), (b), (c), (e), (f), and (q) of protein price per pound times 3.1 plus pounds of skim milk and butterfat the other solids price per pound times remaining in each class after the this section shall be based on a weighted average of the most recent 2 5.9. computations pursuant to paragraphs (a) (j) Class IV price. The Class IV price and (b) of this section. weekly prices announced by the National Agricultural Statistical Service per hundredweight, rounded to the § 1000.45 Market administrator's reports (NASS) before the 24th day of the nearest cent, shall be .965 times the and announcements concerning month. These prices shall be announced Class IV skim milk price plus 3.5 times classification. on or before the 23rd day of the month the butterfat price. (a) Whenever required for the purpose and shall apply to milk received during (k) Class IV skim milk price. The Class of allocating receipts from plants the following month. The prices IV skim milk price per hundredweight, regulated under other Federal orders described in paragraphs (g)–(p) of this rounded to the nearest cent, shall be the pursuant to § 1000.44(a)(9) and the section shall be based on a weighted nonfat solids price per pound times 9. corresponding step of § 1000.44(b), the average for the preceding month of (l) Butterfat price. The butterfat price market administrator shall estimate and weekly prices announced by NASS on per pound, rounded to the nearest one- publicly announce the utilization (to the or before the 5th day of the month and hundredth cent, shall be the U.S. nearest whole percentage) in Class I shall apply to milk received during the average NASS AA Butter survey price during the month of skim milk and preceding month. The price described reported by the Department for the butterfat, respectively, in producer milk in paragraph (d) of this section shall be month less 11.4 cents, with the result of all handlers. The estimate shall be derived from the Class II skim milk divided by 0.82. based upon the most current available price announced on or before the 23rd (m) Nonfat solids price. The nonfat data and shall be final for such purpose. day of the month preceding the month solids price per pound, rounded to the (b) The market administrator shall to which it applies and the butterfat nearest one-hundredth cent, shall be the report to the market administrators of price announced on or before the 5th U.S. average NASS nonfat dry milk other Federal orders as soon as possible day of the month following the month survey price reported by the Department after the handlers’ reports of receipts to which it applies. for the month less 13.7 cents, with the and utilization are received, the class to (a) Class I price. The Class I price per result divided by 1.02. which receipts from plants regulated hundredweight, rounded to the nearest (n) Protein price. The protein price under other Federal orders are allocated cent, shall be .965 times the Class I skim per pound, rounded to the nearest one- pursuant to §§ 1000.43(d) and 1000.44 milk price plus 3.5 times the Class I hundredth cent, shall be computed as (including any reclassification of butterfat price. follows: inventories of bulk concentrated fluid (b) Class I skim milk price. The Class (1) Compute a weighted average of the milk products), and thereafter any I skim milk price per hundredweight amounts described in paragraphs change in allocation required to correct shall be the adjusted Class I differential (n)(1)(i) and (ii) of this section: errors disclosed on the verification of specified in § 1000.52 plus the higher of (i) The U.S. average NASS survey such report. the advanced pricing factors computed price for 40-lb. block cheese reported by (c) The market administrator shall in paragraph (q)(1) or (2) of this section. the Department for the month; and furnish each handler operating a pool (c) Class I butterfat price. The Class I (ii) The U.S. average NASS survey plant and each handler described in butterfat price per pound shall be the price for 500-pound barrel cheddar § 1135.11 who has shipped fluid milk adjusted Class I differential specified in cheese (39 percent moisture) reported products or bulk fluid cream products to § 1000.52 divided by 100, plus the by the Department for the month plus 3 a plant fully regulated under another advanced butterfat price computed in cents; Federal order the class to which the paragraph (q)(3) of this section. (2) Subtract 17.02 cents from the price shipments were allocated by the market (d) The Class II price per computed pursuant to paragraph (n)(1) administrator of the other Federal order hundredweight, rounded to the nearest of this section and multiply the result on the basis of the report by the cent, shall be .965 times the Class II by 1.405; receiving handler and, as necessary, any skim milk price plus 3.5 times the Class (3) Add to the amount computed changes in the allocation arising from II butterfat price. pursuant to paragraph (n)(2) of this the verification of such report. (e) Class II skim milk price. The Class section an amount computed as follows: (d) The market administrator shall II skim milk price per hundredweight (i) Subtract 17.02 cents from the price report to each cooperative association shall be the advanced Class IV skim computed pursuant to paragraph (n)(1) which so requests, the percentage of milk price computed in paragraph (q)(2) of this section and multiply the result producer milk delivered by members of of this section plus 70 cents. by 1.582; the association that was used in each (f) Class II nonfat solids price. The (ii) Subtract the butterfat price class by each handler receiving the Class II nonfat solids price per pound, computed pursuant to paragraph (l) of milk. For the purpose of this report, the rounded to the nearest one-hundredth this section from the amount computed milk so received shall be prorated to cent, shall be the Class II skim milk pursuant to paragraph (n)(3)(i) of this each class in accordance with the total price divided by 9. section; and

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(iii) Multiply the amount computed Class I butterfat price for the following the nearest cent, shall be computed as pursuant to paragraph (n)(3)(ii) of this month, the following pricing factors follows: section by 1.28. shall be computed using the weighted (i) Following the procedure set forth (o) Other solids price. The other solids average of the 2 most recent NASS U.S. in paragraph (m) of this section, but price per pound, rounded to the nearest average weekly survey prices using the weighted average of the 2 most one-hundredth cent, shall be the U.S. announced before the 24th day of the recent NASS U.S. average weekly average NASS dry whey survey price month: reported by the Department for the survey prices announced before the 24th (1) An advanced Class III skim milk day of the month, compute a nonfat month minus 13.7 cents, with the result price per hundredweight, rounded to solids price; and divided by 0.968. the nearest cent, shall be computed as (p) Somatic cell adjustment. The follows: (ii) Multiply the nonfat solids price somatic cell adjustment per (i) Following the procedure set forth computed in paragraph (q)(2)(i) of this hundredweight of milk shall be in paragraphs (n) and (o) of this section, section by 9. determined as follows: but using the weighted average of the (1) Multiply .0005 by the weighted (3) An advanced butterfat price per NASS U.S. average weekly survey prices average price computed pursuant to pound, rounded to the nearest one- announced before the 24th day of the paragraph (n)(1) of this section and hundredth cent, shall be calculated by month, compute a protein price and round to the 5th decimal place; computing a weighted average of the 2 (2) Subtract the somatic cell count of another solids price; most recent U.S. average NASS AA the milk (reported in thousands) from (ii) Multiply the protein price Butter survey prices announced before 350; and computed in paragraph (q)(1)(i) of this the 24th day of the month, subtracting (3) Multiply the amount computed in section by 3.1; 11.4 cents from this average, and paragraph (p)(1) of this section by the (iii) Multiply the other solids price dividing the result by 0.82. amount computed in paragraph (p)(2) of per pound computed in paragraph this section and round to the nearest full (q)(1)(i) of this section by 5.9; and § 1000.51 [Reserved] (iv) Add the amounts computed in cent. § 1000.52 Adjusted Class I differentials. (q) Advanced pricing factors. For the paragraphs (q)(1)(ii) and (iii) of this purpose of computing the Class I skim section. The Class I differential adjusted for milk price, the Class II skim milk price, (2) An advanced Class IV skim milk location to be used in § 1000.50(b) and the Class II nonfat solids price, and the price per hundredweight, rounded to (c) shall be as follows:

Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

AUTAUGA ...... AL 01001 2.90 BALDWIN ...... AL 01003 3.30 BARBOUR ...... AL 01005 3.20 BIBB ...... AL 01007 2.70 BLOUNT ...... AL 01009 2.55 BULLOCK ...... AL 01011 3.10 BUTLER ...... AL 01013 3.20 CALHOUN ...... AL 01015 2.70 CHAMBERS ...... AL 01017 2.90 CHEROKEE ...... AL 01019 2.55 CHILTON ...... AL 01021 2.70 CHOCTAW ...... AL 01023 3.10 CLARKE ...... AL 01025 3.10 CLAY ...... AL 01027 2.80 CLEBURNE ...... AL 01029 2.70 COFFEE ...... AL 01031 3.20 COLBERT ...... AL 01033 2.25 CONECUH ...... AL 01035 3.20 COOSA ...... AL 01037 2.80 COVINGTON ...... AL 01039 3.20 CRENSHAW ...... AL 01041 3.20 CULLMAN ...... AL 01043 2.55 DALE ...... AL 01045 3.20 DALLAS ...... AL 01047 2.90 DE KALB ...... AL 01049 2.25 ELMORE ...... AL 01051 2.90 ESCAMBIA ...... AL 01053 3.30 ETOWAH ...... AL 01055 2.55 FAYETTE ...... AL 01057 2.70 FRANKLIN ...... AL 01059 2.25 GENEVA ...... AL 01061 3.30 GREENE ...... AL 01063 2.70 HALE ...... AL 01065 2.70 HENRY ...... AL 01067 3.20 HOUSTON ...... AL 01069 3.30 JACKSON ...... AL 01071 2.25 JEFFERSON ...... AL 01073 2.70 LAMAR ...... AL 01075 2.70 LAUDERDALE ...... AL 01077 2.20

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

LAWRENCE ...... AL 01079 2.25 LEE ...... AL 01081 2.90 LIMESTONE ...... AL 01083 2.25 LOWNDES ...... AL 01085 3.10 MACON ...... AL 01087 3.10 MADISON ...... AL 01089 2.25 MARENGO ...... AL 01091 3.10 MARION ...... AL 01093 2.55 MARSHALL ...... AL 01095 2.25 MOBILE ...... AL 01097 3.30 MONROE ...... AL 01099 3.20 MONTGOMERY ...... AL 01101 3.10 MORGAN ...... AL 01103 2.25 PERRY ...... AL 01105 2.70 PICKENS ...... AL 01107 2.70 PIKE ...... AL 01109 3.20 RANDOLPH ...... AL 01111 2.80 RUSSELL ...... AL 01113 3.10 ST. CLAIR ...... AL 01115 2.70 SHELBY ...... AL 01117 2.70 SUMTER ...... AL 01119 2.70 TALLADEGA ...... AL 01121 2.70 TALLAPOOSA ...... AL 01123 2.90 TUSCALOOSA ...... AL 01125 2.70 WALKER ...... AL 01127 2.70 WASHINGTON ...... AL 01129 3.10 WILCOX ...... AL 01131 3.10 WINSTON ...... AL 01133 2.55 APACHE ...... AZ 04001 1.90 COCHISE ...... AZ 04003 1.60 COCONINO ...... AZ 04005 1.90 GILA ...... AZ 04007 1.60 GRAHAM ...... AZ 04009 1.60 GREENLEE ...... AZ 04011 1.60 LA PAZ ...... AZ 04012 1.60 MARICOPA ...... AZ 04013 1.55 MOHAVE ...... AZ 04015 1.90 NAVAJO ...... AZ 04017 1.90 PIMA ...... AZ 04019 1.60 PINAL ...... AZ 04021 1.55 SANTA CRUZ ...... AZ 04023 1.60 YAVAPAI ...... AZ 04025 1.60 YUMA ...... AZ 04027 1.60 ARKANSAS ...... AR 05001 2.65 ASHLEY ...... AR 05003 2.75 BAXTER ...... AR 05005 1.90 BENTON ...... AR 05007 1.70 BOONE ...... AR 05009 1.70 BRADLEY ...... AR 05011 2.65 CALHOUN ...... AR 05013 2.65 CARROLL ...... AR 05015 1.70 CHICOT ...... AR 05017 2.75 CLARK ...... AR 05019 2.35 CLAY ...... AR 05021 2.35 CLEBURNE ...... AR 05023 2.10 CLEVELAND ...... AR 05025 2.65 COLUMBIA ...... AR 05027 2.35 CONWAY ...... AR 05029 2.10 CRAIGHEAD ...... AR 05031 2.65 CRAWFORD ...... AR 05033 1.90 CRITTENDEN ...... AR 05035 2.65 CROSS ...... AR 05037 2.65 DALLAS ...... AR 05039 2.35 DESHA ...... AR 05041 2.75 DREW ...... AR 05043 2.75 FAULKNER ...... AR 05045 2.35 FRANKLIN ...... AR 05047 1.90 FULTON ...... AR 05049 2.10 GARLAND ...... AR 05051 2.10 GRANT ...... AR 05053 2.35 GREENE ...... AR 05055 2.35 HEMPSTEAD ...... AR 05057 2.10

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

HOT SPRING ...... AR 05059 2.35 HOWARD ...... AR 05061 2.10 INDEPENDENCE ...... AR 05063 2.35 IZARD ...... AR 05065 2.10 JACKSON ...... AR 05067 2.35 JEFFERSON ...... AR 05069 2.65 JOHNSON ...... AR 05071 1.90 LAFAYETTE ...... AR 05073 2.35 LAWRENCE ...... AR 05075 2.35 LEE ...... AR 05077 2.65 LINCOLN ...... AR 05079 2.65 LITTLE RIVER ...... AR 05081 2.10 LOGAN ...... AR 05083 1.90 LONOKE ...... AR 05085 2.35 MADISON ...... AR 05087 1.70 MARION ...... AR 05089 1.90 MILLER ...... AR 05091 2.10 MISSISSIPPI ...... AR 05093 2.65 MONROE ...... AR 05095 2.65 MONTGOMERY ...... AR 05097 2.10 NEVADA ...... AR 05099 2.35 NEWTON ...... AR 05101 1.90 OUACHITA ...... AR 05103 2.35 PERRY ...... AR 05105 2.10 PHILLIPS ...... AR 05107 2.65 PIKE ...... AR 05109 2.10 POINSETT ...... AR 05111 2.65 POLK ...... AR 05113 2.10 POPE ...... AR 05115 1.90 PRAIRIE ...... AR 05117 2.65 PULASKI ...... AR 05119 2.35 RANDOLPH ...... AR 05121 2.10 ST. FRANCIS ...... AR 05123 2.65 SALINE ...... AR 05125 2.35 SCOTT ...... AR 05127 1.90 SEARCY ...... AR 05129 1.90 SEBASTIAN ...... AR 05131 1.90 SEVIER ...... AR 05133 2.10 SHARP ...... AR 05135 2.10 STONE ...... AR 05137 2.10 UNION ...... AR 05139 2.65 VAN BUREN ...... AR 05141 2.10 WASHINGTON ...... AR 05143 1.70 WHITE ...... AR 05145 2.35 WOODRUFF ...... AR 05147 2.65 YELL ...... AR 05149 2.10 ALAMEDA ...... CA 06001 1.75 ALPINE ...... CA 06003 1.20 AMADOR ...... CA 06005 1.20 BUTTE ...... CA 06007 1.65 CALAVERAS ...... CA 06009 1.20 COLUSA ...... CA 06011 1.80 CONTRA COSTA ...... CA 06013 1.75 DEL NORTE ...... CA 06015 1.80 EL DORADO ...... CA 06017 1.20 FRESNO ...... CA 06019 1.40 GLENN ...... CA 06021 1.80 HUMBOLDT ...... CA 06023 1.80 IMPERIAL ...... CA 06025 1.60 INYO ...... CA 06027 1.50 KERN ...... CA 06029 1.60 KINGS ...... CA 06031 1.40 LAKE ...... CA 06033 1.80 LASSEN ...... CA 06035 1.65 LOS ANGELES ...... CA 06037 1.60 MADERA ...... CA 06039 1.40 MARIN ...... CA 06041 1.80 MARIPOSA ...... CA 06043 1.20 MENDOCINO ...... CA 06045 1.80 MERCED ...... CA 06047 1.40 MODOC ...... CA 06049 1.65 MONO ...... CA 06051 1.20

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

MONTEREY ...... CA 06053 2.20 NAPA ...... CA 06055 1.80 NEVADA ...... CA 06057 1.40 ORANGE ...... CA 06059 1.60 PLACER ...... CA 06061 1.40 PLUMAS ...... CA 06063 1.65 RIVERSIDE ...... CA 06065 1.60 SACRAMENTO ...... CA 06067 1.40 SAN BENITO ...... CA 06069 1.75 SAN BERNARDINO ...... CA 06071 1.60 SAN DIEGO ...... CA 06073 1.80 SAN FRANCISCO ...... CA 06075 1.75 SAN JOAQUIN ...... CA 06077 1.40 SAN LUIS OBISPO ...... CA 06079 2.20 SAN MATEO ...... CA 06081 1.75 SANTA BARBARA ...... CA 06083 2.20 SANTA CLARA ...... CA 06085 1.75 SANTA CRUZ ...... CA 06087 1.75 SHASTA ...... CA 06089 1.80 SIERRA ...... CA 06091 1.40 SISKIYOU ...... CA 06093 1.80 SOLANO ...... CA 06095 1.65 SONOMA ...... CA 06097 1.80 STANISLAUS ...... CA 06099 1.40 SUTTER ...... CA 06101 1.65 TEHAMA ...... CA 06103 1.80 TRINITY ...... CA 06105 1.80 TULARE ...... CA 06107 1.40 TUOLUMNE ...... CA 06109 1.20 VENTURA ...... CA 06111 2.20 YOLO ...... CA 06113 1.65 YUBA ...... CA 06115 1.65 ADAMS ...... CO 08001 1.55 ALAMOSA ...... CO 08003 1.90 ARAPAHOE ...... CO 08005 1.55 ARCHULETA ...... CO 08007 2.20 BACA ...... CO 08009 1.90 BENT ...... CO 08011 1.80 BOULDER ...... CO 08013 1.55 CHAFFEE ...... CO 08015 1.90 CHEYENNE ...... CO 08017 1.60 CLEAR CREEK ...... CO 08019 1.55 CONEJOS ...... CO 08021 1.90 COSTILLA ...... CO 08023 1.90 CROWLEY ...... CO 08025 1.80 CUSTER ...... CO 08027 1.90 DELTA ...... CO 08029 2.20 DENVER ...... CO 08031 1.55 DOLORES ...... CO 08033 2.20 DOUGLAS ...... CO 08035 1.55 EAGLE ...... CO 08037 1.80 ELBERT ...... CO 08039 1.55 EL PASO ...... CO 08041 1.80 FREMONT ...... CO 08043 1.90 GARFIELD ...... CO 08045 1.90 GILPIN ...... CO 08047 1.55 GRAND ...... CO 08049 1.55 GUNNISON ...... CO 08051 1.90 HINSDALE ...... CO 08053 2.20 HUERFANO ...... CO 08055 1.90 JACKSON ...... CO 08057 1.55 JEFFERSON ...... CO 08059 1.55 KIOWA ...... CO 08061 1.80 KIT CARSON ...... CO 08063 1.60 LAKE ...... CO 08065 1.90 LA PLATA ...... CO 08067 2.20 LARIMER ...... CO 08069 1.55 LAS ANIMAS ...... CO 08071 1.90 LINCOLN ...... CO 08073 1.60 LOGAN ...... CO 08075 1.40 MESA ...... CO 08077 2.20 MINERAL ...... CO 08079 2.20

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

MOFFAT ...... CO 08081 1.80 MONTEZUMA ...... CO 08083 2.20 MONTROSE ...... CO 08085 2.20 MORGAN ...... CO 08087 1.40 OTERO ...... CO 08089 1.80 OURAY ...... CO 08091 2.20 PARK ...... CO 08093 1.80 PHILLIPS ...... CO 08095 1.50 PITKIN ...... CO 08097 1.90 PROWERS ...... CO 08099 1.80 PUEBLO ...... CO 08101 1.80 RIO BLANCO ...... CO 08103 1.90 RIO GRANDE ...... CO 08105 1.90 ROUTT ...... CO 08107 1.80 SAGUACHE ...... CO 08109 1.90 SAN JUAN ...... CO 08111 2.20 SAN MIGUEL ...... CO 08113 2.20 SEDGWICK ...... CO 08115 1.40 SUMMIT ...... CO 08117 1.80 TELLER ...... CO 08119 1.80 WASHINGTON ...... CO 08121 1.50 WELD ...... CO 08123 1.40 YUMA ...... CO 08125 1.50 FAIRFIELD ...... CT 09001 2.50 HARTFORD ...... CT 09003 2.50 LITCHFIELD ...... CT 09005 2.30 MIDDLESEX ...... CT 09007 2.50 NEW HAVEN ...... CT 09009 2.30 NEW LONDON ...... CT 09011 2.60 TOLLAND ...... CT 09013 2.50 WINDHAM ...... CT 09015 2.60 KENT ...... DE 10001 2.20 NEW CASTLE ...... DE 10003 2.20 SUSSEX ...... DE 10005 2.20 DISTRICT OF COLUMBIA ...... DC 11001 2.05 ALACHUA ...... FL 12001 4.00 BAKER ...... FL 12003 3.80 BAY ...... FL 12005 3.40 BRADFORD ...... FL 12007 3.80 BREVARD ...... FL 12009 4.20 BROWARD ...... FL 12011 4.75 CALHOUN ...... FL 12013 3.40 CHARLOTTE ...... FL 12015 4.40 CITRUS ...... FL 12017 4.00 CLAY ...... FL 12019 3.80 COLLIER ...... FL 12021 4.75 COLUMBIA ...... FL 12023 3.80 DADE ...... FL 12025 4.75 DE SOTO ...... FL 12027 4.40 DIXIE ...... FL 12029 3.80 DUVAL ...... FL 12031 3.80 ESCAMBIA ...... FL 12033 3.30 FLAGLER ...... FL 12035 4.00 FRANKLIN ...... FL 12037 3.40 GADSDEN ...... FL 12039 3.40 GILCHRIST ...... FL 12041 3.80 GLADES ...... FL 12043 4.40 GULF ...... FL 12045 3.40 HAMILTON ...... FL 12047 3.60 HARDEE ...... FL 12049 4.40 HENDRY ...... FL 12051 4.75 HERNANDO ...... FL 12053 4.20 HIGHLANDS ...... FL 12055 4.40 HILLSBOROUGH ...... FL 12057 4.20 HOLMES ...... FL 12059 3.30 INDIAN RIVER ...... FL 12061 4.40 JACKSON ...... FL 12063 3.30 JEFFERSON ...... FL 12065 3.50 LAFAYETTE ...... FL 12067 3.80 LAKE ...... FL 12069 4.20 LEE ...... FL 12071 4.75 LEON ...... FL 12073 3.50

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

LEVY ...... FL 12075 4.00 LIBERTY ...... FL 12077 3.40 MADISON ...... FL 12079 3.60 MANATEE ...... FL 12081 4.40 MARION ...... FL 12083 4.00 MARTIN ...... FL 12085 4.40 MONROE ...... FL 12087 4.75 NASSAU ...... FL 12089 3.80 OKALOOSA ...... FL 12091 3.30 OKEECHOBEE ...... FL 12093 4.40 ORANGE ...... FL 12095 4.20 OSCEOLA ...... FL 12097 4.20 PALM BEACH ...... FL 12099 4.75 PASCO ...... FL 12101 4.20 PINELLAS ...... FL 12103 4.20 POLK ...... FL 12105 4.20 PUTNAM ...... FL 12107 4.00 ST. JOHNS ...... FL 12109 3.80 ST. LUCIE ...... FL 12111 4.40 SANTA ROSA ...... FL 12113 3.30 SARASOTA ...... FL 12115 4.40 SEMINOLE ...... FL 12117 4.20 SUMTER ...... FL 12119 4.20 SUWANNEE ...... FL 12121 3.80 TAYLOR ...... FL 12123 3.60 UNION ...... FL 12125 3.80 VOLUSIA ...... FL 12127 4.20 WAKULLA ...... FL 12129 3.50 WALTON ...... FL 12131 3.30 WASHINGTON ...... FL 12133 3.40 APPLING ...... GA 13001 3.30 ATKINSON ...... GA 13003 3.30 BACON ...... GA 13005 3.30 BAKER ...... GA 13007 3.30 BALDWIN ...... GA 13009 2.80 BANKS ...... GA 13011 2.70 BARROW ...... GA 13013 2.90 BARTOW ...... GA 13015 2.70 BEN HILL ...... GA 13017 3.30 BERRIEN ...... GA 13019 3.30 BIBB ...... GA 13021 2.80 BLECKLEY ...... GA 13023 3.10 BRANTLEY ...... GA 13025 3.60 BROOKS ...... GA 13027 3.50 BRYAN ...... GA 13029 3.30 BULLOCH ...... GA 13031 3.20 BURKE ...... GA 13033 2.80 BUTTS ...... GA 13035 2.90 CALHOUN ...... GA 13037 3.20 CAMDEN ...... GA 13039 3.60 CANDLER ...... GA 13043 3.20 CARROLL ...... GA 13045 2.90 CATOOSA ...... GA 13047 2.55 CHARLTON ...... GA 13049 3.60 CHATHAM ...... GA 13051 3.30 CHATTAHOOCHEE ...... GA 13053 3.10 CHATTOOGA ...... GA 13055 2.55 CHEROKEE ...... GA 13057 2.70 CLARKE ...... GA 13059 2.80 CLAY ...... GA 13061 3.20 CLAYTON ...... GA 13063 2.90 CLINCH ...... GA 13065 3.60 COBB ...... GA 13067 2.90 COFFEE ...... GA 13069 3.30 COLQUITT ...... GA 13071 3.30 COLUMBIA ...... GA 13073 2.80 COOK ...... GA 13075 3.30 COWETA ...... GA 13077 2.90 CRAWFORD ...... GA 13079 2.90 CRISP ...... GA 13081 3.20 DADE ...... GA 13083 2.55 DAWSON ...... GA 13085 2.70

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

DECATUR ...... GA 13087 3.30 DE KALB ...... GA 13089 2.90 DODGE ...... GA 13091 3.20 DOOLY ...... GA 13093 3.20 DOUGHERTY ...... GA 13095 3.20 DOUGLAS ...... GA 13097 2.90 EARLY ...... GA 13099 3.30 ECHOLS ...... GA 13101 3.60 EFFINGHAM ...... GA 13103 3.20 ELBERT ...... GA 13105 2.80 EMANUEL ...... GA 13107 3.10 EVANS ...... GA 13109 3.20 FANNIN ...... GA 13111 2.55 FAYETTE ...... GA 13113 2.90 FLOYD ...... GA 13115 2.55 FORSYTH ...... GA 13117 2.90 FRANKLIN ...... GA 13119 2.70 FULTON ...... GA 13121 2.90 GILMER ...... GA 13123 2.55 GLASCOCK ...... GA 13125 2.80 GLYNN ...... GA 13127 3.60 GORDON ...... GA 13129 2.55 GRADY ...... GA 13131 3.30 GREENE ...... GA 13133 2.80 GWINNETT ...... GA 13135 2.90 HABERSHAM ...... GA 13137 2.70 HALL ...... GA 13139 2.90 HANCOCK ...... GA 13141 2.80 HARALSON ...... GA 13143 2.70 HARRIS ...... GA 13145 2.90 HART ...... GA 13147 2.70 HEARD ...... GA 13149 2.90 HENRY ...... GA 13151 2.90 HOUSTON ...... GA 13153 3.10 IRWIN ...... GA 13155 3.30 JACKSON ...... GA 13157 2.80 JASPER ...... GA 13159 2.80 JEFF DAVIS ...... GA 13161 3.30 JEFFERSON ...... GA 13163 2.80 JENKINS ...... GA 13165 3.10 JOHNSON ...... GA 13167 3.10 JONES ...... GA 13169 2.80 LAMAR ...... GA 13171 2.90 LANIER ...... GA 13173 3.60 LAURENS ...... GA 13175 3.10 LEE ...... GA 13177 3.20 LIBERTY ...... GA 13179 3.30 LINCOLN ...... GA 13181 2.80 LONG ...... GA 13183 3.30 LOWNDES ...... GA 13185 3.60 LUMPKIN ...... GA 13187 2.70 MCDUFFIE ...... GA 13189 2.80 MCINTOSH ...... GA 13191 3.30 MACON ...... GA 13193 3.10 MADISON ...... GA 13195 2.80 MARION ...... GA 13197 3.10 MERIWETHER ...... GA 13199 2.90 MILLER ...... GA 13201 3.30 MITCHELL ...... GA 13205 3.30 MONROE ...... GA 13207 2.90 MONTGOMERY ...... GA 13209 3.20 MORGAN ...... GA 13211 2.80 MURRAY ...... GA 13213 2.55 MUSCOGEE ...... GA 13215 3.10 NEWTON ...... GA 13217 2.80 OCONEE ...... GA 13219 2.80 OGLETHORPE ...... GA 13221 2.80 PAULDING ...... GA 13223 2.90 PEACH ...... GA 13225 2.90 PICKENS ...... GA 13227 2.70 PIERCE ...... GA 13229 3.30 PIKE ...... GA 13231 2.90

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

POLK ...... GA 13233 2.70 PULASKI ...... GA 13235 3.20 PUTNAM ...... GA 13237 2.80 QUITMAN ...... GA 13239 3.20 RABUN ...... GA 13241 2.55 RANDOLPH ...... GA 13243 3.20 RICHMOND ...... GA 13245 2.80 ROCKDALE ...... GA 13247 2.90 SCHLEY ...... GA 13249 3.10 SCREVEN ...... GA 13251 3.10 SEMINOLE ...... GA 13253 3.30 SPALDING ...... GA 13255 2.90 STEPHENS ...... GA 13257 2.70 STEWART ...... GA 13259 3.10 SUMTER ...... GA 13261 3.20 TALBOT ...... GA 13263 2.90 TALIAFERRO ...... GA 13265 2.80 TATTNALL ...... GA 13267 3.20 TAYLOR ...... GA 13269 2.90 TELFAIR ...... GA 13271 3.20 TERRELL ...... GA 13273 3.20 THOMAS ...... GA 13275 3.50 TIFT ...... GA 13277 3.30 TOOMBS ...... GA 13279 3.20 TOWNS ...... GA 13281 2.55 TREUTLEN ...... GA 13283 3.20 TROUP ...... GA 13285 2.90 TURNER ...... GA 13287 3.30 TWIGGS ...... GA 13289 2.80 UNION ...... GA 13291 2.55 UPSON ...... GA 13293 2.90 WALKER ...... GA 13295 2.55 WALTON ...... GA 13297 2.80 WARE ...... GA 13299 3.60 WARREN ...... GA 13301 2.80 WASHINGTON ...... GA 13303 2.80 WAYNE ...... GA 13305 3.30 WEBSTER ...... GA 13307 3.20 WHEELER ...... GA 13309 3.20 WHITE ...... GA 13311 2.70 WHITFIELD ...... GA 13313 2.55 WILCOX ...... GA 13315 3.20 WILKES ...... GA 13317 2.80 WILKINSON ...... GA 13319 2.80 WORTH ...... GA 13321 3.30 ADA ...... ID 16001 1.35 ADAMS ...... ID 16003 1.35 BANNOCK ...... ID 16005 1.40 BEAR LAKE ...... ID 16007 1.40 BENEWAH ...... ID 16009 1.35 BINGHAM ...... ID 16011 1.35 BLAINE ...... ID 16013 1.35 BOISE ...... ID 16015 1.35 BONNER ...... ID 16017 1.35 BONNEVILLE ...... ID 16019 1.35 BOUNDARY ...... ID 16021 1.35 BUTTE ...... ID 16023 1.35 CAMAS ...... ID 16025 1.35 CANYON ...... ID 16027 1.35 CARIBOU ...... ID 16029 1.40 CASSIA ...... ID 16031 1.40 CLARK ...... ID 16033 1.40 CLEARWATER ...... ID 16035 1.40 CUSTER ...... ID 16037 1.35 ELMORE ...... ID 16039 1.35 FRANKLIN ...... ID 16041 1.40 FREMONT ...... ID 16043 1.40 GEM ...... ID 16045 1.35 GOODING ...... ID 16047 1.35 IDAHO ...... ID 16049 1.40 JEFFERSON ...... ID 16051 1.35 JEROME ...... ID 16053 1.35

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

KOOTENAI ...... ID 16055 1.35 LATAH ...... ID 16057 1.35 LEMHI ...... ID 16059 1.40 LEWIS ...... ID 16061 1.35 LINCOLN ...... ID 16063 1.35 MADISON ...... ID 16065 1.40 MINIDOKA ...... ID 16067 1.35 NEZ PERCE ...... ID 16069 1.35 ONEIDA ...... ID 16071 1.40 OWYHEE ...... ID 16073 1.35 PAYETTE ...... ID 16075 1.35 POWER ...... ID 16077 1.40 SHOSHONE ...... ID 16079 1.40 TETON ...... ID 16081 1.40 TWIN FALLS ...... ID 16083 1.35 VALLEY ...... ID 16085 1.35 WASHINGTON ...... ID 16087 1.35 ADAMS ...... IL 17001 2.00 ALEXANDER ...... IL 17003 2.10 BOND ...... IL 17005 2.00 BOONE ...... IL 17007 1.95 BROWN ...... IL 17009 2.00 BUREAU ...... IL 17011 2.00 CALHOUN ...... IL 17013 2.00 CARROLL ...... IL 17015 1.95 CASS ...... IL 17017 2.00 CHAMPAIGN ...... IL 17019 2.00 CHRISTIAN ...... IL 17021 2.00 CLARK ...... IL 17023 2.00 CLAY ...... IL 17025 2.00 CLINTON ...... IL 17027 2.00 COLES ...... IL 17029 2.00 COOK ...... IL 17031 1.95 CRAWFORD ...... IL 17033 2.00 CUMBERLAND ...... IL 17035 2.00 DE KALB ...... IL 17037 1.95 DE WITT ...... IL 17039 2.00 DOUGLAS ...... IL 17041 2.00 DU PAGE ...... IL 17043 1.95 EDGAR ...... IL 17045 2.00 EDWARDS ...... IL 17047 2.00 EFFINGHAM ...... IL 17049 2.00 FAYETTE ...... IL 17051 2.00 FORD ...... IL 17053 2.00 FRANKLIN ...... IL 17055 2.10 FULTON ...... IL 17057 2.00 GALLATIN ...... IL 17059 2.10 GREENE ...... IL 17061 2.00 GRUNDY ...... IL 17063 2.00 HAMILTON ...... IL 17065 2.10 HANCOCK ...... IL 17067 2.00 HARDIN ...... IL 17069 2.10 HENDERSON ...... IL 17071 2.00 HENRY ...... IL 17073 2.00 IROQUOIS ...... IL 17075 2.00 JACKSON ...... IL 17077 2.10 JASPER ...... IL 17079 2.00 JEFFERSON ...... IL 17081 2.00 JERSEY ...... IL 17083 2.00 JO DAVIESS ...... IL 17085 1.95 JOHNSON ...... IL 17087 2.10 KANE ...... IL 17089 1.95 KANKAKEE ...... IL 17091 2.00 KENDALL ...... IL 17093 2.00 KNOX ...... IL 17095 2.00 LAKE ...... IL 17097 1.95 LA SALLE ...... IL 17099 2.00 LAWRENCE ...... IL 17101 2.00 LEE ...... IL 17103 1.95 LIVINGSTON ...... IL 17105 2.00 LOGAN ...... IL 17107 2.00 MCDONOUGH ...... IL 17109 2.00

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

MCHENRY ...... IL 17111 1.95 MCLEAN ...... IL 17113 2.00 MACON ...... IL 17115 2.00 MACOUPIN ...... IL 17117 2.00 MADISON ...... IL 17119 2.00 MARION ...... IL 17121 2.00 MARSHALL ...... IL 17123 2.00 MASON ...... IL 17125 2.00 MASSAC ...... IL 17127 2.10 MENARD ...... IL 17129 2.00 MERCER ...... IL 17131 2.00 MONROE ...... IL 17133 2.10 MONTGOMERY ...... IL 17135 2.00 MORGAN ...... IL 17137 2.00 MOULTRIE ...... IL 17139 2.00 OGLE ...... IL 17141 1.95 PEORIA ...... IL 17143 2.00 PERRY ...... IL 17145 2.10 PIATT ...... IL 17147 2.00 PIKE ...... IL 17149 2.00 POPE ...... IL 17151 2.10 PULASKI ...... IL 17153 2.10 PUTNAM ...... IL 17155 2.00 RANDOLPH ...... IL 17157 2.10 RICHLAND ...... IL 17159 2.00 ROCK ISLAND ...... IL 17161 2.00 ST. CLAIR ...... IL 17163 2.10 SALINE ...... IL 17165 2.10 SANGAMON ...... IL 17167 2.00 SCHUYLER ...... IL 17169 2.00 SCOTT ...... IL 17171 2.00 SHELBY ...... IL 17173 2.00 STARK ...... IL 17175 2.00 STEPHENSON ...... IL 17177 1.95 TAZEWELL ...... IL 17179 2.00 UNION ...... IL 17181 2.10 VERMILION ...... IL 17183 2.00 WABASH ...... IL 17185 2.00 WARREN ...... IL 17187 2.00 WASHINGTON ...... IL 17189 2.10 WAYNE ...... IL 17191 2.00 WHITE ...... IL 17193 2.00 WHITESIDE ...... IL 17195 1.95 WILL ...... IL 17197 2.00 WILLIAMSON ...... IL 17199 2.10 WINNEBAGO ...... IL 17201 1.95 WOODFORD ...... IL 17203 2.00 ADAMS ...... IN 18001 2.00 ALLEN ...... IN 18003 1.80 BARTHOLOMEW ...... IN 18005 2.05 BENTON ...... IN 18007 2.00 BLACKFORD ...... IN 18009 2.00 BOONE ...... IN 18011 2.00 BROWN ...... IN 18013 2.05 CARROLL ...... IN 18015 2.00 CASS ...... IN 18017 2.00 CLARK ...... IN 18019 1.95 CLAY ...... IN 18021 2.00 CLINTON ...... IN 18023 2.00 CRAWFORD ...... IN 18025 2.10 DAVIESS ...... IN 18027 2.05 DEARBORN ...... IN 18029 1.95 DECATUR ...... IN 18031 1.95 DE KALB ...... IN 18033 1.80 DELAWARE ...... IN 18035 2.00 DUBOIS ...... IN 18037 2.10 ELKHART ...... IN 18039 1.80 FAYETTE ...... IN 18041 2.00 FLOYD ...... IN 18043 1.95 FOUNTAIN ...... IN 18045 2.00 FRANKLIN ...... IN 18047 1.95 FULTON ...... IN 18049 2.00

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

GIBSON ...... IN 18051 2.10 GRANT ...... IN 18053 2.00 GREENE ...... IN 18055 2.05 HAMILTON ...... IN 18057 2.00 HANCOCK ...... IN 18059 2.00 HARRISON ...... IN 18061 1.95 HENDRICKS ...... IN 18063 2.00 HENRY ...... IN 18065 2.00 HOWARD ...... IN 18067 2.00 HUNTINGTON ...... IN 18069 2.00 JACKSON ...... IN 18071 2.05 JASPER ...... IN 18073 2.00 JAY ...... IN 18075 2.00 JEFFERSON ...... IN 18077 1.95 JENNINGS ...... IN 18079 1.95 JOHNSON ...... IN 18081 2.00 KNOX ...... IN 18083 2.05 KOSCIUSKO ...... IN 18085 1.80 LAGRANGE ...... IN 18087 1.80 LAKE ...... IN 18089 1.95 LA PORTE ...... IN 18091 1.80 LAWRENCE ...... IN 18093 2.05 MADISON ...... IN 18095 2.00 MARION ...... IN 18097 2.00 MARSHALL ...... IN 18099 1.80 MARTIN ...... IN 18101 2.05 MIAMI ...... IN 18103 2.00 MONROE ...... IN 18105 2.05 MONTGOMERY ...... IN 18107 2.00 MORGAN ...... IN 18109 2.00 NEWTON ...... IN 18111 2.00 NOBLE ...... IN 18113 1.80 OHIO ...... IN 18115 1.95 ORANGE ...... IN 18117 2.05 OWEN ...... IN 18119 2.00 PARKE ...... IN 18121 2.00 PERRY ...... IN 18123 2.10 PIKE ...... IN 18125 2.10 PORTER ...... IN 18127 1.95 POSEY ...... IN 18129 2.10 PULASKI ...... IN 18131 2.00 PUTNAM ...... IN 18133 2.00 RANDOLPH ...... IN 18135 2.00 RIPLEY ...... IN 18137 1.95 RUSH ...... IN 18139 2.00 ST. JOSEPH ...... IN 18141 1.80 SCOTT ...... IN 18143 1.95 SHELBY ...... IN 18145 2.00 SPENCER ...... IN 18147 2.10 STARKE ...... IN 18149 1.80 STEUBEN ...... IN 18151 1.80 SULLIVAN ...... IN 18153 2.05 SWITZERLAND ...... IN 18155 1.95 TIPPECANOE ...... IN 18157 2.00 TIPTON ...... IN 18159 2.00 UNION ...... IN 18161 2.00 VANDERBURGH ...... IN 18163 2.10 VERMILLION ...... IN 18165 2.00 VIGO ...... IN 18167 2.00 WABASH ...... IN 18169 2.00 WARREN ...... IN 18171 2.00 WARRICK ...... IN 18173 2.10 WASHINGTON ...... IN 18175 1.95 WAYNE ...... IN 18177 2.00 WELLS ...... IN 18179 2.00 WHITE ...... IN 18181 2.00 WHITLEY ...... IN 18183 1.80 ADAIR ...... IA 19001 1.90 ADAMS ...... IA1 19003 1.90 ALLAMAKEE ...... IA 19005 1.70 APPANOOSE ...... IA 19007 1.90 AUDUBON ...... IA 19009 1.90

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

BENTON ...... IA 19011 1.95 BLACK HAWK ...... IA 19013 1.80 BOONE ...... IA 19015 1.90 BREMER ...... IA 19017 1.80 BUCHANAN ...... IA 19019 1.80 BUENA VISTA ...... IA 19021 1.80 BUTLER ...... IA 19023 1.80 CALHOUN ...... IA 19025 1.80 CARROLL ...... IA 19027 1.90 CASS ...... IA 19029 1.90 CEDAR ...... IA 19031 1.95 CERRO GORDO ...... IA 19033 1.70 CHEROKEE ...... IA 19035 1.80 CHICKASAW ...... IA 19037 1.70 CLARKE ...... IA 19039 1.90 CLAY ...... IA 19041 1.70 CLAYTON ...... IA 19043 1.70 CLINTON ...... IA 19045 1.95 CRAWFORD ...... IA 19047 1.90 DALLAS ...... IA 19049 1.90 DAVIS ...... IA 19051 1.90 DECATUR ...... IA 19053 1.90 DELAWARE ...... IA 19055 1.80 DES MOINES ...... IA 19057 1.90 DICKINSON ...... IA 19059 1.70 DUBUQUE ...... IA 19061 1.80 EMMET ...... IA 19063 1.70 FAYETTE ...... IA 19065 1.70 FLOYD ...... IA 19067 1.70 FRANKLIN ...... IA 19069 1.80 FREMONT ...... IA 19071 1.90 GREENE ...... IA 19073 1.90 GRUNDY ...... IA1 9075 1.80 GUTHRIE ...... IA 19077 1.90 HAMILTON ...... IA 19079 1.80 HANCOCK ...... IA 19081 1.70 HARDIN ...... IA 19083 1.80 HARRISON ...... IA 19085 1.90 HENRY ...... IA 19087 1.90 HOWARD ...... IA 19089 1.70 HUMBOLDT ...... IA 19091 1.80 IDA ...... IA 19093 1.80 IOWA ...... IA 19095 1.95 JACKSON ...... IA 19097 1.95 JASPER ...... IA 19099 1.95 JEFFERSON ...... IA 19101 1.90 JOHNSON ...... IA 19103 1.95 JONES ...... IA 19105 1.95 KEOKUK ...... IA 19107 1.90 KOSSUTH ...... IA 19109 1.70 LEE ...... IA 19111 1.90 LINN ...... IA 19113 1.95 LOUISA ...... IA 19115 1.90 LUCAS ...... IA 19117 1.90 LYON ...... IA 19119 1.70 MADISON ...... IA 19121 1.90 MAHASKA ...... IA 19123 1.90 MARION ...... IA 19125 1.90 MARSHALL ...... IA 19127 1.95 MILLS ...... IA 19129 1.90 MITCHELL ...... IA 19131 1.70 MONONA ...... IA 19133 1.80 MONROE ...... IA 19135 1.90 MONTGOMERY ...... IA 19137 1.90 MUSCATINE ...... IA 19139 1.90 O'BRIEN ...... IA 19141 1.70 OSCEOLA ...... IA 19143 1.70 PAGE ...... IA 19145 1.90 PALO ALTO ...... IA 19147 1.70 PLYMOUTH ...... IA 19149 1.70 POCAHONTAS ...... IA 19151 1.80 POLK ...... IA 19153 1.90

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

POTTAWATTAMIE ...... IA 19155 1.90 POWESHIEK ...... IA 19157 1.95 RINGGOLD ...... IA 19159 1.90 SAC ...... IA 19161 1.80 SCOTT ...... IA 19163 1.95 SHELBY ...... IA 19165 1.90 SIOUX ...... IA 19167 1.70 STORY ...... IA 19169 1.95 TAMA ...... IA 19171 1.95 TAYLOR ...... IA 19173 1.90 UNION ...... IA 19175 1.90 VAN BUREN ...... IA 19177 1.90 WAPELLO ...... IA 19179 1.90 WARREN ...... IA 19181 1.90 WASHINGTON ...... IA 19183 1.90 WAYNE ...... IA 19185 1.90 WEBSTER ...... IA 19187 1.80 WINNEBAGO ...... IA 19189 1.70 WINNESHIEK ...... IA 19191 1.70 WOODBURY ...... IA 19193 1.80 WORTH ...... IA 19195 1.70 WRIGHT ...... IA 19197 1.80 ALLEN ...... KS 20001 1.70 ANDERSON ...... KS 20003 1.70 ATCHISON ...... KS 20005 1.90 BARBER ...... KS 20007 1.90 BARTON ...... KS 20009 1.90 BOURBON ...... KS 20011 1.70 BROWN ...... KS 20013 1.90 BUTLER ...... KS 20015 1.70 CHASE ...... KS 20017 1.70 CHAUTAUQUA ...... KS 20019 1.70 CHEROKEE ...... KS 20021 1.70 CHEYENNE ...... KS 20023 1.60 CLARK ...... KS 20025 1.90 CLAY ...... KS 20027 1.90 CLOUD ...... KS 20029 1.80 COFFEY ...... KS 20031 1.70 COMANCHE ...... KS 20033 1.90 COWLEY ...... KS 20035 1.70 CRAWFORD ...... KS 20037 1.70 DECATUR ...... KS 20039 1.60 DICKINSON ...... KS 20041 1.90 DONIPHAN ...... KS 20043 1.90 DOUGLAS ...... KS 20045 1.70 EDWARDS ...... KS 20047 1.90 ELK ...... KS 20049 1.70 ELLIS ...... KS 20051 1.80 ELLSWORTH ...... KS 20053 1.90 FINNEY ...... KS 20055 1.80 FORD ...... KS 20057 1.90 FRANKLIN ...... KS 20059 1.70 GEARY ...... KS 20061 1.90 GOVE ...... KS 20063 1.60 GRAHAM ...... KS 20065 1.60 GRANT ...... KS 20067 1.90 GRAY ...... KS 20069 1.90 GREELEY ...... KS 20071 1.80 GREENWOOD ...... KS 20073 1.70 HAMILTON ...... KS 20075 1.80 HARPER ...... KS 20077 1.70 HARVEY ...... KS 20079 1.70 HASKELL ...... KS 20081 1.90 HODGEMAN ...... KS 20083 1.80 JACKSON ...... KS 20085 1.90 JEFFERSON ...... KS 20087 1.90 JEWELL ...... KS 20089 1.80 JOHNSON ...... KS 20091 1.90 KEARNY ...... KS 20093 1.80 KINGMAN ...... KS 20095 1.70 KIOWA ...... KS 20097 1.90 LABETTE ...... KS 20099 1.70

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

LANE ...... KS 20101 1.80 LEAVENWORTH ...... KS 20103 1.90 LINCOLN ...... KS 20105 1.80 LINN ...... KS 20107 1.70 LOGAN ...... KS 20109 1.60 LYON ...... KS 20111 1.70 MCPHERSON ...... KS 20113 1.90 MARION ...... KS 20115 1.70 MARSHALL ...... KS 20117 1.90 MEADE ...... KS 20119 1.90 MIAMI ...... KS 20121 1.70 MITCHELL ...... KS 20123 1.80 MONTGOMERY ...... KS 20125 1.70 MORRIS ...... KS 20127 1.90 MORTON ...... KS 20129 1.90 NEMAHA ...... KS 20131 1.90 NEOSHO ...... KS 20133 1.70 NESS ...... KS 20135 1.80 NORTON ...... KS 20137 1.60 OSAGE ...... KS 20139 1.70 OSBORNE ...... KS 20141 1.80 OTTAWA ...... KS 20143 1.90 PAWNEE ...... KS 20145 1.90 PHILLIPS ...... KS 20147 1.60 POTTAWATOMIE ...... KS 20149 1.90 PRATT ...... KS 20151 1.90 RAWLINS ...... KS 20153 1.60 RENO ...... KS 20155 1.70 REPUBLIC ...... KS 20157 1.80 RICE ...... KS 20159 1.90 RILEY ...... KS 20161 1.90 ROOKS ...... KS 20163 1.60 RUSH ...... KS 20165 1.80 RUSSELL ...... KS 20167 1.80 SALINE ...... KS 20169 1.90 SCOTT ...... KS 20171 1.80 SEDGWICK ...... KS 20173 1.70 SEWARD ...... KS 20175 1.90 SHAWNEE ...... KS 20177 1.90 SHERIDAN ...... KS 20179 1.60 SHERMAN ...... KS 20181 1.60 SMITH ...... KS 20183 1.60 STAFFORD ...... KS 20185 1.90 STANTON ...... KS 20187 1.90 STEVENS ...... KS 20189 1.90 SUMNER ...... KS 20191 1.70 THOMAS ...... KS 20193 1.60 TREGO ...... KS 20195 1.80 WABAUNSEE ...... KS 20197 1.90 WALLACE ...... KS 20199 1.60 WASHINGTON ...... KS 20201 1.90 WICHITA ...... KS 20203 1.80 WILSON ...... KS 20205 1.70 WOODSON ...... KS 20207 1.70 WYANDOTTE ...... KS 20209 1.90 ADAIR ...... KY 21001 1.95 ALLEN ...... KY 21003 2.05 ANDERSON ...... KY 21005 1.95 BALLARD ...... KY 21007 2.30 BARREN ...... KY 21009 2.05 BATH ...... KY 21011 2.05 BELL ...... KY 21013 2.15 BOONE ...... KY 21015 1.95 BOURBON ...... KY 21017 2.05 BOYD ...... KY 21019 2.20 BOYLE ...... KY 21021 1.95 BRACKEN ...... KY 21023 2.05 BREATHITT ...... KY 21025 2.15 BRECKINRIDGE ...... KY 21027 2.10 BULLITT ...... KY 21029 1.95 BUTLER ...... KY 21031 2.20 CALDWELL ...... KY 21033 2.30

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

CALLOWAY ...... KY 21035 2.30 CAMPBELL ...... KY 21037 2.05 CARLISLE ...... KY 21039 2.30 CARROLL ...... KY 21041 1.95 CARTER ...... KY 21043 2.20 CASEY ...... KY 21045 1.95 CHRISTIAN ...... KY 21047 2.20 CLARK ...... KY 21049 2.05 CLAY ...... KY 21051 2.15 CLINTON ...... KY 21053 2.15 CRITTENDEN ...... KY 21055 2.30 CUMBERLAND ...... KY 21057 2.05 DAVIESS ...... KY 21059 2.10 EDMONSON ...... KY 21061 2.05 ELLIOTT ...... KY 21063 2.05 ESTILL ...... KY 21065 2.05 FAYETTE ...... KY 21067 2.05 FLEMING ...... KY 21069 2.05 FLOYD ...... KY 21071 2.15 FRANKLIN ...... KY 21073 1.95 FULTON ...... KY 21075 2.30 GALLATIN ...... KY 21077 1.95 GARRARD ...... KY 21079 1.95 GRANT ...... KY 21081 1.95 GRAVES ...... KY 21083 2.30 GRAYSON ...... KY 21085 2.10 GREEN ...... KY 21087 1.95 GREENUP ...... KY 21089 2.20 HANCOCK ...... KY 21091 2.10 HARDIN ...... KY 21093 1.95 HARLAN ...... KY 21095 2.15 HARRISON ...... KY 21097 2.05 HART ...... KY 21099 1.95 HENDERSON ...... KY 21101 2.10 HENRY ...... KY 21103 1.95 HICKMAN ...... KY 21105 2.30 HOPKINS ...... KY 21107 2.20 JACKSON ...... KY 21109 1.95 JEFFERSON ...... KY 21111 1.95 JESSAMINE ...... KY 21113 1.95 JOHNSON ...... KY 21115 2.15 KENTON ...... KY 21117 2.05 KNOTT ...... KY 21119 2.15 KNOX ...... KY 21121 2.15 LARUE ...... KY 21123 1.95 LAUREL ...... KY 21125 2.15 LAWRENCE ...... KY 21127 2.15 LEE ...... KY 21129 2.05 LESLIE ...... KY 21131 2.15 LETCHER ...... KY 21133 2.15 LEWIS ...... KY 21135 2.05 LINCOLN ...... KY 21137 1.95 LIVINGSTON ...... KY 21139 2.30 LOGAN ...... KY 21141 2.20 LYON ...... KY 21143 2.30 MCCRACKEN ...... KY 21145 2.30 MCCREARY ...... KY 21147 2.15 MCLEAN ...... KY 21149 2.10 MADISON ...... KY 21151 2.05 MAGOFFIN ...... KY 21153 2.15 MARION ...... KY 21155 1.95 MARSHALL ...... KY 21157 2.30 MARTIN ...... KY 21159 2.15 MASON ...... KY 21161 2.05 MEADE ...... KY 21163 1.95 MENIFEE ...... KY 21165 2.05 MERCER ...... KY 21167 1.95 METCALFE ...... KY 21169 2.05 MONROE ...... KY 21171 2.05 MONTGOMERY ...... KY 21173 2.05 MORGAN ...... KY 21175 2.05 MUHLENBERG ...... KY 21177 2.20

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

NELSON ...... KY 21179 1.95 NICHOLAS ...... KY 21181 2.05 OHIO ...... KY 21183 2.10 OLDHAM ...... KY 21185 1.95 OWEN ...... KY 21187 1.95 OWSLEY ...... KY 21189 2.15 PENDLETON ...... KY 21191 2.05 PERRY ...... KY 21193 2.15 PIKE ...... KY 21195 2.15 POWELL ...... KY 21197 2.05 PULASKI ...... KY 21199 2.15 ROBERTSON ...... KY 21201 2.05 ROCKCASTLE ...... KY 21203 1.95 ROWAN ...... KY 21205 2.05 RUSSELL ...... KY 21207 1.95 SCOTT ...... KY 21209 2.05 SHELBY ...... KY 21211 1.95 SIMPSON ...... KY 21213 2.05 SPENCER ...... KY 21215 1.95 TAYLOR ...... KY 21217 1.95 TODD ...... KY 21219 2.20 TRIGG ...... KY 21221 2.30 TRIMBLE ...... KY 21223 1.95 UNION ...... KY 21225 2.10 WARREN ...... KY 21227 2.05 WASHINGTON ...... KY 21229 1.95 WAYNE ...... KY 21231 2.15 WEBSTER ...... KY 21233 2.10 WHITLEY ...... KY 21235 2.15 WOLFE ...... KY 21237 2.05 WOODFORD ...... KY 21239 1.95 ACADIA ...... LA 22001 3.05 ALLEN ...... LA 22003 2.85 ASCENSION ...... LA 22005 2.85 ASSUMPTION ...... LA 22007 3.05 AVOYELLES ...... LA 22009 2.85 BEAUREGARD ...... LA 22011 2.85 BIENVILLE ...... LA 22013 2.65 BOSSIER ...... LA 22015 2.35 CADDO ...... LA 22017 2.35 CALCASIEU ...... LA 22019 3.05 CALDWELL ...... LA 22021 2.75 CAMERON ...... LA 22023 3.05 CATAHOULA ...... LA 22025 2.85 CLAIBORNE ...... LA 22027 2.65 CONCORDIA ...... LA 22029 2.85 DE SOTO ...... LA 22031 2.65 EAST BATON ROUGE ...... LA 22033 2.85 EAST CARROLL ...... LA 22035 2.75 EAST FELICIANA ...... LA 22037 2.85 EVANGELINE ...... LA 22039 2.85 FRANKLIN ...... LA 22041 2.75 GRANT ...... LA 22043 2.75 IBERIA ...... LA 22045 3.05 IBERVILLE ...... LA 22047 2.85 JACKSON ...... LA 22049 2.75 JEFFERSON ...... LA 22051 3.05 JEFFERSON DAVIS ...... LA 22053 3.05 LAFAYETTE ...... LA 22055 3.05 LAFOURCHE ...... LA 22057 3.05 LA SALLE ...... LA 22059 2.75 LINCOLN ...... LA 22061 2.65 LIVINGSTON ...... LA 22063 2.85 MADISON ...... LA 22065 2.75 MOREHOUSE ...... LA 22067 2.75 NATCHITOCHES ...... LA 22069 2.75 ORLEANS ...... LA 22071 3.05 OUACHITA ...... LA 22073 2.75 PLAQUEMINES ...... LA 22075 3.05 POINTE COUPEE ...... LA 22077 2.85 RAPIDES ...... LA 22079 2.85 RED RIVER ...... LA 22081 2.65

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

RICHLAND ...... LA 22083 2.75 SABINE ...... LA 22085 2.75 ST. BERNARD ...... LA 22087 3.05 ST. CHARLES ...... LA 22089 3.05 ST. HELENA ...... LA 22091 2.85 ST. JAMES ...... LA 22093 2.85 ST. JOHN THE BAPTIST ...... LA 22095 2.85 ST. LANDRY ...... LA 22097 3.05 ST. MARTIN ...... LA 22099 3.05 ST. MARY ...... LA 22101 3.05 ST. TAMMANY ...... LA 22103 2.85 TANGIPAHOA ...... LA 22105 2.85 TENSAS ...... LA 22107 2.85 TERREBONNE ...... LA 22109 3.05 UNION ...... LA 22111 2.65 VERMILION ...... LA 22113 3.05 VERNON ...... LA 22115 2.85 WASHINGTON ...... LA 22117 2.85 WEBSTER ...... LA 22119 2.35 WEST BATON ROUGE ...... LA 22121 2.85 WEST CARROLL ...... LA 22123 2.75 WEST FELICIANA ...... LA 22125 2.85 WINN ...... LA 22127 2.75 ANDROSCOGGIN ...... ME 23001 2.20 AROOSTOOK ...... ME 23003 2.15 CUMBERLAND ...... ME 23005 2.30 FRANKLIN ...... ME 23007 2.15 HANCOCK ...... ME 23009 2.15 KENNEBEC ...... ME 23011 2.20 KNOX ...... ME 23013 2.20 LINCOLN ...... ME 23015 2.20 OXFORD ...... ME 23017 2.15 PENOBSCOT ...... ME 23019 2.15 PISCATAQUIS ...... ME 23021 2.15 SAGADAHOC ...... ME 23023 2.30 SOMERSET ...... ME 23025 2.15 WALDO ...... ME 23027 2.20 WASHINGTON ...... ME 23029 2.15 YORK ...... ME 23031 2.45 ALLEGANY ...... MD 24001 2.05 ANNE ARUNDEL ...... MD 24003 2.05 BALTIMORE ...... MD 24005 2.05 CALVERT ...... MD 24009 2.05 CAROLINE ...... MD 24011 2.10 CARROLL ...... MD 24013 2.05 CECIL ...... MD 24015 2.10 CHARLES ...... MD 24017 2.05 DORCHESTER ...... MD 24019 2.10 FREDERICK ...... MD 24021 2.05 GARRETT ...... MD 24023 2.05 HARFORD ...... MD 24025 2.05 HOWARD ...... MD 24027 2.05 KENT ...... MD 24029 2.10 MONTGOMERY ...... MD 24031 2.05 PRINCE GEORGE'S ...... MD 24033 2.05 QUEEN ANNE'S ...... MD 24035 2.10 ST. MARY'S ...... MD 24037 2.05 SOMERSET ...... MD 24039 2.10 TALBOT ...... MD 24041 2.10 WASHINGTON ...... MD 24043 2.05 WICOMICO ...... MD 24045 2.10 WORCESTER ...... MD 24047 2.10 BALTIMORE CITY ...... MD 24510 2.05 BARNSTABLE ...... MA 25001 2.75 BERKSHIRE ...... MA 25003 2.30 BRISTOL ...... MA 25005 2.75 DUKES ...... MA 25007 2.75 ESSEX ...... MA 25009 2.75 FRANKLIN ...... MA 25011 2.40 HAMPDEN ...... MA 25013 2.40 HAMPSHIRE ...... MA 25015 2.40 MIDDLESEX ...... MA 25017 2.75

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

NANTUCKET ...... MA 25019 2.75 NORFOLK ...... MA 25021 2.75 PLYMOUTH ...... MA 25023 2.75 SUFFOLK ...... MA 25025 2.75 WORCESTER ...... MA 25027 2.60 ALCONA ...... MI 26001 1.50 ALGER ...... MI 26003 1.60 ALLEGAN ...... MI 26005 1.80 ALPENA ...... MI 26007 1.35 ANTRIM ...... MI 26009 1.35 ARENAC ...... MI 26011 1.70 BARAGA ...... MI 26013 1.50 BARRY ...... MI 26015 1.80 BAY ...... MI 26017 1.70 BENZIE ...... MI 26019 1.50 BERRIEN ...... MI 26021 1.80 BRANCH ...... MI 26023 1.80 CALHOUN ...... MI 26025 1.80 CASS ...... MI 26027 1.80 CHARLEVOIX ...... MI 26029 1.35 CHEBOYGAN ...... MI 26031 1.35 CHIPPEWA ...... MI 26033 1.70 CLARE ...... MI 26035 1.70 CLINTON ...... MI 26037 1.80 CRAWFORD ...... MI 26039 1.50 DELTA ...... MI 26041 1.60 DICKINSON ...... MI 26043 1.40 EATON ...... MI 26045 1.80 EMMET ...... MI 26047 1.35 GENESEE ...... MI 26049 1.85 GLADWIN ...... MI 26051 1.70 GOGEBIC ...... MI 26053 1.40 GRAND TRAVERSE ...... MI 26055 1.50 GRATIOT ...... MI 26057 1.70 HILLSDALE ...... MI 26059 1.80 HOUGHTON ...... MI 26061 1.50 HURON ...... MI 26063 1.85 INGHAM ...... MI 26065 1.80 IONIA ...... MI 26067 1.80 IOSCO ...... MI 26069 1.50 IRON ...... MI 26071 1.40 ISABELLA ...... MI 26073 1.70 JACKSON ...... MI 26075 1.80 KALAMAZOO ...... MI 26077 1.80 KALKASKA ...... MI 26079 1.50 KENT ...... MI 26081 1.70 KEWEENAW ...... MI 26083 1.50 LAKE ...... MI 26085 1.70 LAPEER ...... MI 26087 1.85 LEELANAU ...... MI 26089 1.50 LENAWEE ...... MI 26091 1.80 LIVINGSTON ...... MI 26093 1.85 LUCE ...... MI 26095 1.70 MACKINAC ...... MI 26097 1.70 MACOMB ...... MI 26099 1.85 MANISTEE ...... MI 26101 1.50 MARQUETTE ...... MI 26103 1.50 MASON ...... MI 26105 1.70 MECOSTA ...... MI 26107 1.70 MENOMINEE ...... MI 26109 1.50 MIDLAND ...... MI 26111 1.70 MISSAUKEE ...... MI 26113 1.50 MONROE ...... MI 26115 1.85 MONTCALM ...... MI 26117 1.70 MONTMORENCY ...... MI 26119 1.35 MUSKEGON ...... MI 26121 1.70 NEWAYGO ...... MI 26123 1.70 OAKLAND ...... MI 26125 1.85 OCEANA ...... MI 26127 1.70 OGEMAW ...... MI 26129 1.50 ONTONAGON ...... MI 26131 1.40 OSCEOLA ...... MI 26133 1.70

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

OSCODA ...... MI 26135 1.50 OTSEGO ...... MI 26137 1.35 OTTAWA ...... MI 26139 1.70 PRESQUE ISLE ...... MI 26141 1.35 ROSCOMMON ...... MI 26143 1.50 SAGINAW ...... MI 26145 1.85 ST. CLAIR ...... MI 26147 1.85 ST. JOSEPH ...... MI 26149 1.80 SANILAC ...... MI 26151 1.85 SCHOOLCRAFT ...... MI 26153 1.60 SHIAWASSEE ...... MI 26155 1.85 TUSCOLA ...... MI 26157 1.85 VAN BUREN ...... MI 26159 1.80 WASHTENAW ...... MI 26161 1.85 WAYNE ...... MI 26163 1.85 WEXFORD ...... MI 26165 1.50 AITKIN ...... MN 27001 1.30 ANOKA ...... MN 27003 1.60 BECKER ...... MN 27005 1.40 BELTRAMI ...... MN 27007 1.10 BENTON ...... MN 27009 1.50 BIG STONE ...... MN 27011 1.50 BLUE EARTH ...... MN 27013 1.60 BROWN ...... MN 27015 1.60 CARLTON ...... MN 27017 1.65 CARVER ...... MN 27019 1.60 CASS ...... MN 27021 1.30 CHIPPEWA ...... MN 27023 1.50 CHISAGO ...... MN 27025 1.60 CLAY ...... MN 27027 1.40 CLEARWATER ...... MN 27029 1.10 COOK ...... MN 27031 1.65 COTTONWOOD ...... MN 27033 1.60 CROW WING ...... MN 27035 1.30 DAKOTA ...... MN 27037 1.60 DODGE ...... MN 27039 1.60 DOUGLAS ...... MN 27041 1.50 FARIBAULT ...... MN 27043 1.60 FILLMORE ...... MN 27045 1.60 FREEBORN ...... MN 27047 1.60 GOODHUE ...... MN 27049 1.60 GRANT ...... MN 27051 1.50 HENNEPIN ...... MN 27053 1.60 HOUSTON ...... MN 27055 1.60 HUBBARD ...... MN 27057 1.30 ISANTI ...... MN 27059 1.60 ITASCA ...... MN 27061 1.30 JACKSON ...... MN 27063 1.60 KANABEC ...... MN 27065 1.50 KANDIYOHI ...... MN 27067 1.50 KITTSON ...... MN 27069 1.10 KOOCHICHING ...... MN 27071 1.30 LAC QUI PARLE ...... MN 27073 1.50 LAKE ...... MN 27075 1.65 LAKE OF THE WOODS ...... MN 27077 1.10 LE SUEUR ...... MN 27079 1.60 LINCOLN ...... MN 27081 1.50 LYON ...... MN 27083 1.50 MCLEOD ...... MN 27085 1.60 MAHNOMEN ...... MN 27087 1.40 MARSHALL ...... MN 27089 1.10 MARTIN ...... MN 27091 1.60 MEEKER ...... MN 27093 1.60 MILLE LACS ...... MN 27095 1.50 MORRISON ...... MN 27097 1.50 MOWER ...... MN 27099 1.60 MURRAY ...... MN 27101 1.60 NICOLLET ...... MN 27103 1.60 NOBLES ...... MN 27105 1.60 NORMAN ...... MN 27107 1.40 OLMSTED ...... MN 27109 1.60 OTTER TAIL ...... MN 27111 1.40

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

PENNINGTON ...... MN 27113 1.10 PINE ...... MN 27115 1.65 PIPESTONE ...... MN 27117 1.60 POLK ...... MN 27119 1.40 POPE ...... MN 27121 1.50 RAMSEY ...... MN 27123 1.60 RED LAKE ...... MN 27125 1.10 REDWOOD ...... MN 27127 1.60 RENVILLE ...... MN 27129 1.60 RICE ...... MN 27131 1.60 ROCK ...... MN 27133 1.60 ROSEAU ...... MN 27135 1.10 ST. LOUIS ...... MN 27137 1.65 SCOTT ...... MN 27139 1.60 SHERBURNE ...... MN 27141 1.60 SIBLEY ...... MN 27143 1.60 STEARNS ...... MN 27145 1.50 STEELE ...... MN 27147 1.60 STEVENS ...... MN 27149 1.50 SWIFT ...... MN 27151 1.50 TODD ...... MN 27153 1.50 TRAVERSE ...... MN 27155 1.50 WABASHA ...... MN 27157 1.60 WADENA ...... MN 27159 1.30 WASECA ...... MN 27161 1.60 WASHINGTON ...... MN 27163 1.60 WATONWAN ...... MN 27165 1.60 WILKIN ...... MN 27167 1.40 WINONA ...... MN 27169 1.60 WRIGHT ...... MN 27171 1.60 YELLOW MEDICINE ...... MN 27173 1.50 ADAMS ...... MS 28001 2.85 ALCORN ...... MS 28003 2.70 AMITE ...... MS 28005 2.85 ATTALA ...... MS 28007 2.85 BENTON ...... MS 28009 2.70 BOLIVAR ...... MS 28011 2.85 CALHOUN ...... MS 28013 2.85 CARROLL ...... MS 28015 2.85 CHICKASAW ...... MS 28017 2.85 CHOCTAW ...... MS 28019 2.85 CLAIBORNE ...... MS 28021 2.85 CLARKE ...... MS 28023 3.10 CLAY ...... MS 28025 2.85 COAHOMA ...... MS 28027 2.85 COPIAH ...... MS 28029 2.85 COVINGTON ...... MS 28031 3.00 DE SOTO ...... MS 28033 2.85 FORREST ...... MS 28035 3.10 FRANKLIN ...... MS 28037 2.85 GEORGE ...... MS 28039 3.00 GREENE ...... MS 28041 3.10 GRENADA ...... MS 28043 2.85 HANCOCK ...... MS 28045 3.00 HARRISON ...... MS 28047 3.00 HINDS ...... MS 28049 2.85 HOLMES ...... MS 28051 2.85 HUMPHREYS ...... MS 28053 2.85 ISSAQUENA ...... MS 28055 2.85 ITAWAMBA ...... MS 28057 2.55 JACKSON ...... MS 28059 3.00 JASPER ...... MS 28061 3.10 JEFFERSON ...... MS 28063 2.85 JEFFERSON DAVIS ...... MS 28065 3.00 JONES ...... MS 28067 3.10 KEMPER ...... MS 28069 2.70 LAFAYETTE ...... MS 28071 2.85 LAMAR ...... MS 28073 3.00 LAUDERDALE ...... MS 28075 2.70 LAWRENCE ...... MS 28077 2.85 LEAKE ...... MS 28079 2.70 LEE ...... MS 28081 2.70

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

LEFLORE ...... MS 28083 2.85 LINCOLN ...... MS 28085 2.85 LOWNDES ...... MS 28087 2.70 MADISON ...... MS 28089 2.85 MARION ...... MS 28091 3.00 MARSHALL ...... MS 28093 2.85 MONROE ...... MS 28095 2.70 MONTGOMERY ...... MS 28097 2.85 NESHOBA ...... MS 28099 2.70 NEWTON ...... MS 28101 2.70 NOXUBEE ...... MS 28103 2.70 OKTIBBEHA ...... MS 28105 2.70 PANOLA ...... MS 28107 2.85 PEARL RIVER ...... MS 28109 3.00 PERRY ...... MS 28111 3.10 PIKE ...... MS 28113 2.85 PONTOTOC ...... MS 28115 2.85 PRENTISS ...... MS 28117 2.70 QUITMAN ...... MS 28119 2.85 RANKIN ...... MS 28121 2.85 SCOTT ...... MS 28123 2.70 SHARKEY ...... MS 28125 2.85 SIMPSON ...... MS 28127 2.85 SMITH ...... MS 28129 3.00 STONE ...... MS 28131 3.00 SUNFLOWER ...... MS 28133 2.85 TALLAHATCHIE ...... MS 28135 2.85 TATE ...... MS 28137 2.85 TIPPAH ...... MS 28139 2.70 TISHOMINGO ...... MS 28141 2.50 TUNICA ...... MS 28143 2.85 UNION ...... MS 28145 2.70 WALTHALL ...... MS 28147 2.85 WARREN ...... MS 28149 2.85 WASHINGTON ...... MS 28151 2.85 WAYNE ...... MS 28153 3.10 WEBSTER ...... MS 28155 2.85 WILKINSON ...... MS 28157 2.85 WINSTON ...... MS 28159 2.70 YALOBUSHA ...... MS 28161 2.85 YAZOO ...... MS 28163 2.85 ADAIR ...... MO 29001 1.90 ANDREW ...... MO 29003 1.90 ATCHISON ...... MO 29005 1.90 AUDRAIN ...... MO 29007 2.00 BARRY ...... MO 29009 1.70 BARTON ...... MO 29011 1.70 BATES ...... MO 29013 1.70 BENTON ...... MO 29015 1.90 BOLLINGER ...... MO 29017 2.10 BOONE ...... MO 29019 2.00 BUCHANAN ...... MO 29021 1.90 BUTLER ...... MO 29023 2.10 CALDWELL ...... MO 29025 1.90 CALLAWAY ...... MO 29027 2.00 CAMDEN ...... MO 29029 1.90 CAPE GIRARDEAU ...... MO 29031 2.10 CARROLL ...... MO 29033 1.90 CARTER ...... MO 29035 2.10 CASS ...... MO 29037 1.90 CEDAR ...... MO 29039 1.70 CHARITON ...... MO 29041 1.90 CHRISTIAN ...... MO 29043 1.70 CLARK ...... MO 29045 1.90 CLAY ...... MO 29047 1.90 CLINTON ...... MO 29049 1.90 COLE ...... MO 29051 2.00 COOPER ...... MO 29053 1.90 CRAWFORD ...... MO 29055 1.90 DADE ...... MO 29057 1.70 DALLAS ...... MO 29059 1.70 DAVIESS ...... MO 29061 1.90

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

DE KALB ...... MO 29063 1.90 DENT ...... MO 29065 1.90 DOUGLAS ...... MO 29067 1.70 DUNKLIN ...... MO 29069 2.35 FRANKLIN ...... MO 29071 2.00 GASCONADE ...... MO 29073 2.00 GENTRY ...... MO 29075 1.90 GREENE ...... MO 29077 1.70 GRUNDY ...... MO 29079 1.90 HARRISON ...... MO 29081 1.90 HENRY ...... MO 29083 1.70 HICKORY ...... MO 29085 1.70 HOLT ...... MO 29087 1.90 HOWARD ...... MO 29089 1.90 HOWELL ...... MO 29091 1.90 IRON ...... MO 29093 2.10 JACKSON ...... MO 29095 1.90 JASPER ...... MO 29097 1.70 JEFFERSON ...... MO 29099 2.10 JOHNSON ...... MO 29101 1.90 KNOX ...... MO 29103 1.90 LACLEDE ...... MO 29105 1.70 LAFAYETTE ...... MO 29107 1.90 LAWRENCE ...... MO 29109 1.70 LEWIS ...... MO 29111 1.90 LINCOLN ...... MO 29113 2.00 LINN ...... MO 29115 1.90 LIVINGSTON ...... MO 29117 1.90 MCDONALD ...... MO 29119 1.70 MACON ...... MO 29121 1.90 MADISON ...... MO 29123 2.10 MARIES ...... MO 29125 1.90 MARION ...... MO 29127 2.00 MERCER ...... MO 29129 1.90 MILLER ...... MO 29131 1.90 MISSISSIPPI ...... MO 29133 2.10 MONITEAU ...... MO 29135 2.00 MONROE ...... MO 29137 2.00 MONTGOMERY ...... MO 29139 2.00 MORGAN ...... MO 29141 1.90 NEW MADRID ...... MO 29143 2.35 NEWTON ...... MO 29145 1.70 NODAWAY ...... MO 29147 1.90 OREGON ...... MO 29149 2.10 OSAGE ...... MO 29151 2.00 OZARK ...... MO 29153 1.90 PEMISCOT ...... MO 29155 2.35 PERRY ...... MO 29157 2.10 PETTIS ...... MO 29159 1.90 PHELPS ...... MO 29161 1.90 PIKE ...... MO 29163 2.00 PLATTE ...... MO 29165 1.90 POLK ...... MO 29167 1.70 PULASKI ...... MO 29169 1.90 PUTNAM ...... MO 29171 1.90 RALLS ...... MO 29173 2.00 RANDOLPH ...... MO 29175 1.90 RAY ...... MO 29177 1.90 REYNOLDS ...... MO 29179 2.10 RIPLEY ...... MO 29181 2.10 ST. CHARLES ...... MO 29183 2.00 ST. CLAIR ...... MO 29185 1.70 STE. GENEVIEVE ...... MO 29186 2.10 ST. FRANCOIS ...... MO 29187 2.10 ST. LOUIS ...... MO 29189 2.10 SALINE ...... MO 29195 1.90 SCHUYLER ...... MO 29197 1.90 SCOTLAND ...... MO 29199 1.90 SCOTT ...... MO 29201 2.10 SHANNON ...... MO 29203 1.90 SHELBY ...... MO 29205 1.90 STODDARD ...... MO 29207 2.10

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

STONE ...... MO 29209 1.70 SULLIVAN ...... MO 29211 1.90 TANEY ...... MO 29213 1.70 TEXAS ...... MO 29215 1.90 VERNON ...... MO 29217 1.70 WARREN ...... MO 29219 2.00 WASHINGTON ...... MO 29221 2.10 WAYNE ...... MO 29223 2.10 WEBSTER ...... MO 29225 1.70 WORTH ...... MO 29227 1.90 WRIGHT ...... MO 29229 1.70 ST. LOUIS CITY ...... MO 29510 2.10 BEAVERHEAD ...... MT 30001 1.40 BIG HORN ...... MT 30003 1.50 BLAINE ...... MT 30005 1.65 BROADWATER ...... MT 30007 1.40 CARBON ...... MT 30009 1.40 CARTER ...... MT 30011 1.40 CASCADE ...... MT 30013 1.75 CHOUTEAU ...... MT 30015 1.75 CUSTER ...... MT 30017 1.50 DANIELS ...... MT 30019 1.50 DAWSON ...... MT 30021 1.50 DEER LODGE ...... MT 30023 1.40 FALLON ...... MT 30025 1.40 FERGUS ...... MT 30027 1.65 FLATHEAD ...... MT 30029 1.50 GALLATIN ...... MT 30031 1.40 GARFIELD ...... MT 30033 1.65 GLACIER ...... MT 30035 1.65 GOLDEN VALLEY ...... MT 30037 1.65 GRANITE ...... MT 30039 1.65 HILL ...... MT 30041 1.75 JEFFERSON ...... MT 30043 1.40 JUDITH BASIN ...... MT 30045 1.65 LAKE ...... MT 30047 1.50 LEWIS AND CLARK ...... MT 30049 1.65 LIBERTY ...... MT 30051 1.75 LINCOLN ...... MT 30053 1.50 MCCONE ...... MT 30055 1.50 MADISON ...... MT 30057 1.40 MEAGHER ...... MT 30059 1.40 MINERAL ...... MT 30061 1.50 MISSOULA ...... MT 30063 1.50 MUSSELSHELL ...... MT 30065 1.65 PARK ...... MT 30067 1.40 PETROLEUM ...... MT 30069 1.65 PHILLIPS ...... MT 30071 1.65 PONDERA ...... MT 30073 1.65 POWDER RIVER ...... MT 30075 1.40 POWELL ...... MT 30077 1.65 PRAIRIE ...... MT 30079 1.50 RAVALLI ...... MT 30081 1.65 RICHLAND ...... MT 30083 1.50 ROOSEVELT ...... MT 30085 1.50 ROSEBUD ...... MT 30087 1.50 SANDERS ...... MT 30089 1.50 SHERIDAN ...... MT 30091 1.50 SILVER BOW ...... MT 30093 1.40 STILLWATER ...... MT 30095 1.40 SWEET GRASS ...... MT 30097 1.40 TETON ...... MT 30099 1.65 TOOLE ...... MT 30101 1.65 TREASURE ...... MT 30103 1.50 VALLEY ...... MT 30105 1.65 WHEATLAND ...... MT 30107 1.65 WIBAUX ...... MT 30109 1.40 YELLOWSTONE ...... MT 30111 1.65 YELLOWSTONE NATIONAL PARK ...... MT 30113 1.40 ADAMS ...... NE 31001 1.60 ANTELOPE ...... NE 31003 1.60 ARTHUR ...... NE 31005 1.40

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

BANNER ...... NE 31007 1.40 BLAINE ...... NE 31009 1.50 BOONE ...... NE 31011 1.60 BOX BUTTE ...... NE 31013 1.40 BOYD ...... NE 31015 1.50 BROWN ...... NE 31017 1.50 BUFFALO ...... NE 31019 1.60 BURT ...... NE 31021 1.80 BUTLER ...... NE 31023 1.80 CASS ...... NE 31025 1.90 CEDAR ...... NE 31027 1.60 CHASE ...... NE 31029 1.50 CHERRY ...... NE 31031 1.40 CHEYENNE ...... NE 31033 1.40 CLAY ...... NE 31035 1.80 COLFAX ...... NE 31037 1.80 CUMING ...... NE 31039 1.80 CUSTER ...... NE 31041 1.50 DAKOTA ...... NE 31043 1.80 DAWES ...... NE 31045 1.40 DAWSON ...... NE 31047 1.60 DEUEL ...... NE 31049 1.40 DIXON ...... NE 31051 1.60 DODGE ...... NE 31053 1.80 DOUGLAS ...... NE 31055 1.90 DUNDY ...... NE 31057 1.60 FILLMORE ...... NE 31059 1.80 FRANKLIN ...... NE 31061 1.60 FRONTIER ...... NE 31063 1.60 FURNAS ...... NE 31065 1.60 GAGE ...... NE 31067 1.90 GARDEN ...... NE 31069 1.40 GARFIELD ...... NE 31071 1.50 GOSPER ...... NE 31073 1.60 GRANT ...... NE 31075 1.40 GREELEY ...... NE 31077 1.60 HALL ...... NE 31079 1.60 HAMILTON ...... NE 31081 1.80 HARLAN ...... NE 31083 1.60 HAYES ...... NE 31085 1.60 HITCHCOCK ...... NE 31087 1.60 HOLT ...... NE 31089 1.50 HOOKER ...... NE 31091 1.40 HOWARD ...... NE 31093 1.60 JEFFERSON ...... NE 31095 1.80 JOHNSON ...... NE 31097 1.90 KEARNEY ...... NE 31099 1.60 KEITH ...... NE 31101 1.40 KEYA PAHA ...... NE 31103 1.50 KIMBALL ...... NE 31105 1.40 KNOX ...... NE 31107 1.60 LANCASTER ...... NE 31109 1.80 LINCOLN ...... NE 31111 1.50 LOGAN ...... NE 31113 1.50 LOUP ...... NE 31115 1.50 MCPHERSON ...... NE 31117 1.50 MADISON ...... NE 31119 1.60 MERRICK ...... NE 31121 1.60 MORRILL ...... NE 31123 1.40 NANCE ...... NE 31125 1.60 NEMAHA ...... NE 31127 1.90 NUCKOLLS ...... NE 31129 1.60 OTOE ...... NE 31131 1.90 PAWNEE ...... NE 31133 1.90 PERKINS ...... NE 31135 1.50 PHELPS ...... NE 31137 1.60 PIERCE ...... NE 31139 1.60 PLATTE ...... NE 31141 1.80 POLK ...... NE 31143 1.80 RED WILLOW ...... NE 31145 1.60 RICHARDSON ...... NE 31147 1.90 ROCK ...... NE 31149 1.50

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

SALINE ...... NE 31151 1.80 SARPY ...... NE 31153 1.90 SAUNDERS ...... NE 31155 1.80 SCOTTS BLUFF ...... NE 31157 1.40 SEWARD ...... NE 31159 1.80 SHERIDAN ...... NE 31161 1.40 SHERMAN ...... NE 31163 1.60 SIOUX ...... NE 31165 1.40 STANTON ...... NE 31167 1.60 THAYER ...... NE 31169 1.80 THOMAS ...... NE 31171 1.40 THURSTON ...... NE 31173 1.80 VALLEY ...... NE 31175 1.60 WASHINGTON ...... NE 31177 1.90 WAYNE ...... NE 31179 1.60 WEBSTER ...... NE 31181 1.60 WHEELER ...... NE 31183 1.60 YORK ...... NE 31185 1.80 CHURCHILL ...... NV 32001 1.40 CLARK ...... NV 32003 2.25 DOUGLAS ...... NV 32005 1.20 ELKO ...... NV 32007 1.40 ESMERALDA ...... NV 32009 1.50 EUREKA ...... NV 32011 1.40 HUMBOLDT ...... NV 32013 1.40 LANDER ...... NV 32015 1.40 LINCOLN ...... NV 32017 1.80 LYON ...... NV 32019 1.20 MINERAL ...... NV 32021 1.20 NYE ...... NV 32023 1.50 PERSHING ...... NV 32027 1.40 STOREY ...... NV 32029 1.20 WASHOE ...... NV 32031 1.40 WHITE PINE ...... NV 32033 1.50 CARSON CITY ...... NV 32510 1.20 BELKNAP ...... NH 33001 2.30 CARROLL ...... NH 33003 2.15 CHESHIRE ...... NH 33005 2.50 COOS ...... NH 33007 1.95 GRAFTON ...... NH 33009 2.15 HILLSBOROUGH ...... NH 33011 2.60 MERRIMACK ...... NH 33013 2.45 ROCKINGHAM ...... NH 33015 2.60 STRAFFORD ...... NH 33017 2.45 SULLIVAN ...... NH 33019 2.30 ATLANTIC ...... NJ 34001 2.20 BERGEN ...... NJ 34003 2.50 BURLINGTON ...... NJ 34005 2.20 CAMDEN ...... NJ 34007 2.20 CAPE MAY ...... NJ 34009 2.20 CUMBERLAND ...... NJ 34011 2.20 ESSEX ...... NJ 34013 2.50 GLOUCESTER ...... NJ 34015 2.20 HUDSON ...... NJ 34017 2.50 HUNTERDON ...... NJ 34019 2.30 MERCER ...... NJ 34021 2.30 MIDDLESEX ...... NJ 34023 2.30 MONMOUTH ...... NJ 34025 2.30 MORRIS ...... NJ 34027 2.30 OCEAN ...... NJ 34029 2.30 PASSAIC ...... NJ 34031 2.50 SALEM ...... NJ 34033 2.20 SOMERSET ...... NJ 34035 2.30 SUSSEX ...... NJ 34037 2.30 UNION ...... NJ 34039 2.50 WARREN ...... NJ 34041 2.30 BERNALILLO ...... NM 35001 2.30 CATRON ...... NM 35003 1.90 CHAVES ...... NM 35005 1.60 CIBOLA ...... NM 35006 1.90 COLFAX ...... NM 35007 1.90 CURRY ...... NM 35009 1.60

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

DE BACA ...... NM 35011 1.60 DONA ANA ...... NM 35013 1.60 EDDY ...... NM 35015 1.60 GRANT ...... NM 35017 1.60 GUADALUPE ...... NM 35019 1.90 HARDING ...... NM 35021 1.90 HIDALGO ...... NM 35023 1.60 LEA ...... NM 35025 1.60 LINCOLN ...... NM 35027 1.90 LOS ALAMOS ...... NM 35028 2.30 LUNA ...... NM 35029 1.60 MCKINLEY ...... NM 35031 1.90 MORA ...... NM 35033 1.90 OTERO ...... NM 35035 1.60 QUAY ...... NM 35037 1.60 RIO ARRIBA ...... NM 35039 2.20 ROOSEVELT ...... NM 35041 1.60 SANDOVAL ...... NM 35043 2.30 SAN JUAN ...... NM 35045 2.20 SAN MIGUEL ...... NM 35047 1.90 SANTA FE ...... NM 35049 2.30 SIERRA ...... NM 35051 1.90 SOCORRO ...... NM 35053 1.90 TAOS ...... NM 35055 1.90 TORRANCE ...... NM 35057 1.90 UNION ...... NM 35059 1.90 VALENCIA ...... NM 35061 1.90 ALBANY ...... NY 36001 2.15 ALLEGANY ...... NY 36003 1.85 BRONX ...... NY 36005 2.50 BROOME ...... NY 36007 1.90 CATTARAUGUS ...... NY 36009 1.60 CAYUGA ...... NY 36011 1.85 CHAUTAUQUA ...... NY 36013 1.60 CHEMUNG ...... NY 36015 1.85 CHENANGO ...... NY 36017 1.85 CLINTON ...... NY 36019 1.95 COLUMBIA ...... NY 36021 2.15 CORTLAND ...... NY 36023 1.85 DELAWARE ...... NY 36025 2.15 DUTCHESS ...... NY 36027 2.30 ERIE ...... NY 36029 1.85 ESSEX ...... NY 36031 2.05 FRANKLIN ...... NY 36033 1.85 FULTON ...... NY 36035 2.05 GENESEE ...... NY 36037 1.85 GREENE ...... NY 36039 2.15 HAMILTON ...... NY 36041 1.95 HERKIMER ...... NY 36043 1.95 JEFFERSON ...... NY 36045 1.85 KINGS ...... NY 36047 2.50 LEWIS ...... NY 36049 1.85 LIVINGSTON ...... NY 36051 1.85 MADISON ...... NY 36053 1.85 MONROE ...... NY 36055 1.85 MONTGOMERY ...... NY 36057 2.05 NASSAU ...... NY 36059 2.50 NEW YORK ...... NY 36061 2.50 NIAGARA ...... NY 36063 1.85 ONEIDA ...... NY 36065 1.85 ONONDAGA ...... NY 36067 1.85 ONTARIO ...... NY 36069 1.85 ORANGE ...... NY 36071 2.30 ORLEANS ...... NY 36073 1.85 OSWEGO ...... NY 36075 1.85 OTSEGO ...... NY 36077 1.95 PUTNAM ...... NY 36079 2.30 QUEENS ...... NY 36081 2.50 RENSSELAER ...... NY 36083 2.15 RICHMOND ...... NY 36085 2.50 ROCKLAND ...... NY 36087 2.50 ST. LAWRENCE ...... NY 36089 1.85

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

SARATOGA ...... NY 36091 2.05 SCHENECTADY ...... NY 36093 2.15 SCHOHARIE ...... NY 36095 2.05 SCHUYLER ...... NY 36097 1.85 SENECA ...... NY 36099 1.85 STEUBEN ...... NY 36101 1.85 SUFFOLK ...... NY 36103 2.50 SULLIVAN ...... NY 36105 2.15 TIOGA ...... NY 36107 1.90 TOMPKINS ...... NY 36109 1.85 ULSTER ...... NY 36111 2.15 WARREN ...... NY 36113 1.95 WASHINGTON ...... NY 36115 2.05 WAYNE ...... NY 36117 1.85 WESTCHESTER ...... NY 36119 2.50 WYOMING ...... NY 36121 1.85 YATES ...... NY 36123 1.85 ALAMANCE ...... NC 37001 2.35 ALEXANDER ...... NC 37003 2.35 ALLEGHANY ...... NC 37005 2.35 ANSON ...... NC 37007 2.55 ASHE ...... NC 37009 2.25 AVERY ...... NC 37011 2.25 BEAUFORT ...... NC 37013 2.65 BERTIE ...... NC 37015 2.65 BLADEN ...... NC 37017 2.80 BRUNSWICK ...... NC 37019 2.85 BUNCOMBE ...... NC 37021 2.55 BURKE ...... NC 37023 2.35 CABARRUS ...... NC 37025 2.55 CALDWELL ...... NC 37027 2.35 CAMDEN ...... NC 37029 2.55 CARTERET ...... NC 37031 2.85 CASWELL ...... NC 37033 2.35 CATAWBA ...... NC 37035 2.35 CHATHAM ...... NC 37037 2.35 CHEROKEE ...... NC 37039 2.55 CHOWAN ...... NC 37041 2.55 CLAY ...... NC 37043 2.55 CLEVELAND ...... NC 37045 2.55 COLUMBUS ...... NC 37047 3.00 CRAVEN ...... NC 37049 2.85 CUMBERLAND ...... NC 37051 2.80 CURRITUCK ...... NC 37053 2.55 DARE ...... NC 37055 2.65 DAVIDSON ...... NC 37057 2.35 DAVIE ...... NC 37059 2.35 DUPLIN ...... NC 37061 2.85 DURHAM ...... NC 37063 2.35 EDGECOMBE ...... NC 37065 2.65 FORSYTH ...... NC 37067 2.35 FRANKLIN ...... NC 37069 2.55 GASTON ...... NC 37071 2.55 GATES ...... NC 37073 2.55 GRAHAM ...... NC 37075 2.55 GRANVILLE ...... NC 37077 2.55 GREENE ...... NC 37079 2.65 GUILFORD ...... NC 37081 2.35 HALIFAX ...... NC 37083 2.55 HARNETT ...... NC 37085 2.55 HAYWOOD ...... NC 37087 2.55 HENDERSON ...... NC 37089 2.55 HERTFORD ...... NC 37091 2.55 HOKE ...... NC 37093 2.80 HYDE ...... NC 37095 2.65 IREDELL ...... NC 37097 2.35 JACKSON ...... NC 37099 2.55 JOHNSTON ...... NC 37101 2.65 JONES ...... NC 37103 2.85 LEE ...... NC 37105 2.55 LENOIR ...... NC 37107 2.85 LINCOLN ...... NC 37109 2.35

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

MCDOWELL ...... NC 37111 2.35 MACON ...... NC 37113 2.55 MADISON ...... NC 37115 2.25 MARTIN ...... NC 37117 2.65 MECKLENBURG ...... NC 37119 2.55 MITCHELL ...... NC 37121 2.25 MONTGOMERY ...... NC 37123 2.55 MOORE ...... NC 37125 2.55 NASH ...... NC 37127 2.65 NEW HANOVER ...... NC 37129 2.85 NORTHAMPTON ...... NC 37131 2.55 ONSLOW ...... NC 37133 2.85 ORANGE ...... NC 37135 2.35 PAMLICO ...... NC 37137 2.85 PASQUOTANK ...... NC 37139 2.55 PENDER ...... NC 37141 2.85 PERQUIMANS ...... NC 37143 2.55 PERSON ...... NC 37145 2.35 PITT ...... NC 37147 2.65 POLK ...... NC 37149 2.55 RANDOLPH ...... NC 37151 2.35 RICHMOND ...... NC 37153 2.55 ROBESON ...... NC 37155 3.00 ROCKINGHAM ...... NC 37157 2.35 ROWAN ...... NC 37159 2.35 RUTHERFORD ...... NC 37161 2.55 SAMPSON ...... NC 37163 2.80 SCOTLAND ...... NC 37165 2.80 STANLY ...... NC 37167 2.55 STOKES ...... NC 37169 2.35 SURRY ...... NC 37171 2.35 SWAIN ...... NC 37173 2.25 TRANSYLVANIA ...... NC 37175 2.55 TYRRELL ...... NC 37177 2.65 UNION ...... NC 37179 2.55 VANCE ...... NC 37181 2.55 WAKE ...... NC 37183 2.55 WARREN ...... NC 37185 2.55 WASHINGTON ...... NC 37187 2.65 WATAUGA ...... NC 37189 2.25 WAYNE ...... NC 37191 2.65 WILKES ...... NC 37193 2.35 WILSON ...... NC 37195 2.65 YADKIN ...... NC 37197 2.35 YANCEY ...... NC 37199 2.25 ADAMS ...... ND 38001 1.40 BARNES ...... ND 38003 1.40 BENSON ...... ND 38005 1.40 BILLINGS ...... ND 38007 1.40 BOTTINEAU ...... ND 38009 1.40 BOWMAN ...... ND 38011 1.40 BURKE ...... ND 38013 1.40 BURLEIGH ...... ND 38015 1.40 CASS ...... ND 38017 1.40 CAVALIER ...... ND 38019 1.40 DICKEY ...... ND 38021 1.40 DIVIDE ...... ND 38023 1.40 DUNN ...... ND 38025 1.40 EDDY ...... ND 38027 1.40 EMMONS ...... ND 38029 1.40 FOSTER ...... ND 38031 1.40 GOLDEN VALLEY ...... ND 38033 1.40 GRAND FORKS ...... ND 38035 1.40 GRANT ...... ND 38037 1.40 GRIGGS ...... ND 38039 1.40 HETTINGER ...... ND 38041 1.40 KIDDER ...... ND 38043 1.40 LA MOURE ...... ND 38045 1.40 LOGAN ...... ND 38047 1.40 MCHENRY ...... ND 38049 1.40 MCINTOSH ...... ND 38051 1.40 MCKENZIE ...... ND 38053 1.40

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

MCLEAN ...... ND 38055 1.40 MERCER ...... ND 38057 1.40 MORTON ...... ND 38059 1.40 MOUNTRAIL ...... ND 38061 1.40 NELSON ...... ND 38063 1.40 OLIVER ...... ND 38065 1.40 PEMBINA ...... ND 38067 1.40 PIERCE ...... ND 38069 1.40 RAMSEY ...... ND 38071 1.40 RANSOM ...... ND 38073 1.40 RENVILLE ...... ND 38075 1.40 RICHLAND ...... ND 38077 1.40 ROLETTE ...... ND 38079 1.40 SARGENT ...... ND 38081 1.40 SHERIDAN ...... ND 38083 1.40 SIOUX ...... ND 38085 1.40 SLOPE ...... ND 38087 1.40 STARK ...... ND 38089 1.40 STEELE ...... ND 38091 1.40 STUTSMAN ...... ND 38093 1.40 TOWNER ...... ND 38095 1.40 TRAILL ...... ND 38097 1.40 WALSH ...... ND 38099 1.40 WARD ...... ND 38101 1.40 WELLS ...... ND 38103 1.40 WILLIAMS ...... ND 38105 1.40 ADAMS ...... OH 39001 2.05 ALLEN ...... OH 39003 2.00 ASHLAND ...... OH 39005 2.00 ASHTABULA ...... OH 39007 2.00 ATHENS ...... OH 39009 2.00 AUGLAIZE ...... OH 39011 2.00 BELMONT ...... OH 39013 2.00 BROWN ...... OH 39015 2.05 BUTLER ...... OH 39017 2.05 CARROLL ...... OH 39019 1.95 CHAMPAIGN ...... OH 39021 2.00 CLARK ...... OH 39023 2.00 CLERMONT ...... OH 39025 2.05 CLINTON ...... OH 39027 2.05 COLUMBIANA ...... OH 39029 1.95 COSHOCTON ...... OH 39031 1.95 CRAWFORD ...... OH 39033 2.00 CUYAHOGA ...... OH 39035 2.00 DARKE ...... OH 39037 2.00 DEFIANCE ...... OH 39039 1.80 DELAWARE ...... OH 39041 2.00 ERIE ...... OH 39043 2.00 FAIRFIELD ...... OH 39045 2.00 FAYETTE ...... OH 39047 2.00 FRANKLIN ...... OH 39049 2.00 FULTON ...... OH 39051 1.85 GALLIA ...... OH 39053 2.20 GEAUGA ...... OH 39055 2.00 GREENE ...... OH 39057 2.00 GUERNSEY ...... OH 39059 2.00 HAMILTON ...... OH 39061 2.05 HANCOCK ...... OH 39063 2.00 HARDIN ...... OH 39065 2.00 HARRISON ...... OH 39067 1.95 HENRY ...... OH 39069 1.85 HIGHLAND ...... OH 39071 2.05 HOCKING ...... OH 39073 2.00 HOLMES ...... OH 39075 1.95 HURON ...... OH 39077 2.00 JACKSON ...... OH 39079 2.05 JEFFERSON ...... OH 39081 1.95 KNOX ...... OH 39083 2.00 LAKE ...... OH 39085 2.00 LAWRENCE ...... OH 39087 2.20 LICKING ...... OH 39089 2.00 LOGAN ...... OH 39091 2.00

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

LORAIN ...... OH 39093 2.00 LUCAS ...... OH 39095 1.85 MADISON ...... OH 39097 2.00 MAHONING ...... OH 39099 1.95 MARION ...... OH 39101 2.00 MEDINA ...... OH 39103 2.00 MEIGS ...... OH 39105 2.05 MERCER ...... OH 39107 2.00 MIAMI ...... OH 39109 2.00 MONROE ...... OH 39111 2.00 MONTGOMERY ...... OH 39113 2.00 MORGAN ...... OH 39115 2.00 MORROW ...... OH 39117 2.00 MUSKINGUM ...... OH 39119 2.00 NOBLE ...... OH 39121 2.00 OTTAWA ...... OH 39123 1.85 PAULDING ...... OH 39125 1.80 PERRY ...... OH 39127 2.00 PICKAWAY ...... OH 39129 2.00 PIKE ...... OH 39131 2.05 PORTAGE ...... OH 39133 2.00 PREBLE ...... OH 39135 2.00 PUTNAM ...... OH 39137 2.00 RICHLAND ...... OH 39139 2.00 ROSS ...... OH 39141 2.05 SANDUSKY ...... OH 39143 2.00 SCIOTO ...... OH 39145 2.05 SENECA ...... OH 39147 2.00 SHELBY ...... OH 39149 2.00 STARK ...... OH 39151 1.95 SUMMIT ...... OH 39153 2.00 TRUMBULL ...... OH 39155 2.00 TUSCARAWAS ...... OH 39157 1.95 UNION ...... OH 39159 2.00 VAN WERT ...... OH 39161 2.00 VINTON ...... OH 39163 2.05 WARREN ...... OH 39165 2.05 WASHINGTON ...... OH 39167 2.00 WAYNE ...... OH 39169 1.95 WILLIAMS ...... OH 39171 1.80 WOOD ...... OH 39173 1.85 WYANDOT ...... OH 39175 2.00 ADAIR ...... OK 40001 1.90 ALFALFA ...... OK 40003 1.90 ATOKA ...... OK 40005 1.95 BEAVER ...... OK 40007 1.90 BECKHAM ...... OK 40009 1.90 BLAINE ...... OK 40011 1.90 BRYAN ...... OK 40013 1.95 CADDO ...... OK 40015 1.90 CANADIAN ...... OK 40017 1.90 CARTER ...... OK 40019 1.95 CHEROKEE ...... OK 40021 1.90 CHOCTAW ...... OK 40023 1.95 CIMARRON ...... OK 40025 1.90 CLEVELAND ...... OK 40027 1.90 COAL ...... OK 40029 1.95 COMANCHE ...... OK 40031 1.95 COTTON ...... OK 40033 1.95 CRAIG ...... OK 40035 1.70 CREEK ...... OK 40037 1.90 CUSTER ...... OK 40039 1.90 DELAWARE ...... OK 40041 1.70 DEWEY ...... OK 40043 1.90 ELLIS ...... OK 40045 1.90 GARFIELD ...... OK 40047 1.90 GARVIN ...... OK 40049 1.95 GRADY ...... OK 40051 1.90 GRANT ...... OK 40053 1.90 GREER ...... OK 40055 1.95 HARMON ...... OK 40057 1.95 HARPER ...... OK 40059 1.90

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

HASKELL ...... OK 40061 1.90 HUGHES ...... OK 40063 1.90 JACKSON ...... OK 40065 1.95 JEFFERSON ...... OK 40067 1.95 JOHNSTON ...... OK 40069 1.95 KAY ...... OK 40071 1.90 KINGFISHER ...... OK 40073 1.90 KIOWA ...... OK 40075 1.95 LATIMER ...... OK 40077 1.90 LE FLORE ...... OK 40079 1.90 LINCOLN ...... OK 40081 1.90 LOGAN ...... OK 40083 1.90 LOVE ...... OK 40085 1.95 MCCLAIN ...... OK 40087 1.90 MCCURTAIN ...... OK 40089 1.95 MCINTOSH ...... OK 40091 1.90 MAJOR ...... OK 40093 1.90 MARSHALL ...... OK 40095 1.95 MAYES ...... OK 40097 1.70 MURRAY ...... OK 40099 1.95 MUSKOGEE ...... OK 40101 1.90 NOBLE ...... OK 40103 1.90 NOWATA ...... OK 40105 1.70 OKFUSKEE ...... OK 40107 1.90 OKLAHOMA ...... OK 40109 1.90 OKMULGEE ...... OK 40111 1.90 OSAGE ...... OK 40113 1.90 OTTAWA ...... OK 40115 1.70 PAWNEE ...... OK 40117 1.90 PAYNE ...... OK 40119 1.90 PITTSBURG ...... OK 40121 1.90 PONTOTOC ...... OK 40123 1.95 POTTAWATOMIE ...... OK 40125 1.90 PUSHMATAHA ...... OK 40127 1.95 ROGER MILLS ...... OK 40129 1.90 ROGERS ...... OK 40131 1.70 SEMINOLE ...... OK 40133 1.90 SEQUOYAH ...... OK 40135 1.90 STEPHENS ...... OK 40137 1.95 TEXAS ...... OK 40139 1.90 TILLMAN ...... OK 40141 1.95 TULSA ...... OK 40143 1.90 WAGONER ...... OK 40145 1.90 WASHINGTON ...... OK 40147 1.70 WASHITA ...... OK 40149 1.90 WOODS ...... OK 40151 1.90 WOODWARD ...... OK 40153 1.90 BAKER ...... OR 41001 1.35 BENTON ...... OR 41003 1.55 CLACKAMAS ...... OR 41005 1.45 CLATSOP ...... OR 41007 1.45 COLUMBIA ...... OR 41009 1.45 COOS ...... OR 41011 1.70 CROOK ...... OR 41013 1.30 CURRY ...... OR 41015 1.85 DESCHUTES ...... OR 41017 1.55 DOUGLAS ...... OR 41019 1.70 GILLIAM ...... OR 41021 1.30 GRANT ...... OR 41023 1.35 HARNEY ...... OR 41025 1.35 HOOD RIVER ...... OR 41027 1.45 JACKSON ...... OR 41029 1.85 JEFFERSON ...... OR 41031 1.30 JOSEPHINE ...... OR 41033 1.85 KLAMATH ...... OR 41035 1.70 LAKE ...... OR 41037 1.55 LANE ...... OR 41039 1.55 LINCOLN ...... OR 41041 1.55 LINN ...... OR 41043 1.55 MALHEUR ...... OR 41045 1.35 MARION ...... OR 41047 1.45 MORROW ...... OR 41049 1.30

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

MULTNOMAH ...... OR 41051 1.45 POLK ...... OR 41053 1.45 SHERMAN ...... OR 41055 1.30 TILLAMOOK ...... OR 41057 1.45 UMATILLA ...... OR 41059 1.35 UNION ...... OR 41061 1.35 WALLOWA ...... OR 41063 1.35 WASCO ...... OR 41065 1.30 WASHINGTON ...... OR 41067 1.45 WHEELER ...... OR 41069 1.30 YAMHILL ...... OR 41071 1.45 ADAMS ...... PA 42001 2.05 ALLEGHENY ...... PA 42003 1.95 ARMSTRONG ...... PA 42005 1.95 BEAVER ...... PA 42007 1.95 BEDFORD ...... PA 42009 2.05 BERKS ...... PA 42011 2.05 BLAIR ...... PA 42013 2.05 BRADFORD ...... PA 42015 1.90 BUCKS ...... PA 42017 2.10 BUTLER ...... PA 42019 1.95 CAMBRIA ...... PA 42021 2.05 CAMERON ...... PA 42023 1.95 CARBON ...... PA 42025 2.10 CENTRE ...... PA 42027 2.00 CHESTER ...... PA 42029 2.10 CLARION ...... PA 42031 1.95 CLEARFIELD ...... PA 42033 1.95 CLINTON ...... PA 42035 2.00 COLUMBIA ...... PA 42037 2.00 CRAWFORD ...... PA 42039 1.75 CUMBERLAND ...... PA 42041 2.05 DAUPHIN ...... PA 42043 2.05 DELAWARE ...... PA 42045 2.20 ELK ...... PA 42047 1.95 ERIE ...... PA 42049 1.75 FAYETTE ...... PA 42051 1.95 FOREST ...... PA 42053 1.75 FRANKLIN ...... PA 42055 2.05 FULTON ...... PA 42057 2.05 GREENE ...... PA 42059 1.95 HUNTINGDON ...... PA 42061 2.05 INDIANA ...... PA 42063 1.95 JEFFERSON ...... PA 42065 1.95 JUNIATA ...... PA 42067 2.00 LACKAWANNA ...... PA 42069 2.00 LANCASTER ...... PA 42071 2.05 LAWRENCE ...... PA 42073 1.95 LEBANON ...... PA 42075 2.05 LEHIGH ...... PA 42077 2.10 LUZERNE ...... PA 42079 2.00 LYCOMING ...... PA 42081 2.00 MCKEAN ...... PA 42083 1.85 MERCER ...... PA 42085 1.75 MIFFLIN ...... PA 42087 2.00 MONROE ...... PA 42089 2.10 MONTGOMERY ...... PA 42091 2.10 MONTOUR ...... PA 42093 2.00 NORTHAMPTON ...... PA 42095 2.10 NORTHUMBERLAND ...... PA 42097 2.00 PERRY ...... PA 42099 2.05 PHILADELPHIA ...... PA 42101 2.20 PIKE ...... PA 42103 2.15 POTTER ...... PA 42105 1.90 SCHUYLKILL ...... PA 42107 2.05 SNYDER ...... PA 42109 2.00 SOMERSET ...... PA 42111 2.05 SULLIVAN ...... PA 42113 2.00 SUSQUEHANNA ...... PA 42115 1.90 TIOGA ...... PA 42117 1.90 UNION ...... PA 42119 2.00 VENANGO ...... PA 42121 1.75

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

WARREN ...... PA 42123 1.60 WASHINGTON ...... PA 42125 1.95 WAYNE ...... PA 42127 2.15 WESTMORELAND ...... PA 42129 1.95 WYOMING ...... PA 42131 2.00 YORK ...... PA 42133 2.05 BRISTOL ...... RI 44001 2.75 KENT ...... RI 44003 2.75 NEWPORT ...... RI 44005 2.75 PROVIDENCE ...... RI 44007 2.75 WASHINGTON ...... RI 44009 2.75 ABBEVILLE ...... SC 45001 2.70 AIKEN ...... SC 45003 2.80 ALLENDALE ...... SC 45005 3.10 ANDERSON ...... SC 45007 2.55 BAMBERG ...... SC 45009 3.10 BARNWELL ...... SC 45011 2.80 BEAUFORT ...... SC 45013 3.10 BERKELEY ...... SC 45015 3.00 CALHOUN ...... SC 45017 2.80 CHARLESTON ...... SC 45019 3.10 CHEROKEE ...... SC 45021 2.55 CHESTER ...... SC 45023 2.70 CHESTERFIELD ...... SC 45025 2.70 CLARENDON ...... SC 45027 2.80 COLLETON ...... SC 45029 3.10 DARLINGTON ...... SC 45031 2.80 DILLON ...... SC 45033 3.00 DORCHESTER ...... SC 45035 3.10 EDGEFIELD ...... SC 45037 2.80 FAIRFIELD ...... SC 45039 2.70 FLORENCE ...... SC 45041 3.00 GEORGETOWN ...... SC 45043 3.00 GREENVILLE ...... SC 45045 2.55 GREENWOOD ...... SC 45047 2.70 HAMPTON ...... SC 45049 3.20 HORRY ...... SC 45051 3.00 JASPER ...... SC 45053 3.20 KERSHAW ...... SC 45055 2.70 LANCASTER ...... SC 45057 2.70 LAURENS ...... SC 45059 2.55 LEE ...... SC 45061 2.80 LEXINGTON ...... SC 45063 2.80 MCCORMICK ...... SC 45065 2.80 MARION ...... SC 45067 3.00 MARLBORO ...... SC 45069 2.80 NEWBERRY ...... SC 45071 2.70 OCONEE ...... SC 45073 2.55 ORANGEBURG ...... SC 45075 2.80 PICKENS ...... SC 45077 2.55 RICHLAND ...... SC 45079 2.80 SALUDA ...... SC 45081 2.80 SPARTANBURG ...... SC 45083 2.55 SUMTER ...... SC 45085 2.80 UNION ...... SC 45087 2.55 WILLIAMSBURG ...... SC 45089 3.00 YORK ...... SC 45091 2.55 AURORA ...... SD 46003 1.50 BEADLE ...... SD 46005 1.50 BENNETT ...... SD 46007 1.40 BON HOMME ...... SD 46009 1.50 BROOKINGS ...... SD 46011 1.50 BROWN ...... SD 46013 1.40 BRULE ...... SD 46015 1.50 BUFFALO ...... SD 46017 1.40 BUTTE ...... SD 46019 1.40 CAMPBELL ...... SD 46021 1.40 CHARLES MIX ...... SD 46023 1.50 CLARK ...... SD 46025 1.50 CLAY ...... SD 46027 1.70 CODINGTON ...... SD 46029 1.50 CORSON ...... SD 46031 1.40

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

CUSTER ...... SD 46033 1.40 DAVISON ...... SD 46035 1.50 DAY ...... SD 46037 1.40 DEUEL ...... SD 46039 1.50 DEWEY ...... SD 46041 1.40 DOUGLAS ...... SD 46043 1.50 EDMUNDS ...... SD 46045 1.40 FALL RIVER ...... SD 46047 1.40 FAULK ...... SD 46049 1.40 GRANT ...... SD 46051 1.50 GREGORY ...... SD 46053 1.50 HAAKON ...... SD 46055 1.40 HAMLIN ...... SD 46057 1.50 HAND ...... SD 46059 1.40 HANSON ...... SD 46061 1.50 HARDING ...... SD 46063 1.40 HUGHES ...... SD 46065 1.40 HUTCHINSON ...... SD 46067 1.50 HYDE ...... SD 46069 1.40 JACKSON ...... SD 46071 1.40 JERAULD ...... SD 46073 1.50 JONES ...... SD 46075 1.40 KINGSBURY ...... SD 46077 1.50 LAKE ...... SD 46079 1.50 LAWRENCE ...... SD 46081 1.40 LINCOLN ...... SD 46083 1.60 LYMAN ...... SD 46085 1.40 MCCOOK ...... SD 46087 1.50 MCPHERSON ...... SD 46089 1.40 MARSHALL ...... SD 46091 1.40 MEADE ...... SD 46093 1.40 MELLETTE ...... SD 46095 1.40 MINER ...... SD 46097 1.50 MINNEHAHA ...... SD 46099 1.60 MOODY ...... SD 46101 1.50 PENNINGTON ...... SD 46103 1.40 PERKINS ...... SD 46105 1.40 POTTER ...... SD 46107 1.40 ROBERTS ...... SD 46109 1.50 SANBORN ...... SD 46111 1.50 SHANNON ...... SD 46113 1.40 SPINK ...... SD 46115 1.40 STANLEY ...... SD 46117 1.40 SULLY ...... SD 46119 1.40 TODD ...... SD 46121 1.40 TRIPP ...... SD 46123 1.40 TURNER ...... SD 46125 1.60 UNION ...... SD 46127 1.70 WALWORTH ...... SD 46129 1.40 YANKTON ...... SD 46135 1.60 ZIEBACH ...... SD 46137 1.40 ANDERSON ...... TN 47001 2.15 BEDFORD ...... TN 47003 2.05 BENTON ...... TN 47005 2.20 BLEDSOE ...... TN 47007 2.25 BLOUNT ...... TN 47009 2.25 BRADLEY ...... TN 47011 2.55 CAMPBELL ...... TN 47013 2.15 CANNON ...... TN 47015 2.05 CARROLL ...... TN 47017 2.50 CARTER ...... TN 47019 2.25 CHEATHAM ...... TN 47021 2.05 CHESTER ...... TN 47023 2.70 CLAIBORNE ...... TN 47025 2.15 CLAY ...... TN 47027 2.05 COCKE ...... TN 47029 2.25 COFFEE ...... TN 47031 2.05 CROCKETT ...... TN 47033 2.70 CUMBERLAND ...... TN 47035 2.15 DAVIDSON ...... TN 47037 2.05 DECATUR ...... TN 47039 2.20 DE KALB ...... TN 47041 2.05

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

DICKSON ...... TN 47043 2.20 DYER ...... TN 47045 2.50 FAYETTE ...... TN 47047 2.85 FENTRESS ...... TN 47049 2.15 FRANKLIN ...... TN 47051 2.25 GIBSON ...... TN 47053 2.50 GILES ...... TN 47055 2.20 GRAINGER ...... TN 47057 2.25 GREENE ...... TN 47059 2.25 GRUNDY ...... TN 47061 2.25 HAMBLEN ...... TN 47063 2.25 HAMILTON ...... TN 47065 2.55 HANCOCK ...... TN 47067 2.25 HARDEMAN ...... TN 47069 2.70 HARDIN ...... TN 47071 2.50 HAWKINS ...... TN 47073 2.25 HAYWOOD ...... TN 47075 2.70 HENDERSON ...... TN 47077 2.50 HENRY ...... TN 47079 2.30 HICKMAN ...... TN 47081 2.20 HOUSTON ...... TN 47083 2.20 HUMPHREYS ...... TN 47085 2.20 JACKSON ...... TN 47087 2.05 JEFFERSON ...... TN 47089 2.25 JOHNSON ...... TN 47091 2.25 KNOX ...... TN 47093 2.25 LAKE ...... TN 47095 2.30 LAUDERDALE ...... TN 47097 2.70 LAWRENCE ...... TN 47099 2.20 LEWIS ...... TN 47101 2.20 LINCOLN ...... TN 47103 2.25 LOUDON ...... TN 47105 2.25 MCMINN ...... TN 47107 2.55 MCNAIRY ...... TN 47109 2.70 MACON ...... TN 47111 2.05 MADISON ...... TN 47113 2.70 MARION ...... TN 47115 2.25 MARSHALL ...... TN 47117 2.05 MAURY ...... TN 47119 2.05 MEIGS ...... TN 47121 2.55 MONROE ...... TN 47123 2.55 MONTGOMERY ...... TN 47125 2.20 MOORE ...... TN 47127 2.25 MORGAN ...... TN 47129 2.15 OBION ...... TN 47131 2.30 OVERTON ...... TN 47133 2.15 PERRY ...... TN 47135 2.20 PICKETT ...... TN 47137 2.15 POLK ...... TN 47139 2.55 PUTNAM ...... TN 47141 2.15 RHEA ...... TN 47143 2.25 ROANE ...... TN 47145 2.25 ROBERTSON ...... TN 47147 2.05 RUTHERFORD ...... TN 47149 2.05 SCOTT ...... TN 47151 2.15 SEQUATCHIE ...... TN 47153 2.25 SEVIER ...... TN 47155 2.25 SHELBY ...... TN 47157 2.85 SMITH ...... TN 47159 2.05 STEWART ...... TN 47161 2.20 SULLIVAN ...... TN 47163 2.25 SUMNER ...... TN 47165 2.05 TIPTON ...... TN 47167 2.85 TROUSDALE ...... TN 47169 2.05 UNICOI ...... TN 47171 2.25 UNION ...... TN 47173 2.15 VAN BUREN ...... TN 47175 2.15 WARREN ...... TN 47177 2.05 WASHINGTON ...... TN 47179 2.25 WAYNE ...... TN 47181 2.20 WEAKLEY ...... TN 47183 2.30 WHITE ...... TN 47185 2.15

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

WILLIAMSON ...... TN 47187 2.05 WILSON ...... TN 47189 2.05 ANDERSON ...... TX 48001 2.35 ANDREWS ...... TX 48003 1.95 ANGELINA ...... TX 48005 2.65 ARANSAS ...... TX 48007 2.95 ARCHER ...... TX 48009 1.95 ARMSTRONG ...... TX 48011 1.95 ATASCOSA ...... TX 48013 2.75 AUSTIN ...... TX 48015 2.75 BAILEY ...... TX 48017 1.60 BANDERA ...... TX 48019 2.55 BASTROP ...... TX 48021 2.65 BAYLOR ...... TX 48023 1.95 BEE ...... TX 48025 2.95 BELL ...... TX 48027 2.35 BEXAR ...... TX 48029 2.65 BLANCO ...... TX 48031 2.55 BORDEN ...... TX 48033 2.10 BOSQUE ...... TX 48035 2.35 BOWIE ...... TX 48037 2.10 BRAZORIA ...... TX 48039 2.95 BRAZOS ...... TX 48041 2.65 BREWSTER ...... TX 48043 2.35 BRISCOE ...... TX 48045 1.95 BROOKS ...... TX 48047 3.15 BROWN ...... TX 48049 2.10 BURLESON ...... TX 48051 2.65 BURNET ...... TX 48053 2.35 CALDWELL ...... TX 48055 2.65 CALHOUN ...... TX 48057 2.95 CALLAHAN ...... TX 48059 2.10 CAMERON ...... TX 48061 3.15 CAMP ...... TX 48063 1.95 CARSON ...... TX 48065 1.95 CASS ...... TX 48067 2.10 CASTRO ...... TX 48069 1.60 CHAMBERS ...... TX 48071 2.95 CHEROKEE ...... TX 48073 2.35 CHILDRESS ...... TX 48075 1.95 CLAY ...... TX 48077 1.95 COCHRAN ...... TX 48079 1.60 COKE ...... TX 48081 2.10 COLEMAN ...... TX 48083 2.10 COLLIN ...... TX 48085 1.95 COLLINGSWORTH ...... TX 48087 1.95 COLORADO ...... TX 48089 2.75 COMAL ...... TX 48091 2.55 COMANCHE ...... TX 48093 2.10 CONCHO ...... TX 48095 2.10 COOKE ...... TX 48097 1.95 CORYELL ...... TX 48099 2.35 COTTLE ...... TX 48101 1.95 CRANE ...... TX 48103 2.10 CROCKETT ...... TX 48105 2.35 CROSBY ...... TX 48107 1.95 CULBERSON ...... TX 48109 1.95 DALLAM ...... TX 48111 1.90 DALLAS ...... TX 48113 2.10 DAWSON ...... TX 48115 1.95 DEAF SMITH ...... TX 48117 1.60 DELTA ...... TX 48119 1.95 DENTON ...... TX 48121 1.95 DE WITT ...... TX 48123 2.75 DICKENS ...... TX 48125 1.95 DIMMIT ...... TX 48127 2.75 DONLEY ...... TX 48129 1.95 DUVAL ...... TX 48131 2.95 EASTLAND ...... TX 48133 2.10 ECTOR ...... TX 48135 2.10 EDWARDS ...... TX 48137 2.35 ELLIS ...... TX 48139 2.10

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

EL PASO ...... TX 48141 1.75 ERATH ...... TX 48143 2.10 FALLS ...... TX 48145 2.35 FANNIN ...... TX 48147 1.95 FAYETTE ...... TX 48149 2.75 FISHER ...... TX 48151 2.10 FLOYD ...... TX 48153 1.95 FOARD ...... TX 48155 1.95 FORT BEND ...... TX 48157 2.95 FRANKLIN ...... TX 48159 1.95 FREESTONE ...... TX 48161 2.35 FRIO ...... TX 48163 2.75 GAINES ...... TX 48165 1.95 GALVESTON ...... TX 48167 2.95 GARZA ...... TX 48169 1.95 GILLESPIE ...... TX 48171 2.35 GLASSCOCK ...... TX 48173 2.10 GOLIAD ...... TX 48175 2.95 GONZALES ...... TX 48177 2.75 GRAY ...... TX 48179 1.95 GRAYSON ...... TX 48181 1.95 GREGG ...... TX 48183 2.10 GRIMES ...... TX 48185 2.75 GUADALUPE ...... TX 48187 2.65 HALE ...... TX 48189 1.95 HALL ...... TX 48191 1.95 HAMILTON ...... TX 48193 2.10 HANSFORD ...... TX 48195 1.90 HARDEMAN ...... TX 48197 1.95 HARDIN ...... TX 48199 2.95 HARRIS ...... TX 48201 2.95 HARRISON ...... TX 48203 2.10 HARTLEY ...... TX 48205 1.90 HASKELL ...... TX 48207 1.95 HAYS ...... TX 48209 2.55 HEMPHILL ...... TX 48211 1.90 HENDERSON ...... TX 48213 2.35 HIDALGO ...... TX 48215 3.15 HILL ...... TX 48217 2.35 HOCKLEY ...... TX 48219 1.95 HOOD ...... TX 48221 2.10 HOPKINS ...... TX 48223 1.95 HOUSTON ...... TX 48225 2.55 HOWARD ...... TX 48227 2.10 HUDSPETH ...... TX 48229 1.75 HUNT ...... TX 48231 1.95 HUTCHINSON ...... TX 48233 1.90 IRION ...... TX 48235 2.35 JACK ...... TX 48237 1.95 JACKSON ...... TX 48239 2.95 JASPER ...... TX 48241 2.75 JEFF DAVIS ...... TX 48243 2.10 JEFFERSON ...... TX 48245 2.95 JIM HOGG ...... TX 48247 2.95 JIM WELLS ...... TX 48249 2.95 JOHNSON ...... TX 48251 2.10 JONES ...... TX 48253 2.10 KARNES ...... TX 48255 2.75 KAUFMAN ...... TX 48257 2.10 KENDALL ...... TX 48259 2.55 KENEDY ...... TX 48261 3.15 KENT ...... TX 48263 2.10 KERR ...... TX 48265 2.55 KIMBLE ...... TX 48267 2.35 KING ...... TX 48269 1.95 KINNEY ...... TX 48271 2.65 KLEBERG ...... TX 48273 3.15 KNOX ...... TX 48275 1.95 LAMAR ...... TX 48277 1.95 LAMB ...... TX 48279 1.60 LAMPASAS ...... TX 48281 2.35 LA SALLE ...... TX 48283 2.75

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

LAVACA ...... TX 48285 2.75 LEE ...... TX 48287 2.65 LEON ...... TX 48289 2.55 LIBERTY ...... TX 48291 2.95 LIMESTONE ...... TX 48293 2.35 LIPSCOMB ...... TX 48295 1.90 LIVE OAK ...... TX 48297 2.95 LLANO ...... TX 48299 2.35 LOVING ...... TX 48301 1.95 LUBBOCK ...... TX 48303 1.95 LYNN ...... TX 48305 1.95 MCCULLOCH ...... TX 48307 2.10 MCLENNAN ...... TX 48309 2.35 MCMULLEN ...... TX 48311 2.75 MADISON ...... TX 48313 2.65 MARION ...... TX 48315 2.10 MARTIN ...... TX 48317 2.10 MASON ...... TX 48319 2.35 MATAGORDA ...... TX 48321 2.95 MAVERICK ...... TX 48323 2.65 MEDINA ...... TX 48325 2.65 MENARD ...... TX 48327 2.35 MIDLAND ...... TX 48329 2.10 MILAM ...... TX 48331 2.55 MILLS ...... TX 48333 2.10 MITCHELL ...... TX 48335 2.10 MONTAGUE ...... TX 48337 1.95 MONTGOMERY ...... TX 48339 2.95 MOORE ...... TX 48341 1.90 MORRIS ...... TX 48343 1.95 MOTLEY ...... TX 48345 1.95 NACOGDOCHES ...... TX 48347 2.55 NAVARRO ...... TX 48349 2.35 NEWTON ...... TX 48351 2.75 NOLAN ...... TX 48353 2.10 NUECES ...... TX 48355 3.15 OCHILTREE ...... TX 48357 1.90 OLDHAM ...... TX 48359 1.90 ORANGE ...... TX 48361 2.95 PALO PINTO ...... TX 48363 2.10 PANOLA ...... TX 48365 2.35 PARKER ...... TX 48367 2.10 PARMER ...... TX 48369 1.60 PECOS ...... TX 48371 2.35 POLK ...... TX 48373 2.75 POTTER ...... TX 48375 1.95 PRESIDIO ...... TX 48377 2.10 RAINS ...... TX 48379 1.95 RANDALL ...... TX 48381 1.95 REAGAN ...... TX 48383 2.35 REAL ...... TX 48385 2.55 RED RIVER ...... TX 48387 1.95 REEVES ...... TX 48389 2.10 REFUGIO ...... TX 48391 2.95 ROBERTS ...... TX 48393 1.90 ROBERTSON ...... TX 48395 2.55 ROCKWALL ...... TX 48397 1.95 RUNNELS ...... TX 48399 2.10 RUSK ...... TX 48401 2.35 SABINE ...... TX 48403 2.65 SAN AUGUSTINE ...... TX 48405 2.65 SAN JACINTO ...... TX 48407 2.75 SAN PATRICIO ...... TX 48409 2.95 SAN SABA ...... TX 48411 2.10 SCHLEICHER ...... TX 48413 2.35 SCURRY ...... TX 48415 2.10 SHACKELFORD ...... TX 48417 2.10 SHELBY ...... TX 48419 2.55 SHERMAN ...... TX 48421 1.90 SMITH ...... TX 48423 2.35 SOMERVELL ...... TX 48425 2.10 STARR ...... TX 48427 2.95

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

STEPHENS ...... TX 48429 2.10 STERLING ...... TX 48431 2.10 STONEWALL ...... TX 48433 2.10 SUTTON ...... TX 48435 2.35 SWISHER ...... TX 48437 1.95 TARRANT ...... TX 48439 2.10 TAYLOR ...... TX 48441 2.10 TERRELL ...... TX 48443 2.35 TERRY ...... TX 48445 1.95 THROCKMORTON ...... TX 48447 1.95 TITUS ...... TX 48449 1.95 TOM GREEN ...... TX 48451 2.10 TRAVIS ...... TX 48453 2.55 TRINITY ...... TX 48455 2.65 TYLER ...... TX 48457 2.75 UPSHUR ...... TX 48459 2.10 UPTON ...... TX 48461 2.35 UVALDE ...... TX 48463 2.65 VAL VERDE ...... TX 48465 2.35 VAN ZANDT ...... TX 48467 2.10 VICTORIA ...... TX 48469 2.95 WALKER ...... TX 48471 2.75 WALLER ...... TX 48473 2.75 WARD ...... TX 48475 2.10 WASHINGTON ...... TX 48477 2.75 WEBB ...... TX 48479 2.75 WHARTON ...... TX 48481 2.95 WHEELER ...... TX 48483 1.90 WICHITA ...... TX 48485 1.95 WILBARGER ...... TX 48487 1.95 WILLACY ...... TX 48489 3.15 WILLIAMSON ...... TX 48491 2.55 WILSON ...... TX 48493 2.75 WINKLER ...... TX 48495 1.95 WISE ...... TX 48497 1.95 WOOD ...... TX 48499 1.95 YOAKUM ...... TX 48501 1.95 YOUNG ...... TX 48503 1.95 ZAPATA ...... TX 48505 2.95 ZAVALA ...... TX 48507 2.65 BEAVER ...... UT 49001 1.50 BOX ELDER ...... UT 49003 1.50 CACHE ...... UT 49005 1.50 CARBON ...... UT 49007 1.80 DAGGETT ...... UT 49009 1.50 DAVIS ...... UT 49011 1.50 DUCHESNE ...... UT 49013 1.50 EMERY ...... UT 49015 1.80 GARFIELD ...... UT 49017 1.80 GRAND ...... UT 49019 1.90 IRON ...... UT 49021 1.80 JUAB ...... UT 49023 1.50 KANE ...... UT 49025 1.90 MILLARD ...... UT 49027 1.50 MORGAN ...... UT 49029 1.50 PIUTE ...... UT 49031 1.50 RICH ...... UT 49033 1.50 SALT LAKE ...... UT 49035 1.50 SAN JUAN ...... UT 49037 1.90 SANPETE ...... UT 49039 1.50 SEVIER ...... UT 49041 1.50 SUMMIT ...... UT 49043 1.50 TOOELE ...... UT 49045 1.50 UINTAH ...... UT 49047 1.80 UTAH ...... UT 49049 1.50 WASATCH ...... UT 49051 1.50 WASHINGTON ...... UT 49053 1.90 WAYNE ...... UT 49055 1.80 WEBER ...... UT 49057 1.50 ADDISON ...... VT 50001 2.05 BENNINGTON ...... VT 50003 2.15 CALEDONIA ...... VT 50005 1.95

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

CHITTENDEN ...... VT 50007 2.05 ESSEX ...... VT 50009 1.95 FRANKLIN ...... VT 50011 1.95 GRAND ISLE ...... VT 50013 1.95 LAMOILLE ...... VT 50015 1.95 ORANGE ...... VT 50017 2.05 ORLEANS ...... VT 50019 1.95 RUTLAND ...... VT 50021 2.05 WASHINGTON ...... VT 50023 2.05 WINDHAM ...... VT 50025 2.30 WINDSOR ...... VT 50027 2.15 ACCOMACK ...... VA 51001 2.10 ALBEMARLE ...... VA 51003 2.15 ALLEGHANY ...... VA 51005 2.15 AMELIA ...... VA 51007 2.20 AMHERST ...... VA 51009 2.15 APPOMATTOX ...... VA 51011 2.15 ARLINGTON ...... VA 51013 2.05 AUGUSTA ...... VA 51015 2.15 BATH ...... VA 51017 2.15 BEDFORD ...... VA 51019 2.15 BLAND ...... VA 51021 2.25 BOTETOURT ...... VA 51023 2.15 BRUNSWICK ...... VA 51025 2.35 BUCHANAN ...... VA 51027 2.25 BUCKINGHAM ...... VA 51029 2.15 CAMPBELL ...... VA 51031 2.15 CAROLINE ...... VA 51033 2.20 CARROLL ...... VA 51035 2.25 CHARLES CITY ...... VA 51036 2.20 CHARLOTTE ...... VA 51037 2.15 CHESTERFIELD ...... VA 51041 2.20 CLARKE ...... VA 51043 2.05 CRAIG ...... VA 51045 2.15 CULPEPER ...... VA 51047 2.05 CUMBERLAND ...... VA 51049 2.15 DICKENSON ...... VA 51051 2.25 DINWIDDIE ...... VA 51053 2.35 ESSEX ...... VA 51057 2.20 FAIRFAX ...... VA 51059 2.05 FAUQUIER ...... VA 51061 2.05 FLOYD ...... VA 51063 2.15 FLUVANNA ...... VA 51065 2.15 FRANKLIN ...... VA 51067 2.15 FREDERICK ...... VA 51069 2.05 GILES ...... VA 51071 2.15 GLOUCESTER ...... VA 51073 2.20 GOOCHLAND ...... VA 51075 2.20 GRAYSON ...... VA 51077 2.25 GREENE ...... VA 51079 2.15 GREENSVILLE ...... VA 51081 2.35 HALIFAX ...... VA 51083 2.35 HANOVER ...... VA 51085 2.20 HENRICO ...... VA 51087 2.20 HENRY ...... VA 51089 2.35 HIGHLAND ...... VA 51091 2.15 ISLE OF WIGHT ...... VA 51093 2.55 JAMES CITY ...... VA 51095 2.55 KING AND QUEEN ...... VA 51097 2.20 KING GEORGE ...... VA 51099 2.05 KING WILLIAM ...... VA 51101 2.20 LANCASTER ...... VA 51103 2.20 LEE ...... VA 51105 2.25 LOUDOUN ...... VA 51107 2.05 LOUISA ...... VA 51109 2.15 LUNENBURG ...... VA 51111 2.35 MADISON ...... VA 51113 2.15 MATHEWS ...... VA 51115 2.20 MECKLENBURG ...... VA 51117 2.35 MIDDLESEX ...... VA 51119 2.20 MONTGOMERY ...... VA 51121 2.15 NELSON ...... VA 51125 2.15

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

NEW KENT ...... VA 51127 2.20 NORTHAMPTON ...... VA 51131 2.10 NORTHUMBERLAND ...... VA 51133 2.20 NOTTOWAY ...... VA 51135 2.35 ORANGE ...... VA 51137 2.15 PAGE ...... VA 51139 2.05 PATRICK ...... VA 51141 2.35 PITTSYLVANIA ...... VA 51143 2.35 POWHATAN ...... VA 51145 2.20 PRINCE EDWARD ...... VA 51147 2.15 PRINCE GEORGE ...... VA 51149 2.35 PRINCE WILLIAM ...... VA 51153 2.05 PULASKI ...... VA 51155 2.15 RAPPAHANNOCK ...... VA 51157 2.05 RICHMOND ...... VA 51159 2.20 ROANOKE ...... VA 51161 2.15 ROCKBRIDGE ...... VA 51163 2.15 ROCKINGHAM ...... VA 51165 2.15 RUSSELL ...... VA 51167 2.25 SCOTT ...... VA 51169 2.25 SHENANDOAH ...... VA 51171 2.05 SMYTH ...... VA 51173 2.25 SOUTHAMPTON ...... VA 51175 2.55 SPOTSYLVANIA ...... VA 51177 2.15 STAFFORD ...... VA 51179 2.05 SURRY ...... VA 51181 2.55 SUSSEX ...... VA 51183 2.35 TAZEWELL ...... VA 51185 2.25 WARREN ...... VA 51187 2.05 WASHINGTON ...... VA 51191 2.25 WESTMORELAND ...... VA 51193 2.05 WISE ...... VA 51195 2.25 WYTHE ...... VA 51197 2.25 YORK ...... VA 51199 2.55 ALEXANDRIA CITY ...... VA 51510 2.05 BEDFORD CITY ...... VA 51515 2.15 BRISTOL CITY ...... VA 51520 2.25 BUENA VISTA CITY ...... VA 51530 2.15 CHARLOTTESVILLE CITY ...... VA 51540 2.15 CHESAPEAKE CITY ...... VA 51550 2.55 CLIFTON FORGE CITY ...... VA 51560 2.15 COLONIAL HEIGHTS CITY ...... VA 51570 2.30 COVINGTON CITY ...... VA 51580 2.15 DANVILLE CITY ...... VA 51590 2.35 EMPORIA CITY ...... VA 51595 2.35 FAIRFAX CITY ...... VA 51600 2.05 FALLS CHURCH CITY ...... VA 51610 2.05 FRANKLIN CITY ...... VA 51620 2.55 FREDERICKSBURG CITY ...... VA 51630 2.15 GALAX CITY ...... VA 51640 2.25 HAMPTON CITY ...... VA 51650 2.55 HARRISONBURG CITY ...... VA 51660 2.15 HOPEWELL CITY ...... VA 51670 2.35 LEXINGTON CITY ...... VA 51678 2.15 LYNCHBURG CITY ...... VA 51680 2.15 MANASSAS CITY ...... VA 51683 2.05 MANASSAS PARK CITY ...... VA 51685 2.05 MARTINSVILLE CITY ...... VA 51690 2.35 NEWPORT NEWS CITY ...... VA 51700 2.55 NORFOLK CITY ...... VA 51710 2.55 NORTON CITY ...... VA 51720 2.25 PETERSBURG CITY ...... VA 51730 2.35 POQUOSON CITY ...... VA 51735 2.55 PORTSMOUTH CITY ...... VA 51740 2.55 RADFORD CITY ...... VA 51750 2.15 RICHMOND CITY ...... VA 51760 2.20 ROANOKE CITY ...... VA 51770 2.15 SALEM CITY ...... VA 51775 2.15 STAUNTON CITY ...... VA 51790 2.15 SUFFOLK CITY ...... VA 51800 2.55 VIRGINIA BEACH CITY ...... VA 51810 2.55 WAYNESBORO CITY ...... VA 51820 2.15

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

WILLIAMSBURG CITY ...... VA 51830 2.55 WINCHESTER CITY ...... VA 51840 2.05 ADAMS ...... WA 53001 1.35 ASOTIN ...... WA 53003 1.35 BENTON ...... WA 53005 1.30 CHELAN ...... WA 53007 1.30 CLALLAM ...... WA 53009 1.45 CLARK ...... WA 53011 1.45 COLUMBIA ...... WA 53013 1.35 COWLITZ ...... WA 53015 1.45 DOUGLAS ...... WA 53017 1.30 FERRY ...... WA 53019 1.35 FRANKLIN ...... WA 53021 1.35 GARFIELD ...... WA 53023 1.35 GRANT ...... WA 53025 1.30 GRAYS HARBOR ...... WA 53027 1.45 ISLAND ...... WA 53029 1.45 JEFFERSON ...... WA 53031 1.45 KING ...... WA 53033 1.45 KITSAP ...... WA 53035 1.45 KITTITAS ...... WA 53037 1.30 KLICKITAT ...... WA 53039 1.30 LEWIS ...... WA 53041 1.45 LINCOLN ...... WA 53043 1.35 MASON ...... WA 53045 1.45 OKANOGAN ...... WA 53047 1.30 PACIFIC ...... WA 53049 1.45 PEND OREILLE ...... WA 53051 1.35 PIERCE ...... WA 53053 1.45 SAN JUAN ...... WA 53055 1.45 SKAGIT ...... WA 53057 1.20 SKAMANIA ...... WA 53059 1.45 SNOHOMISH ...... WA 53061 1.45 SPOKANE ...... WA 53063 1.35 STEVENS ...... WA 53065 1.35 THURSTON ...... WA 53067 1.45 WAHKIAKUM ...... WA 53069 1.45 WALLA WALLA ...... WA 53071 1.35 WHATCOM ...... WA 53073 1.20 WHITMAN ...... WA 53075 1.35 YAKIMA ...... WA 53077 1.30 BARBOUR ...... WV 54001 2.05 BERKELEY ...... WV 54003 2.05 BOONE ...... WV 54005 2.20 BRAXTON ...... WV 54007 2.20 BROOKE ...... WV 54009 1.95 CABELL ...... WV 54011 2.20 CALHOUN ...... WV 54013 2.05 CLAY ...... WV 54015 2.20 DODDRIDGE ...... WV 54017 2.05 FAYETTE ...... WV 54019 2.20 GILMER ...... WV 54021 2.05 GRANT ...... WV 54023 2.05 GREENBRIER ...... WV 54025 2.15 HAMPSHIRE ...... WV 54027 2.05 HANCOCK ...... WV 54029 1.95 HARDY ...... WV 54031 2.05 HARRISON ...... WV 54033 2.05 JACKSON ...... WV 54035 2.05 JEFFERSON ...... WV 54037 2.05 KANAWHA ...... WV 54039 2.20 LEWIS ...... WV 54041 2.05 LINCOLN ...... WV 54043 2.20 LOGAN ...... WV 54045 2.20 MCDOWELL ...... WV 54047 2.20 MARION ...... WV 54049 1.95 MARSHALL ...... WV 54051 1.95 MASON ...... WV 54053 2.05 MERCER ...... WV 54055 2.15 MINERAL ...... WV 54057 2.05 MINGO ...... WV 54059 2.20 MONONGALIA ...... WV 54061 1.95

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

MONROE ...... WV 54063 2.15 MORGAN ...... WV 54065 2.05 NICHOLAS ...... WV 54067 2.20 OHIO ...... WV 54069 1.95 PENDLETON ...... WV 54071 2.15 PLEASANTS ...... WV 54073 2.05 POCAHONTAS ...... WV 54075 2.15 PRESTON ...... WV 54077 1.95 PUTNAM ...... WV 54079 2.20 RALEIGH ...... WV 54081 2.20 RANDOLPH ...... WV 54083 2.05 RITCHIE ...... WV 54085 2.05 ROANE ...... WV 54087 2.20 SUMMERS ...... WV 54089 2.15 TAYLOR ...... WV 54091 1.95 TUCKER ...... WV 54093 2.05 TYLER ...... WV 54095 2.05 UPSHUR ...... WV 54097 2.05 WAYNE ...... WV 54099 2.20 WEBSTER ...... WV 54101 2.05 WETZEL ...... WV 54103 1.95 WIRT ...... WV 54105 2.05 WOOD ...... WV 54107 2.05 WYOMING ...... WV 54109 2.20 ADAMS ...... WI 55001 1.70 ASHLAND ...... WI 55003 1.60 BARRON ...... WI 55005 1.60 BAYFIELD ...... WI 55007 1.65 BROWN ...... WI 55009 1.80 BUFFALO ...... WI 55011 1.60 BURNETT ...... WI 55013 1.60 CALUMET ...... WI 55015 1.80 CHIPPEWA ...... WI 55017 1.60 CLARK ...... WI 55019 1.60 COLUMBIA ...... WI 55021 1.70 CRAWFORD ...... WI 55023 1.70 DANE ...... WI 55025 1.80 DODGE ...... WI 55027 1.80 DOOR ...... WI 55029 1.80 DOUGLAS ...... WI 55031 1.65 DUNN ...... WI 55033 1.60 EAU CLAIRE ...... WI 55035 1.60 FLORENCE ...... WI 55037 1.60 FOND DU LAC ...... WI 55039 1.80 FOREST ...... WI 55041 1.60 GRANT ...... WI 55043 1.80 GREEN ...... WI 55045 1.80 GREEN LAKE ...... WI 55047 1.70 IOWA ...... WI 55049 1.80 IRON ...... WI 55051 1.60 JACKSON ...... WI 55053 1.60 JEFFERSON ...... WI 55055 1.80 JUNEAU ...... WI 55057 1.70 KENOSHA ...... WI 55059 1.95 KEWAUNEE ...... WI 55061 1.80 LA CROSSE ...... WI 55063 1.60 LAFAYETTE ...... WI 55065 1.80 LANGLADE ...... WI 55067 1.60 LINCOLN ...... WI 55069 1.60 MANITOWOC ...... WI 55071 1.80 MARATHON ...... WI 55073 1.60 MARINETTE ...... WI 55075 1.60 MARQUETTE ...... WI 55077 1.70 MENOMINEE ...... WI 55078 1.70 MILWAUKEE ...... WI 55079 1.95 MONROE ...... WI 55081 1.60 OCONTO ...... WI 55083 1.70 ONEIDA ...... WI 55085 1.60 OUTAGAMIE ...... WI 55087 1.70 OZAUKEE ...... WI 55089 1.95 PEPIN ...... WI 55091 1.60 PIERCE ...... WI 55093 1.60

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Class I differen- County/Parish/City State FIPSlCode tial adjusted for location

POLK ...... WI 55095 1.60 PORTAGE ...... WI 55097 1.60 PRICE ...... WI 55099 1.60 RACINE ...... WI 55101 1.95 RICHLAND ...... WI 55103 1.70 ROCK ...... WI 55105 1.80 RUSK ...... WI 55107 1.60 ST. CROIX ...... WI 55109 1.60 SAUK ...... WI 55111 1.70 SAWYER ...... WI 55113 1.60 SHAWANO ...... WI 55115 1.70 SHEBOYGAN ...... WI 55117 1.95 TAYLOR ...... WI 55119 1.60 TREMPEALEAU ...... WI 55121 1.60 VERNON ...... WI 55123 1.70 VILAS ...... WI 55125 1.60 WALWORTH ...... WI 55127 1.80 WASHBURN ...... WI 55129 1.60 WASHINGTON ...... WI 55131 1.80 WAUKESHA ...... WI 55133 1.80 WAUPACA ...... WI 55135 1.70 WAUSHARA ...... WI 55137 1.70 WINNEBAGO ...... WI 55139 1.70 WOOD ...... WI 55141 1.60 ALBANY ...... WY 56001 1.55 BIG HORN ...... WY 56003 1.40 CAMPBELL ...... WY 56005 1.40 CARBON ...... WY 56007 1.55 CONVERSE ...... WY 56009 1.40 CROOK ...... WY 56011 1.40 FREMONT ...... WY 56013 1.40 GOSHEN ...... WY 56015 1.40 HOT SPRINGS ...... WY 56017 1.40 JOHNSON ...... WY 56019 1.40 LARAMIE ...... WY 56021 1.55 LINCOLN ...... WY 56023 1.40 NATRONA ...... WY 56025 1.40 NIOBRARA ...... WY 56027 1.40 PARK ...... WY 56029 1.40 PLATTE ...... WY 56031 1.55 SHERIDAN ...... WY 56033 1.50 SUBLETTE ...... WY 56035 1.40 SWEETWATER ...... WY 56037 1.50 TETON ...... WY 56039 1.40 UINTA ...... WY 56041 1.50 WASHAKIE ...... WY 56043 1.40 WESTON ...... WY 56045 1.40

§ 1000.53 Announcement of class prices, each Federal milk marketing order shall equivalent to the price or pricing component prices, and advanced pricing announce the following prices and constituent that is required. factors. pricing factors for the following month: (a) On or before the 5th day of the (1) The Class I price; Subpart HÐPayments for Milk month, the market administrator for (2) The Class I skim milk price; each Federal milk marketing order shall (3) The Class I butterfat price; § 1000.70 Producer-settlement fund. announce the following prices (as (4) The Class II skim milk price; The market administrator shall applicable to that order) for the (5) The Class II nonfat solids price; establish and maintain a separate fund preceding month: and known as the producer-settlement fund (1) The Class II price; (6) The advanced pricing factors into which the market administrator (2) The Class II butterfat price; described in § 1000.50(q). (3) The Class III price; shall deposit all payments made by llll (4) The Class III skim milk price; § 1000.54 Equivalent price. handlers pursuant to §§ .71, llll.76, and llll.77 of each (5) The Class IV price; If for any reason a price or pricing (6) The Class IV skim milk price; Federal milk order and out of which the constituent required for computing the (7) The butterfat price; market administrator shall make all (8) The nonfat solids price; prices described in § 1000.50 is not llll available, the market administrator shall payments pursuant to §§ .72 (9) The protein price; and llll.77 of each Federal milk (10) The other solids price; and use a price or pricing constituent (11) The somatic cell adjustment rate. determined by the Deputy order. Payments due any handler shall (b) On or before the 23rd day of the Administrator, Dairy Programs, month, the market administrator for Agricultural Marketing Service, to be

VerDate 23-MAR-99 17:17 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00197 Fmt 4701 Sfmt 4702 E:\FR\FM\02APP2.XXX pfrm03 PsN: 02APP2 16222 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules be offset by any payments due from that distributing plant except that neither the applicable, of the respective order handler. adjusted Class I differential price nor regulating the handling of milk at the the adjusted producer price differential receiving plant, with such statistical § 1000.76 Payments by a handler shall be less than zero; uniform price or uniform price adjusted operating a partially regulated distributing (3) For orders with skim milk and plant. to the location of the nonpool plant (but butterfat pricing, multiply the remaining not to be less than the lowest On or before the 25th day after the pounds by the amount by which the announced class price of the respective end of the month (except as provided in Class I price exceeds the uniform price, order); and § 1000.90), the operator of a partially both prices to be applicable at the (iii) If the operator of the partially regulated distributing plant, other than location of the partially regulated regulated distributing plant so requests, a plant that is subject to marketwide distributing plant except that neither the the handler’s value of milk determined pooling of producer returns under a adjusted Class I price nor the adjusted pursuant to § llll.60 of the order State government’s milk classification uniform price differential shall be less shall include a value of milk determined and pricing program, shall pay to the than the lowest announced class price; for each nonpool plant that is not a market administrator for the producer- and plant fully regulated under another settlement fund the amount computed (4) Unless the payment option Federal order which serves as a supply pursuant to paragraph (a) of this section described in paragraph (d) is selected, plant for the partially regulated or, if the handler submits the add the amount obtained from distributing plant by making shipments information specified in multiplying the pounds of labeled to the partially regulated distributing §§ llll.30(b) and llll.31(b) of reconstituted milk included in plant during the month equivalent to the order, the handler may elect to pay paragraph (a)(1)(iii) of this section by the requirements of section 7(c) of the the amount computed pursuant to any positive difference between the order subject to the following paragraph (b) of this section. A partially Class I price applicable at the location conditions: regulated distributing plant that is of the partially regulated distributing (A) The operator of the partially subject to marketwide pooling of plant (less $1.00 if the reconstituted regulated distributing plant submits producer returns under a State milk is labeled as such) and the Class IV with its reports filed pursuant to government’s milk classification and price. §§ llll.30(b) and llll.31(b) of pricing program shall pay the amount (b) The payment under this paragraph the order similar reports for each such computed pursuant to paragraph (c) of shall be the amount resulting from the nonpool supply plant; this section. following computations: (a) The payment under this paragraph (1) Determine the value that would (B) The operator of the nonpool plant shall be an amount resulting from the have been computed pursuant to maintains books and records showing following computations: § llll.60 of the order for the the utilization of all skim milk and (1) From the plant’s route disposition partially regulated distributing plant if butterfat received at the plant which are in the marketing area: the plant had been a pool plant, subject made available if requested by the (i) Subtract receipts of fluid milk to the following modifications: market administrator for verification products classified as Class I milk from (i) Fluid milk products and bulk fluid purposes; and pool plants, plants fully regulated under cream products received at the plant (C) The value of milk determined llll other Federal orders, and handlers from a pool plant, a plant fully regulated pursuant to § .60 for the described in § 1000.9(c) and § 1135.11, under another Federal order, and unregulated supply plant shall be except those receipts subtracted under a handlers described in § 1000.9(c) and determined in the same manner similar provision of another Federal § 1135.11 shall be allocated at the prescribed for computing the obligation milk order; partially regulated distributing plant to of the partially regulated distributing (ii) Subtract receipts of fluid milk the same class in which such products plant; and products from another nonpool plant were classified at the fully regulated (2) From the partially regulated that is not a plant fully regulated under plant; distributing plant’s value of milk another Federal order to the extent that (ii) Fluid milk products and bulk fluid computed pursuant to paragraph (b)(1) an equivalent amount of fluid milk cream products transferred from the of this section, subtract: products disposed of to the nonpool partially regulated distributing plant to (i) The gross payments that were plant by handlers fully regulated under a pool plant or a plant fully regulated made for milk that would have been any Federal order is classified and under another Federal order shall be producer milk had the plant been fully priced as Class I milk and is not used classified at the partially regulated regulated; as an offset for any payment obligation distributing plant in the class to which (ii) If paragraph (b)(1)(iii) of this under any order; and allocated at the fully regulated plant. section applies, the gross payments by (iii) Subtract the pounds of Such transfers shall be allocated to the the operator of the nonpool supply plant reconstituted milk made from nonfluid extent possible to those receipts at the for milk received at the plant during the milk products which are disposed of as partially regulated distributing plant month that would have been producer route disposition in the marketing area; from the pool plant and plants fully milk if the plant had been fully (2) For orders with multiple regulated under other Federal orders regulated; and component pricing, compute a Class I that are classified in the corresponding (iii) The payments by the operator of differential price by subtracting Class III class pursuant to paragraph (b)(1)(i) of the partially regulated distributing plant price from the current month’s Class I this section. Any such transfers to the producer-settlement fund of price. Multiply the pounds remaining remaining after the above allocation another Federal order under which the after the computation in paragraph which are in Class I and for which a plant is also a partially regulated (a)(1)(iii) of this section by the amount value is computed pursuant to distributing plant and, if paragraph by which the Class I differential price § llll.60 of the order for the (b)(1)(iii) of this section applies, exceeds the producer price differential, partially regulated distributing plant payments made by the operator of the both prices to be applicable at the shall be priced at the statistical uniform nonpool supply plant to the producer- location of the partially regulated price or uniform price, whichever is settlement fund of any order.

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(c) The operator of a partially § 1000.78 Charges on overdue accounts. milk and butterfat subtracted pursuant regulated distributing plant that is Any unpaid obligation due the market to § 1000.76(a)(1)(i)and (ii). subject to marketwide pooling of returns administrator, producers, or cooperative under a milk classification and pricing § 1000.86 Deduction for marketing associations from a handler pursuant to services. program that is imposed under the the provisions of the order shall be authority of a State government shall increased 1.0 percent each month (a) Except as provided in paragraph pay on or before the 25th day after the beginning with the day following the (b) of this section, each handler in end of the month (except as provided in date such obligation was due under the making payments to producers for milk § 1000.90) to the market administrator order. Any remaining amount due shall (other than milk of such handler’s own for the producer-settlement fund an be increased at the same rate on the production) pursuant to § llll.73 of amount computed as follows: corresponding day of each succeeding each Federal milk order shall deduct an After completing the computations month until paid. The amounts payable amount specified by the market described in paragraphs (a)(1)(i) and (ii) pursuant to this section shall be administrator that is no more than 7 of this section, determine the value of computed monthly on each unpaid cents per hundredweight and shall pay the remaining pounds of fluid milk obligation and shall include any unpaid the amount deducted to the market products disposed of as route charges previously computed pursuant administrator not later than the payment disposition in the marketing area by to this section. The late charges shall receipt date specified under multiplying the hundredweight of such accrue to the administrative assessment § llll.71 of each Federal milk pounds by the amount, if greater than fund. For the purpose of this section, order. The money shall be used by the zero, that remains after subtracting the any obligation that was determined at a market administrator to verify or State program’s class prices applicable date later than prescribed by the order to such products at the plant’s location because of a handler’s failure to submit establish weights, samples and tests of from the Federal order Class I price a report to the market administrator producer milk and provide market applicable at the location of the plant. when due shall be considered to have information for producers who are not (d) Any handler may elect partially been payable by the date it would have receiving such services from a regulated distributing plant status for been due if the report had been filed cooperative association. The services any plant with respect to receipts of when due. shall be performed in whole or in part nonfluid milk ingredients that are by the market administrator or an agent reconstituted for fluid use. Payments Subpart IÐAdministrative Assessment engaged by and responsible to the may be made to the producer-settlement and Marketing Service Deduction market administrator. fund of the order regulating the § 1000.85 Assessment for order (b) In the case of producers for whom producer milk used to produce the administration. the market administrator has nonfluid milk ingredients at the positive On or before the payment receipt date determined that a cooperative difference between the Class I price specified under § llll.71 of each association is actually performing the applicable under the other order at the Federal milk order each handler shall services set forth in paragraph (a) of this location of the plant where the nonfluid pay to the market administrator its pro section, each handler shall make milk ingredients were processed and the rata share of the expense of deductions from the payments to be Class IV price. This payment option administration of the order at a rate made to producers as may be authorized shall apply only if a majority of the total specified by the market administrator by the membership agreement or milk received at the plant that processed that is no more than 5 cents per marketing contract between the the nonfluid milk ingredients is hundredweight with respect to: regulated under one or more Federal cooperative association and the orders and payment may only be made (a) Receipts of producer milk producers. On or before the 15th day to the producer-settlement fund of the (including the handler’s own after the end of the month (except as order pricing a plurality of the milk production) other than such receipts by provided in § 1000.90), such deductions used to produce the nonfluid milk a handler described in § 1000.9(c) that shall be paid to the cooperative ingredients. This payment option shall were delivered to pool plants of other association rendering the services not apply if the source of the nonfluid handlers; accompanied by a statement showing ingredients used in reconstituted fluid (b) Receipts from a handler described the amount of any deductions and the milk products cannot be determined by in § 1000.9(c); amount of milk for which the deduction the market administrator. (c) Receipts of concentrated fluid milk was computed for each producer. These products from unregulated supply deductions shall be made in lieu of the § 1000.77 Adjustment of accounts. plants and receipts of nonfluid milk deduction specified in paragraph (a) of Whenever audit by the market products assigned to Class I use this section. administrator of any handler’s reports, pursuant to § 1000.43(d) and other books, records, or accounts, or other source milk allocated to Class I pursuant Subpart JÐMiscellaneous Provisions verification discloses errors resulting in to § 1000.44(a)(3) and (8) and the money due the market administrator corresponding steps of § 1000.44(b), § 1000.90 Dates. from a handler, or due a handler from except other source milk that is If a date required for a payment the market administrator, or due a excluded from the computations contained in a Federal milk order falls llll producer or cooperative association pursuant to § .60(d) and (e) of on a Saturday, Sunday, or national from a handler, the market parts 1005, 1006, and 1007 or llll holiday, such payment or administrator shall promptly notify § .60(h) and (i) of parts 1001, announcement will be due on the next 1030, 1032, 1033, 1124, 1126, 1131, and such handler of any amount so due and day that the market administrator’s 1135; and payment thereof shall be made on or office is open for public business. before the next date for making (d) Route disposition in the marketing payments as set forth in the provisions area from a partially regulated under which the error(s) occurred. distributing plant that exceeds the skim

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§ 1000.91 [Reserved] Payments for Milk Sterling and Victory in Cayuga County; the city of Hornell, and the townships § 1000.92 [Reserved] 1001.70 Producer-settlement fund. 1001.71 Payments to the producer- of Avoca, Bath, Bradford, Canisteo, § 1000.93 OMB control number assigned settlement fund. Cohocton, Dansville, Fremont, Pulteney, pursuant to the Paperwork Reduction Act. 1001.72 Payments from the producer- Hartsville, Hornellsville, Howard, The information collection settlement fund. Prattsburg, Urbana, Wayland, Wayne 1001.73 Payments to producers and to and Wheeler in Steuben County; and the requirements contained in this cooperative associations. regulation have been approved by the 1001.74 [Reserved] townships of Italy, Middlesex, and Office of Management and Budget 1001.75 Plant location adjustments for Potter in Yates County. (OMB) under the provisions of Title 44 producer milk and nonpool milk. Pennsylvania Counties U.S.C. chapter 35 and have been 1001.76 Payments by a handler operating a assigned OMB control number 0581– partially regulated distributing plant. Adams, Bucks, Chester, Cumberland, 0032. 1001.77 Adjustment of accounts. Dauphin, Delaware, Franklin, Fulton, 1001.78 Charges on overdue accounts. Juniata, Lancaster, Lebanon, PART 1001ÐMILK IN THE Administrative Assessment and Marketing Montgomery, Perry, Philadelphia, and NORTHEAST MARKETING AREA Service Deduction York. SubpartÐOrder Regulating Handling 1001.85 Assessment for order Virginia Counties and Cities administration. General Provisions 1001.86 Deduction for marketing services. Arlington, Fairfax, Loudoun, and Sec. Authority: 7 U.S.C. 601–674. Prince William, and the cities of 1001.1 General provisions. Alexandria, Fairfax, Falls Church, SubpartÐOrder Regulating Handling Definitions Manassas, and Manassas Park. 1001.2 Northeast marketing area. General Provisions § 1001.3 Route disposition. 1001.3 Route disposition. See § 1000.3. 1001.4 Plant. § 1001.1 General provisions. 1001.5 Distributing plant. The terms, definitions, and provisions § 1001.4 Plant. 1001.6 Supply plant. in part 1000 of this chapter apply to and (a) Except as provided in paragraph 1001.7 Pool plant. are hereby made a part of this order. In (b) of this section, plant means the land, 1001.8 Nonpool plant. this part 1001, all references to sections 1001.9 Handler. buildings, facilities, and equipment in part 1000 refer to part 1000 of this 1001.10 Producer-handler. constituting a single operating unit or chapter. 1001.11 [Reserved] establishment at which milk or milk 1001.12 Producer. Definitions products are received, processed, or 1001.13 Producer milk. packaged, including a facility described 1001.14 Other source milk. § 1001.2 Northeast marketing area. 1001.15 Fluid milk product. in paragraph (b)(2) of this section if the The marketing area means all the facility receives the milk of more than 1001.16 Fluid cream product. territory within the bounds of the 1001.17 [Reserved] one dairy farmer. 1001.18 Cooperative association. following states and political (b) Plant shall not include: subdivisions, including all piers, docks 1001.19 Commercial food processing (1) A separate building without and wharves connected therewith and establishment. stationary storage tanks that is used only all craft moored thereat, and all territory as a reload point for transferring bulk Handler Reports occupied by government (municipal, milk from one tank truck to another or 1001.30 Reports of receipts and utilization. State or Federal) reservations, a separate building used only as a 1001.31 Payroll reports. installations, institutions, or other distribution point for storing packaged 1001.32 Other reports. similar establishments if any part fluid milk products in transit for route Classification of Milk thereof is within any of the listed states disposition; or political subdivisions: 1001.40 Classes of utilization. (2) An on-farm facility operated as 1001.41 [Reserved] Connecticut, Delaware, Massachusetts, 1001.42 Classification of transfers and part of a single dairy farm entity for the diversions. New Hampshire, New Jersey, Rhode separation of cream and skim milk; or 1001.43 General classification rules. Island, Vermont and District of (3) Bulk reload points where milk is 1001.44 Classification of producer milk. Columbia transferred from one tank truck to 1001.45 Market administrator’s reports and All of the States of Connecticut, another while en route from dairy announcements concerning Delaware, Massachusetts, New farmers’ farms to a plant. If stationary classification. Hampshire, New Jersey, Rhode Island, storage tanks are used for transferring Class Prices Vermont and the District of Columbia. milk at the premises, the operator of the facility shall make an advance written 1001.50 Class prices, component prices, Maryland Counties and advanced pricing factors. request to the market administrator that 1001.51 Class I differential and price. All of the State of Maryland except the facility shall be treated as a reload 1001.52 Adjusted Class I differentials. the counties of Allegany and Garrett. point. The cooling of milk, collection of 1001.53 Announcement of class prices, samples, and washing and sanitizing of New York Counties, Cities, and component prices, and advanced pricing tank trucks at the premises shall not Townships factors. disqualify it as a bulk reload point. 1001.54 Equivalent price. All counties within the State of New Producer Price Differential York except Allegany, Cattaraugus, § 1001.5 Distributing plant. 1001.60 Handler’s value of milk. Chatauqua, Erie, Genessee, Livingston, See § 1000.5. 1001.61 Computation of producer price Monroe, Niagara, Ontario, Orleans, § 1001.6 Supply plant. differential. Seneca, Wayne, and Wyoming; the 1001.62 Announcement of producer prices. townships of Conquest, Montezuma, See § 1000.6.

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§ 1001.7 Pool plant. plant fails to meet the requirements of Written notification must be given to the Pool plant means a plant, unit of a duly constituted regulatory agency, market administrator listing the plants plants, or system of plants as specified the plant fails to meet a shipping to be included in the system prior to the in paragraphs (a) through (f) of this requirement instituted pursuant to first day of July preceding the effective section, but excluding a plant described paragraph (f) of this section, or the plant date of the system. The plants included in paragraph (h) of this section. The operator requests nonpool status for the in the system shall be listed in the pooling standards described in plant. The shipping requirement for any sequence in which they shall qualify for paragraphs (c) and (f) of this section are plant which has not met the pool plant status based on the minimum subject to modification pursuant to requirements of paragraphs (c)(1) and deliveries required. If the deliveries paragraph (g) of this section. (c)(2) of this section must equal not less made are insufficient to qualify the (a) A distributing plant, other than a than 10 percent of the total quantity of entire system for pooling, the last listed plant qualified as a pool plant pursuant milk that is received at the plant or plant shall be excluded from the system, to paragraph (b) of this section or diverted from it pursuant to § 1001.13 followed by the plant next-to-last on the section 7(b) of any other Federal milk during each of the months of January list, and continuing in this sequence order, from which during the month 25 through July in order for the plant to be until remaining listed plants have met percent or more of the total quantity of a pool plant in each of those months; the minimum shipping requirements; fluid milk products physically received (4) If milk is delivered directly from and at the plant (excluding concentrated producers’ farms that are located (2) Each plant that qualifies as a pool milk received from another plant by outside of the states included in the plant within a system shall continue agreement for other than Class I use) are marketing area or outside Maine or West each month as a plant in the system disposed of as route disposition or are Virginia, such producers must be through the following July unless the transferred in the form of packaged fluid grouped by state into reporting units plant subsequently fails to qualify for milk products to other distributing and each reporting unit must pooling, the handler submits a written plants. At least 25 percent of such route independently meet the shipping notification to the market administrator disposition and transfers must be to requirements of this paragraph; and prior to the first day of the month that outlets in the marketing area. (5) Concentrated milk transferred the plant be deleted from the system, or (b) Any distributing plant located in from the supply plant to a distributing that the system be discontinued. Any the marketing area which during the plant for an agreed-upon use other than plant that has been so deleted from the month processed at least 25 percent of Class I shall be excluded from the system, or that has failed to qualify as the total quantity of fluid milk products supply plant’s shipments in computing a pool plant in any month, will not be physically received at the plant the percentages in paragraphs (c)(1) and part of the system for the remaining (excluding concentrated milk received (2) of this section. months through July. For any system from another plant by agreement for (d) [Reserved] that qualifies in August, no plant may other than Class I use) into ultra- (e) Two or more plants that are be added in any subsequent month pasteurized or aseptically-processed located in the marketing area and through the following July unless the fluid milk products. operated by the same handler may plant replaces another plant in the (c) A supply plant from which fluid qualify as a unit by meeting the total system that has ceased operations and milk products are transferred or and in-area route distribution the market administrator is notified of diverted to plants described in requirements specified in paragraph (a) such replacement prior to the first day paragraph (a) or (b) of this section of this section subject to the following of the month for which it is to be subject to the additional conditions additional requirements: effective. described in this paragraph. In the case (1) At least one of the plants in the (g) The applicable shipping of a supply plant operated by a unit qualifies as a pool plant pursuant percentages of paragraphs (c) and (f) of cooperative association handler to paragraph (a) of this section; this section may be increased or described in § 1000.9(c), fluid milk (2) Other plants in the unit must decreased by the market administrator if products that the cooperative delivers to process only Class I or Class II products the market administrator finds that such pool plants directly from producers’ and must be located in a pricing zone adjustment is necessary to encourage farms shall be treated as if transferred providing the same or a lower Class I needed shipments or to prevent from the cooperative association’s plant price than the price applicable at the uneconomic shipments. Before making for the purpose of meeting the shipping distributing plant included in the unit; such a finding, the market administrator requirements of this paragraph. and shall investigate the need for adjustment (1) During the months of August and (3) A written request to form a unit, either on the market administrator’s December, such shipments must equal or to add or remove plants from a unit, own initiative or at the request of not less than 10 percent of the total or to cancel a unit, must be filed with interested parties if the request is made quantity of milk that is received at the the market administrator prior to the in writing at least 15 days prior to the plant or diverted from it pursuant to first day of the month for which unit month for which the requested revision § 1001.13 during the month; formation is to be effective. is desired effective. If the investigation (2) During the months of September (f) Two or more supply plants shows that an adjustment of the through November, such shipments operated by the same handler, or by one shipping percentages might be must equal not less than 20 percent of or more cooperative associations, may appropriate, the market administrator the total quantity of milk that is qualify for pooling as a system of plants shall issue a notice stating that an received at the plant or diverted from it by meeting the applicable percentage adjustment is being considered and pursuant to § 1001.13 during the month; requirements of paragraph (c) of this invite data, views and arguments. Any (3) A plant which meets the shipping section in the same manner as a single decision to revise an applicable requirements of this paragraph during plant subject to the following additional shipping percentage must be issued in each of the months of August through requirements: writing at least one day before the December shall be a pool plant during (1) A supply plant system will be effective date. the following months of January through effective for the period of August 1 (h) The term pool plant shall not July unless the milk received at the through July 31 of the following year. apply to the following plants:

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(1) A producer-handler plant; (c) Receives at its plant or acquires for described in § 1000.9(c) if the pool plant (2) An exempt plant as defined in route disposition no more than 150,000 operator or the cooperative association § 1000.8(e); pounds of fluid milk products from caused milk from the same farm to be (3) A plant qualified pursuant to handlers fully regulated under any delivered to any plant as other than paragraph (a) of this section that is Federal order. This limitation shall not producer milk, as defined under this located within the marketing area if the apply if the producer-handler’s own order or any other Federal milk order, plant also meets the pooling farm production is less than 150,000 during the same month, either of the 2 requirements of another Federal order pounds during the month; preceding months, or during any of the and more than 50 percent of its route (d) Disposes of no other source milk preceding months of July through distribution has been in such other as Class I milk except by increasing the November; and Federal order marketing area for 3 nonfat milk solids content of the fluid (6) For any month of July through consecutive months; milk products; and November, any dairy farmer whose milk (4) A plant qualified pursuant to (e) Provides proof satisfactory to the is received at a pool plant or by a paragraph (a) of this section which is market administrator that the care and cooperative association handler not located within any Federal order management of the dairy animals and described in § 1000.9(c) if the pool plant marketing area that meets the pooling other resources necessary to produce all operator or the cooperative association requirements of another Federal order Class I milk handled (excluding receipts caused milk from the same farm to be and has had greater route disposition in from handlers fully regulated under any delivered to any plant as other than such other Federal order’s marketing Federal order) and the processing and producer milk, as defined under this area for 3 consecutive months; packaging operations are the producer- order or any other Federal milk order, (5) A plant qualified pursuant to handler’s own enterprise and at its own during the same month. paragraph (a) of this section that is risk. located in another Federal order § 1001.13 Producer milk. marketing area if the plant meets the § 1001.11 [Reserved] Producer milk means the skim milk pooling requirements of such other (or the skim equivalent of components § 1001.12 Producer. Federal order and does not have a of skim milk) and butterfat contained in majority of its route distribution in this (a) Except as provided in paragraph milk of a producer that is: marketing area for 3 consecutive months (b) of this section, producer means any (a) Received by the operator of a pool or if the plant is required to be regulated person who produces milk approved by plant directly from a producer or from under such other Federal order without a duly constituted regulatory agency for a handler described in § 1000.9(c). Any regard to its route disposition in any fluid consumption as Grade A milk and milk which is picked up from the other Federal order marketing area; whose milk (or components of milk) is: producer’s farm in a tank truck under (6) A plant qualified pursuant to (1) Received at a pool plant directly the control of the operator of a pool paragraph (c) of this section which also from the producer or diverted by the plant or a handler described in meets the pooling requirements of plant operator in accordance with § 1000.9(c) but which is not received at another Federal order and from which § 1001.13; or a plant until the following month shall greater qualifying shipments are made (2) Received by a handler described in be considered as having been received to plants regulated under the other § 1000.9(c). by the handler during the month in Federal order than are made to plants (b) Producer shall not include a dairy which it is picked up at the farm. All regulated under this order, or the plant farmer described in paragraphs (b)(1) milk received pursuant to this has automatic pooling status under the through (6) of this section. A dairy paragraph shall be priced at the location other Federal order; and farmer described in paragraphs (b)(5) or of the plant where it is first physically (7) That portion of a pool plant (6) of this section shall be known as a received; designated as a ‘‘nonpool plant’’ that is dairy farmer for other markets. (b) Received by the operator of a pool physically separate and operated (1) A producer-handler as defined in plant or a handler described in separately from the pool portion of such any Federal order; § 1000.9(c) in excess of the quantity plant. The designation of a portion of a (2) A dairy farmer whose milk is delivered to pool plants subject to the regulated plant as a nonpool plant must received at an exempt plant, excluding following conditions: be requested in writing by the handler producer milk diverted to the exempt (1) The producers whose farms are and must be approved by the market plant pursuant to § 1001.13(d); outside of the states included in the administrator. (3) A dairy farmer whose milk is marketing area and outside the states of received by diversion at a pool plant § 1001.8 Nonpool plant. Maine or West Virginia shall be from a handler regulated under another organized into state units and each such See § 1000.8. Federal order if the other Federal order unit shall be reported separately; and § 1001.9 Handler. designates the dairy farmer as a (2) For pooling purposes, each See § 1000.9. producer under that order and that milk reporting unit must satisfy the shipping is allocated by request to a utilization standards specified for a supply plant § 1001.10 Producer-handler. other than Class I; pursuant to § 1001.7(c); Producer-handler means a person (4) A dairy farmer whose milk is (c) Diverted by a proprietary pool who: reported as diverted to a plant fully plant operator to another pool plant. (a) Operates a dairy farm and a regulated under another Federal order Milk so diverted shall be priced at the distributing plant from which there is with respect to that portion of the milk location of the plant to which diverted; monthly route disposition in the so diverted that is assigned to Class I or marketing area during the month; under the provisions of such other (d) Diverted by the operator of a pool (b) Receives milk solely from own order; plant or by a handler described in farm production or receives milk that is (5) For any month of December § 1000.9(c) to a nonpool plant, subject to fully subject to the pricing and pooling through June, any dairy farmer whose the following conditions: provisions of this or any other Federal milk is received at a pool plant or by a (1) Milk of a dairy farmer shall not be order; cooperative association handler eligible for diversion unless milk of

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A approval), the dairy farmer’s milk with respect to such plant in the same shall not be eligible for diversion until manner as prescribed for reports § 1001.44 Classification of producer milk. milk of the dairy farmer has been required by paragraph (a) of this section. See § 1000.44. physically received as producer milk at Receipts of milk that would have been § 1001.45 Market administrator's reports a pool plant; and producer milk if the plant had been (2) Diverted milk shall be priced at and announcements concerning fully regulated shall be reported in lieu classification. the location of the plant to which of producer milk. The report shall show See § 1000.45. diverted. also the quantity of any reconstituted § 1001.14 Other source milk. skim milk in route disposition in the Class Prices marketing area. See § 1000.14. § 1001.50 Class prices, component prices, (c) Each handler described in and advanced pricing factors. § 1001.15 Fluid milk product. § 1000.9(c) shall report: See § 1000.50. See § 1000.15. (1) The product pounds, pounds of § 1001.51 Class I differential and price. § 1001.16 Fluid cream product. butterfat, pounds of protein, and the pounds of solids-not-fat other than The Class I differential shall be the See § 1000.16. protein (other solids) contained in differential established for Suffolk § 1001.17 [Reserved] receipts of milk from producers; and County, Massachusetts, which is reported in § 1000.52. The Class I price § 1001.18 Cooperative association. (2) The utilization or disposition of such receipts. shall be the price computed pursuant to See § 1000.18. § 1000.50(a) for Suffolk County, (d) Each handler not specified in Massachusetts. § 1001.19 Commercial food processing paragraph (a) or (b) of this section shall establishment. report with respect to its receipts and § 1001.52 Adjusted Class I differentials. See § 1000.19. utilization of milk and milk products in See § 1000.52. such manner as the market Handler Reports administrator may prescribe. § 1001.53 Announcement of class prices, § 1001.30 Reports of receipts and component prices, and advanced pricing § 1001.31 Payroll reports. utilization. factors. Each handler shall report monthly so (a) On or before the 22nd day after the See § 1000.53. that the market administrator’s office end of each month, each handler that § 1001.54 Equivalent price. operates a pool plant pursuant to receives the report on or before the 9th See § 1000.54. day after the end of the month, in the § 1001.7 and each handler described in detail and on prescribed forms, as § 1000.9(c) shall report to the market Producer Price Differential follows: administrator its producer payroll for (a) Each pool plant operator shall the month, in detail prescribed by the § 1001.60 Handler's value of milk. report for each of its operations the market administrator, showing for each For the purpose of computing a following information: producer the information specified in handler’s obligation for producer milk, (1) Product pounds, pounds of § 1001.73(e). the market administrator shall butterfat, pounds of protein, and pounds (b) Each handler operating a partially determine for each month the value of of nonfat solids other than protein regulated distributing plant who elects milk of each handler with respect to (other solids) contained in or to make payment pursuant to each of the handler’s pool plants and of represented by: § 1000.76(b) shall report for each dairy each handler described in § 1000.9(c) (i) Receipts of producer milk, farmer who would have been a producer with respect to milk that was not including producer milk diverted by the if the plant had been fully regulated in received at a pool plant by adding the reporting handler, from sources other the same manner as prescribed for amounts computed in paragraphs (a) than handlers described in § 1000.9(c); reports required by paragraph (a) of this through (h) of this section and and section. subtracting from that total amount the (ii) Receipts of milk from handlers value computed in paragraph (i) of this described in § 1000.9(c); § 1001.32 Other reports. section. Unless otherwise specified, the skim milk, butterfat, and the combined (2) Product pounds and pounds of In addition to the reports required pounds of skim milk and butterfat butterfat contained in: pursuant to §§ 1001.30 and 1001.31, referred to in this section shall result (i) Receipts of fluid milk products and each handler shall report any from the steps set forth in § 1000.44(a), bulk fluid cream products from other information the market administrator (b), and (c), respectively, and the nonfat pool plants; deems necessary to verify or establish components of producer milk in each (ii) Receipts of other source milk; and each handler’s obligation under the class shall be based upon the proportion (iii) Inventories at the beginning and order. end of the month of fluid milk products of such components in producer skim and bulk fluid cream products; Classification of Milk milk. Receipts of nonfluid milk (3) The utilization or disposition of all products that are distributed as labeled § 1001.40 Classes of utilization. milk and milk products required to be reconstituted milk for which payments reported pursuant to this paragraph; and See § 1000.40. are made to the producer-settlement

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Class I pursuant to § 1000.44(a)(8) and more than 5 cents from the price (b) Class II value. the corresponding step of § 1000.44(b), computed pursuant to paragraph (e) of (1) Multiply the pounds of nonfat excluding such skim milk and butterfat this section. The result, rounded to the solids in Class II skim milk by the Class in receipts of fluid milk products from nearest cent, shall be known as the II nonfat solids price; and an unregulated supply plant to the producer price differential for the (2) Add an amount obtained by extent that an equivalent amount of month. multiplying the pounds of butterfat in skim milk or butterfat disposed of to Class II times the Class II butterfat price. § 1001.62 Announcement of producer such plant by handlers fully regulated prices. (c) Class III value. under any Federal milk order is (1) Multiply the pounds of protein in classified and priced as Class I milk and On or before the 13th day after the Class III skim milk by the protein price; is not used as an offset for any other end of the month, the market (2) Add an amount obtained by payment obligation under any order. administrator shall announce the multiplying the pounds of other solids (i) For reconstituted milk made from following prices and information: in Class III skim milk by the other solids receipts of nonfluid milk products, (a) The producer price differential; price; and multiply $1.00 (but not more than the (b) The protein price; (3) Add an amount obtained by difference between the Class I price (c) The nonfat solids price; (d) The other solids price; multiplying the pounds of butterfat in applicable at the location of the pool (e) The butterfat price; Class III by the butterfat price. plant and the Class IV price) by the (d) Class IV value. (f) The average butterfat, protein, hundredweight of skim milk and (1) Multiply the pounds of nonfat nonfat solids, and other solids content butterfat contained in receipts of solids in Class IV skim milk by the of producer milk; and nonfluid milk products that are nonfat solids price; and (g) The statistical uniform price for allocated to Class I use pursuant to (2) Add an amount obtained by milk containing 3.5 percent butterfat § 1000.43(d). multiplying the pounds of butterfat in computed by combining the Class III Class IV by the butterfat price. § 1001.61 Computation of producer price price and the producer price (e) Multiply the pounds of skim milk differential. differential. and butterfat overage assigned to each For each month, the market Payments for Milk class pursuant to § 1000.44(a)(11) and administrator shall compute a producer the corresponding step of § 1000.44(b) price differential per hundredweight. § 1001.70 Producer-settlement fund. by the skim milk prices and butterfat The report of any handler who has not See § 1000.70. prices applicable to each class. made payments required pursuant to (f) Multiply the difference between § 1001.71 for the preceding month shall § 1001.71 Payments to the producer- the current month’s Class I, II, or III not be included in the computation of settlement fund. price, as the case may be, and the Class the producer price differential, and such Each handler shall make payment to IV price for the preceding month by the handler’s report shall not be included in the producer-settlement fund in a hundredweight of skim milk and the computation for succeeding months manner that provides receipt of the butterfat subtracted from Class I, II, or until the handler has made full payment funds by the market administrator no III, respectively, pursuant to of outstanding monthly obligations. later than the 15th day after the end of § 1000.44(a)(7) and the corresponding Subject to the aforementioned the month (except as provided in step of § 1000.44(b); conditions, the market administrator § 1000.90). Payment shall be the (g) Multiply the difference between shall compute the producer price amount, if any, by which the amount the Class I price applicable at the differential in the following manner: specified in paragraph (a) of this section location of the pool plant and the Class (a) Combine into one total the values exceeds the amount specified in IV price by the hundredweight of skim computed pursuant to § 1001.60 for all paragraph (b) of this section: milk and butterfat assigned to Class I handlers required to file reports (a) The total value of milk to the pursuant to § 1000.43(d) and the prescribed in § 1001.30; handler for the month as determined hundredweight of skim milk and (b) Subtract the total of the values pursuant to § 1001.60. butterfat subtracted from Class I obtained by multiplying each handler’s (b) The sum of: pursuant to § 1000.44(a)(3)(i) through total pounds of protein, other solids, (1) An amount obtained by (vi) and the corresponding step of and butterfat contained in the milk for multiplying the total hundredweight of § 1000.44(b), excluding receipts of bulk which an obligation was computed producer milk as determined pursuant fluid cream products from a plant pursuant to § 1001.60 by the protein to § 1000.44(c) by the producer price regulated under other Federal orders price, other solids price, and the differential as adjusted pursuant to and bulk concentrated fluid milk butterfat price, respectively; § 1001.75; products from pool plants, plants (c) Add an amount equal to the sum (2) An amount obtained by regulated under other Federal orders, of the location adjustments computed multiplying the total pounds of protein, and unregulated supply plants. pursuant to § 1001.75; other solids, and butterfat contained in (h) Multiply the difference between (d) Add an amount equal to not less producer milk by the protein, other the Class I price applicable at the than one-half of the unobligated balance solids, and butterfat prices respectively; location of the nearest unregulated in the producer-settlement fund; and

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(3) An amount obtained by (B) Subtract the deduction for (vii) Multiply the pounds of protein in multiplying the pounds of skim milk marketing services pursuant to Class III milk by the protein price for the and butterfat for which a value was § 1000.86; month; computed pursuant to § 1001.60(h) by (C) Add or subtract for errors made in (viii) Multiply the pounds of other the producer price differential as previous payments to the producer; and solids in Class III milk by the other adjusted pursuant to § 1001.75 for the (D) Subtract proper deductions solids price for the month; and location of the plant from which authorized in writing by the producer. (ix) Add together the amounts received. (b) One day before partial and final computed in paragraphs (b)(3)(i) payments are due pursuant to paragraph through (viii) of this section and from § 1001.72 Payments from the producer- (a) of this section, each pool plant that sum deduct any payment made settlement fund. operator shall pay a cooperative pursuant to paragraph (b)(2) of this No later than the 16th day after the association for milk received as follows: section. end of each month (except as provided (1) Partial payment to a cooperative (4) Final payment to a cooperative in § 1000.90), the market administrator association for bulk milk received association for bulk milk received shall pay to each handler the amount, if directly from producers’ farms. For bulk directly from producers’ farms. For bulk any, by which the amount computed milk (including the milk of producers milk received from a cooperative pursuant to § 1001.71(b) exceeds the who are not members of such association during the month, including amount computed pursuant to association and who the market the milk of producers who are not § 1001.71(a). If, at such time, the balance administrator determines have members of such association and who in the producer-settlement fund is authorized the cooperative association the market administrator determines insufficient to make all payments to collect payment for their milk) have authorized the cooperative pursuant to this section, the market received during the first 15 days of the association to collect payment for their administrator shall reduce uniformly month from a cooperative association in milk, the final payment for such milk such payments and shall complete the any capacity, except as the operator of shall be an amount equal to the sum of payments as soon as the funds are a pool plant, the payment shall be equal the individual payments otherwise available. to the hundredweight of milk received payable for such milk pursuant to § 1001.73 Payments to producers and to multiplied by the lowest announced paragraph (a)(2) of this section. cooperative associations. class price for the preceding month. (c) If a handler has not received full payment from the market administrator (a) Each pool plant operator that is not (2) Partial payment to a cooperative pursuant to § 1001.72 by the payment paying a cooperative association for association for milk transferred from its date specified in paragraph (a) or (b) of producer milk shall pay each producer pool plant. For bulk milk/skimmed milk this section, the handler may reduce as follows: products received during the first 15 (1) Partial payment. For each days of the month from a cooperative payments pursuant to paragraphs (a) producer who has not discontinued association in its capacity as the and (b) of this section, but by not more shipments as of the 23rd day of the operator of a pool plant, the partial than the amount of the underpayment. month, payment shall be made so that payment shall be at the pool plant The payments shall be completed on the it is received by the producer on or operator’s estimated use value of the next scheduled payment date after before the 26th day of the month (except milk using the most recent class prices receipt of the balance due from the as provided in § 1000.90) for milk available at the receiving plant’s market administrator. received during the first 15 days of the location. (d) If a handler claims that a required month at not less than the lowest (3) Final payment to a cooperative payment to a producer cannot be made announced class price for the preceding association for milk transferred from its because the producer is deceased or month, less proper deductions pool plant. Following the classification cannot be located, or because the authorized in writing by the producer. of bulk fluid milk products and bulk cooperative association or its lawful (2) Final payment. For milk received fluid cream products received during successor or assignee is no longer in during the month, payment shall be the month from a cooperative existence, the payment shall be made to made so that it is received by each association in its capacity as the the producer-settlement fund, and in the producer no later than the day after the operator of a pool plant, the final event that the handler subsequently payment date required in § 1001.72 in payment for such receipts shall be locates and pays the producer or a an amount computed as follows: determined as follows: lawful claimant, or in the event that the (i) Multiply the hundredweight of (i) Multiply the hundredweight of handler no longer exists and a lawful producer milk received by the producer Class I skim milk by the Class I skim claim is later established, the market price differential for the month as milk price for the month at the receiving administrator shall make the required adjusted pursuant to § 1001.75; plant; payment from the producer-settlement (ii) Multiply the pounds of butterfat (ii) Multiply the pounds of Class I fund to the handler or to the lawful received by the butterfat price for the butterfat by the Class I butterfat price for claimant as the case may be. month; the month at the receiving plant; (e) In making payments to producers (iii) Multiply the pounds of protein (iii) Multiply the pounds of nonfat pursuant to this section, each pool plant received by the protein price for the solids in Class II skim milk by the Class operator shall furnish each producer, month; II nonfat solids price; except a producer whose milk was (iv) Multiply the pounds of other (iv) Multiply the pounds of butterfat received from a cooperative association solids received by the other solids price in Class II times the Class II butterfat handler described in § 1000.9(a) or (c), for the month; and price; a supporting statement in such form that (v) Add the amounts computed in (v) Multiply the pounds of nonfat it may be retained by the recipient paragraphs (a)(2)(i) through (iv) of this solids in Class IV milk by the nonfat which shall show: section, and from that sum: solids price for the month; (1) The name, address, Grade A (A) Subtract the partial payment made (vi) Multiply the pounds of butterfat identifier assigned by a duly constituted pursuant to paragraph (a)(1) of this in Class III and IV milk by the butterfat regulatory agency, and the payroll section; price for the month; number of the producer;

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(2) The month and dates that milk 1005.8 Nonpool plant. SubpartÐOrder Regulating Handling was received from the producer, 1005.9 Handler. including the daily and total pounds of 1005.10 Producer-handler. General Provisions milk received; 1005.11 [Reserved] 1005.12 Producer. § 1005.1 General provisions. (3) The total pounds of butterfat, The terms, definitions, and provisions protein, and other solids contained in 1005.13 Producer milk. 1005.14 Other source milk. in part 1000 of this chapter apply to and the producer’s milk; 1005.15 Fluid milk product. are hereby made a part of this order. In (4) The minimum rate or rates at 1005.16 Fluid cream product. this part 1005, all references to sections which payment to the producer is 1005.17 [Reserved] in part 1000 refer to part 1000 of this required pursuant to this order; 1005.18 Cooperative association. chapter. (5) The rate used in making payment 1005.19 Commercial food processing if the rate is other than the applicable establishment. Definitions minimum rate; § 1005.2 Appalachian marketing area. (6) The amount, or rate per Handler Reports hundredweight, or rate per pound of 1005.30 Reports of receipts and utilization. The marketing area means all the component, and the nature of each 1005.31 Payroll reports. territory within the bounds of the deduction claimed by the handler; and 1005.32 Other reports. following states and political (7) The net amount of payment to the Classification of Milk subdivisions, including all piers, docks producer or cooperative association. and wharves connected therewith and 1005.40 Classes of utilization. all craft moored thereat, and all territory § 1001.74 [Reserved] 1005.41 [Reserved] occupied by government (municipal, 1005.42 Classification of transfers and State or Federal) reservations, § 1001.75 Plant location adjustments for diversions. producer milk and nonpool milk. 1005.43 General classification rules. installations, institutions, or other 1005.44 Classification of producer milk. similar establishments if any part For purposes of making payments for thereof is within any of the listed states producer milk and nonpool milk, a 1005.45 Market administrator’s reports and announcements concerning or political subdivisions: plant location adjustment shall be classification. determined by subtracting the Class I Georgia Counties price specified in § 1001.51 from the Class Prices Catoosa, Chattooga, Dade, Fannin, Murray, Class I price at the plant’s location. The 1005.50 Class prices, component prices, Walker, and Whitfield. difference, plus or minus as the case and advanced pricing factors. Indiana Counties 1005.51 Class I differential and price. may be, shall be used to adjust the Clark, Crawford, Daviess, Dubois, Floyd, payments required pursuant to 1005.52 Adjusted Class I differentials. 1005.53 Announcement of class prices, Gibson, Greene, Harrison, Knox, Martin, §§ 1001.73 and 1000.76. Orange, Perry, Pike, Posey, Scott, Spencer, component prices, and advanced pricing Sullivan, Vanderburgh, Warrick, and factors. § 1001.76 Payments by a handler Washington. operating a partially regulated distributing 1005.54 Equivalent price. plant. Kentucky Counties Uniform Prices See § 1000.76. Adair, Anderson, Bath, Bell, Bourbon, 1005.60 Handler’s value of milk. Boyle, Breathitt, Breckinridge, Bullitt, Butler, § 1001.77 Adjustment of accounts. 1005.61 Computation of uniform prices. Carroll, Carter, Casey, Clark, Clay, Clinton, 1005.62 Announcement of uniform prices. See § 1000.77. Cumberland, Daviess, Edmonson, Elliott, Payments for Milk Estill, Fayette, Fleming, Franklin, Gallatin, § 1001.78 Charges on overdue accounts. Garrard, Grayson, Green, Hancock, Hardin, 1005.70 Producer-settlement fund. See § 1000.78. Harlan, Hart, Henderson, Henry, Hopkins, 1005.71 Payments to the producer- Jackson, Jefferson, Jessamine, Knott, Knox, Administrative Assessment and settlement fund. Larue, Laurel, Lee, Leslie, Letcher, Lincoln, Marketing Service Deduction 1005.72 Payments from the producer- Madison, Marion, McCreary, McLean, Meade, settlement fund. Menifee, Mercer, Montgomery, Morgan, § 1001.85 Assessment for order 1005.73 Payments to producers and to Muhlenberg, Nelson, Nicholas, Ohio, administration. cooperative associations. Oldham, Owen, Owsley, Perry, Powell, See § 1000.85. 1005.74 [Reserved] Pulaski, Rockcastle, Rowan, Russell, Scott, 1005.75 Plant location adjustments for Shelby, Spencer, Taylor, Trimble, Union, § 1001.86 Deduction for marketing producer milk and nonpool milk. Washington, Wayne, Webster, Whitley, services. 1005.76 Payments by a handler operating a Wolfe, and Woodford. partially regulated distributing plant. North Carolina and South Carolina See § 1000.86. 1005.77 Adjustment of accounts. 1005.78 Charges on overdue accounts. All of the States of North Carolina and PART 1005ÐMILK IN THE South Carolina. APPALACHIAN MARKETING AREA Marketwide Service Payments Tennessee Counties SubpartÐOrder Regulating Handling 1005.80 Transportation credit balancing fund. Anderson, Blount, Bradley, Campbell, General Provisions 1005.81 Payments to the transportation Carter, Claiborne, Cocke, Cumberland, Grainger, Greene, Hamblen, Hamilton, credit balancing fund. Sec. Hancock, Hawkins, Jefferson, Johnson, Knox, 1005.82 Payments from the transportation 1005.1 General provisions. Loudon, Marion, McMinn, Meigs, Monroe, credit balancing fund. Definitions Morgan, Polk, Rhea, Roane, Scott, Administrative Assessment and Marketing Sequatchie, Sevier, Sullivan, Unicoi, Union, 1005.2 Appalachian marketing area. Service Deduction and Washington. 1005.3 Route disposition. 1005.4 Plant. 1005.85 Assessment for order Virginia Counties and Cities 1005.5 Distributing plant. administration. Buchanan, Dickenson, Lee, Russell, Scott, 1005.6 Supply plant. 1005.86 Deduction for marketing services. Tazewell, Washington, and Wise; and the 1005.7 Pool plant. Authority: 7 U.S.C. 601–674. cities of Bristol and Norton.

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West Virginia Counties plant by the cooperative association and marketing area, meets the pooling McDowell and Mercer. during the month at least 60 percent of requirements of another Federal order, the producer milk of members of such and has had greater route disposition in § 1005.3 Route disposition. cooperative association is delivered such other Federal order marketing area See § 1000.3. directly from farms to pool distributing for 3 consecutive months; § 1005.4 Plant. plants or is transferred to such plants as (4) A plant qualified pursuant to a fluid milk product (excluding See § 1000.4. paragraph (a) of this section which is concentrated milk transferred to a located in another Federal order § 1005.5 Distributing plant. distributing plant for an agreed-upon marketing area, meets the pooling See § 1000.5. use other than Class I) from the standards of the other Federal order, cooperative’s plant. and has not had a majority of its route § 1005.6 Supply plant. (e) Two or more plants operated by disposition in this marketing area for 3 See § 1000.6. the same handler and that are located consecutive months or is locked into within the marketing area may qualify § 1005.7 Pool plant. pool status under such other Federal for pool status as a unit by meeting the order without regard to its route Pool plant means a plant specified in total and in-area route disposition disposition in any other Federal order paragraphs (a) through (d) of this requirements specified in paragraph (a) marketing area; section, or a unit of plants as specified of this section and the following (5) A plant qualified pursuant to in paragraph (e) of this section, but additional requirements: excluding a plant specified in paragraph paragraph (c) of this section which also (1) At least one of the plants in the meets the pooling requirements of (g) of this section. The pooling unit must qualify as a pool plant standards described in paragraphs (c) another Federal order and from which pursuant to paragraph (a) of this section; greater qualifying shipments are made and (d) of this section are subject to (2) Other plants in the unit must to plants regulated under such other modification pursuant to paragraph (f) process only Class I or Class II products order than are made to plants regulated of this section: and must be located in a pricing zone under this order, or such plant has (a) A distributing plant, other than a providing the same or a lower Class I automatic pooling status under such plant qualified as a pool plant pursuant price than the price applicable at the other order; and to paragraph (b) of this section or distributing plant included in the unit section 7(b) of any other Federal milk pursuant to paragraph (e)(1) of this (6) That portion of a pool plant order, from which during the month 50 section; and designated as a ‘‘nonpool plant’’ that is percent or more of the fluid milk (3) A written request to form a unit, physically separate and operated products received at such plant or to add or remove plants from a unit, separately from the pool portion of such (excluding concentrated milk received must be filed with the market plant. The designation of a portion of a from another plant by agreement for administrator prior to the first day of the regulated plant as a nonpool plant must other than Class I use) are disposed of month for which it is to be effective. be requested in writing by the handler as route disposition or are transferred in (f) The applicable shipping and must be approved by the market the form of packaged fluid milk percentages of paragraphs (c) and (d) of administrator. products to other distributing plants. At this section may be increased or § 1005.8 Nonpool plant. least 25 percent of such route decreased by the market administrator if disposition and transfers must be to the market administrator finds that such See § 1000.8. outlets in the marketing area. adjustment is necessary to encourage § 1005.9 Handler. (b) Any distributing plant located in needed shipments or to prevent See § 1000.9. the marketing area which during the uneconomic shipments. Before making month processed at least 50 percent of such a finding, the market administrator § 1005.10 Producer-handler. the total quantity of fluid milk products shall investigate the need for adjustment Producer-handler means a person received at the plant (excluding either on the market administrator’s who: concentrated milk received from own initiative or at the request of another plant by agreement for other (a) Operates a dairy farm and a interested parties if the request is made distributing plant from which there is than Class I use) into ultra-pasteurized in writing at least 15 days prior to the or aseptically-processed fluid milk monthly route disposition in the date for which the requested revision is marketing area; products. desired effective. If the investigation (b) Receives no fluid milk products, (c) A supply plant from which 50 shows that an adjustment of the and acquires no fluid milk products for percent or more of the total quantity of shipping percentages might be route disposition, from sources other milk that is received during the month appropriate, the market administrator than own farm production; from dairy farmers and handlers shall issue a notice stating that an described in § 1000.9(c), including milk adjustment is being considered and (c) Disposes of no other source milk that is diverted from the plant, is invite data, views and arguments. Any as Class I milk except by increasing the transferred to pool distributing plants. decision to revise an applicable nonfat milk solids content of the fluid Concentrated milk transferred from the shipping percentage must be issued in milk products received from own farm supply plant to a distributing plant for writing at least one day before the production; and an agreed-upon use other than Class I effective date. (d) Provides proof satisfactory to the shall be excluded from the supply (g) The term pool plant shall not market administrator that the care and plant’s shipments in computing the apply to the following plants: management of the dairy animals and plant’s shipping percentage. (1) A producer-handler plant; other resources necessary to produce all (d) A plant located within the (2) An exempt plant as defined in Class I milk handled, and the processing marketing area or in the State of Virginia § 1000.8(e); and packaging operations are the that is operated by a cooperative (3) A plant qualified pursuant to producer-handler’s own enterprise and association if pool plant status under paragraph (a) of this section which is are operated at the producer-handler’s this paragraph is requested for such not located within any Federal order own risk.

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§ 1005.11 [Reserved] (3) The total quantity of milk so § 1005.15 Fluid milk product. diverted during the month by a § 1005.12 Producer. See § 1000.15. cooperative association shall not exceed (a) Except as provided in paragraph 25 percent during the months of July § 1005.16 Fluid cream product. (b) of this section, producer means any through November, January, and See § 1000.16. person who produces milk approved by February, and 40 percent during the § 1005.17 [Reserved] a duly constituted regulatory agency for months of December and March through fluid consumption as Grade A milk and June, of the producer milk that the § 1005.18 Cooperative association. whose milk (or components of milk) is: cooperative association caused to be (1) Received at a pool plant directly See § 1000.18. delivered to, and physically received at, from the producer or diverted by the pool plants during the month; § 1005.19 Commercial food processing plant operator in accordance with establishment. § 1005.13; or (4) The operator of a pool plant that (2) Received by a handler described in is not a cooperative association may See § 1000.19. § 1000.9(c). divert any milk that is not under the Handler Reports (b) Producer shall not include: control of a cooperative association that (1) A producer-handler as defined in diverts milk during the month pursuant § 1005.30 Reports of receipts and any Federal order; to paragraph (d) of this section. The utilization. (2) A dairy farmer whose milk is total quantity of milk so diverted during Each handler shall report monthly so received at an exempt plant, excluding the month shall not exceed 25 percent that the market administrator’s office producer milk diverted to the exempt during the months of July through receives the report on or before the 7th plant pursuant to § 1005.13(d); November, January, and February, and day after the end of the month, in the (3) A dairy farmer whose milk is 40 percent during the months of detail and on prescribed forms, as received by diversion at a pool plant December and March through June, of follows: from a handler regulated under another the producer milk physically received at (a) With respect to each of its pool Federal order if the other Federal order such plant (or such unit of plants in the plants, the quantities of skim milk and designates the dairy farmer as a case of plants that pool as a unit butterfat contained in or represented by: producer under that order and that milk pursuant to § 1005.7(d)) during the (1) Receipts of producer milk, is allocated by request to a utilization month, excluding the quantity of including producer milk diverted by the other than Class I; and producer milk received from a handler reporting handler, from sources other (4) A dairy farmer whose milk is described in § 1000.9(c); than handlers described in § 1000.9(c); reported as diverted to a plant fully (5) Any milk diverted in excess of the (2) Receipts of milk from handlers regulated under another order with limits prescribed in paragraphs (d)(3) described in § 1000.9(c); respect to that portion of the milk so and (4) of this section shall not be (3) Receipts of fluid milk products diverted that is assigned to Class I under producer milk. If the diverting handler and bulk fluid cream products from the provisions of such other order. or cooperative association fails to other pool plants; § 1005.13 Producer milk. designate the dairy farmers’ deliveries (4) Receipts of other source milk; that will not be producer milk, no milk (5) Receipts of bulk milk from a plant Producer milk means the skim milk diverted by the handler or cooperative regulated under another Federal order, (or the skim equivalent of components association shall be producer milk; except Federal Order 1007, for which a of skim milk) and butterfat contained in transportation credit is requested milk of a producer that is: (6) Diverted milk shall be priced at (a) Received by the operator of a pool the location of the plant to which pursuant to § 1005.82; plant directly from a producer or a diverted; and (6) Receipts of producer milk handler described in § 1000.9(c). All (7) The delivery day requirements and described in § 1005.82(c)(2), including milk received pursuant to this the diversion percentages in paragraphs the identity of the individual producers paragraph shall be priced at the location (d)(1) through (4) of this section may be whose milk is eligible for the of the plant where it is first physically increased or decreased by the market transportation credit pursuant to that received; administrator if the market paragraph and the date that such milk (b) Received by a handler described in administrator finds that such revision is was received; § 1000.9(c) in excess of the quantity necessary to assure orderly marketing (7) For handlers submitting delivered to pool plants; and efficient handling of milk in the transportation credit requests, transfers (c) Diverted by a pool plant operator marketing area. Before making such a of bulk milk to nonpool plants, to another pool plant. Milk so diverted finding, the market administrator shall including the dates that such milk was shall be priced at the location of the investigate the need for the revision transferred; plant to which diverted; or either on the market administrator’s (8) Inventories at the beginning and (d) Diverted by the operator of a pool own initiative or at the request of end of the month of fluid milk products plant or a handler described in interested persons. If the investigation and bulk fluid cream products; and § 1000.9(c) to a nonpool plant, subject to shows that a revision might be (9) The utilization or disposition of all the following conditions: appropriate, the market administrator milk and milk products required to be (1) In any month of July through shall issue a notice stating that the reported pursuant to this paragraph. December, not less than 6 days’ revision is being considered and (b) Each handler operating a partially production of the producer whose milk inviting written data, views, and regulated distributing plant shall report is diverted is physically received at a arguments. Any decision to revise an with respect to such plant in the same pool plant during the month; applicable percentage must be issued in manner as prescribed for reports (2) In any month of January through writing at least one day before the required by paragraph (a) of this section. June, not less than 2 days’ production of effective date. Receipts of milk that would have been the producer whose milk is diverted is producer milk if the plant had been physically received at a pool plant § 1005.14 Other source milk. fully regulated shall be reported in lieu during the month; See § 1000.14. of producer milk. The report shall show

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II, or III price, as the case may be, by the § 1000.9(c) shall report: See § 1000.44. hundredweight of skim milk and (1) The quantities of all skim milk and § 1005.45 Market administrator's reports butterfat subtracted from Class I, II, or butterfat contained in receipts of milk and announcements concerning III, respectively, pursuant to from producers; classification. § 1000.44(a)(7) and the corresponding (2) The utilization or disposition of all See § 1000.45. step of § 1000.44(b); such receipts; and (d) Multiply the difference between (3) With respect to milk for which a Class Prices the Class I price applicable at the location of the pool plant and the Class cooperative association is requesting a § 1005.50 Class prices, component prices, transportation credit pursuant to and advanced pricing factors. IV price by the hundredweight of skim milk and butterfat assigned to Class I § 1005.82, all of the information See § 1000.50. required in paragraphs (a)(5), (a)(6), and pursuant to § 1000.43(d) and the (a)(7) of this section. § 1005.51 Class I differential and price. hundredweight of skim milk and (d) Each handler not specified in The Class I differential shall be the butterfat subtracted from Class I paragraphs (a) through (c) of this section differential established for Mecklenburg pursuant to § 1000.44(a)(3)(i) through shall report with respect to its receipts County, North Carolina, which is (vi) and the corresponding step of and utilization of milk and milk reported in § 1000.52. The Class I price § 1000.44(b), excluding receipts of bulk products in such manner as the market shall be the price computed pursuant to fluid cream products from a plant administrator may prescribe. § 1000.50(a) for Mecklenburg County, regulated under other Federal orders North Carolina. and bulk concentrated fluid milk § 1005.31 Payroll reports. products from pool plants, plants (a) On or before the 20th day after the § 1005.52 Adjusted Class I differentials. regulated under other Federal orders, end of each month, each handler that See § 1000.52. and unregulated supply plants; operates a pool plant pursuant to (e) Multiply the Class I price § 1005.7 and each handler described in § 1005.53 Announcement of class prices, applicable at the location of the nearest component prices, and advanced pricing unregulated supply plants from which § 1000.9 (c) shall report to the market factors. administrator its producer payroll for an equivalent volume was received by the month, in detail prescribed by the See § 1000.53. the pounds of skim milk and butterfat market administrator, showing for each § 1005.54 Equivalent price. in receipts of concentrated fluid milk products assigned to Class I pursuant to producer the information specified in See § 1000.54. § 1005.73(e). § 1000.43(d) and § 1000.44(a)(3)(i) and (b) Each handler operating a partially Uniform Prices the pounds of skim milk and butterfat subtracted from Class I pursuant to regulated distributing plant who elects § 1005.60 Handler's value of milk. to make payment pursuant to § 1000.44(a)(8) and the corresponding For the purpose of computing a § 1000.76(b) shall report for each dairy step of § 1000.44(b), excluding such handler’s obligation for producer milk, farmer who would have been a producer skim milk and butterfat in receipts of the market administrator shall if the plant had been fully regulated in fluid milk products from an unregulated determine for each month the value of the same manner as prescribed for supply plant to the extent that an milk of each handler with respect to reports required by paragraph (a) of this equivalent amount of skim milk or each of the handler’s pool plants and of section. butterfat disposed of to such plant by each handler described in § 1000.9(c) handlers fully regulated under any § 1005.32 Other reports. with respect to milk that was not Federal milk order is classified and (a) On or before the 20th day after the received at a pool plant by adding the priced as Class I milk and is not used end of each month, each handler amounts computed in paragraphs (a) as an offset for any other payment described in § 1000.9(a) and (c) shall through (e) of this section and obligation under any order; and report to the market administrator any subtracting from that total amount the (f) For reconstituted milk made from adjustments to transportation credit value computed in paragraph (f) of this receipts of nonfluid milk products, requests as reported pursuant to section. Receipts of nonfluid milk multiply $1.00 (but not more than the § 1005.30(a)(5), (6), and (7). products that are distributed as labeled difference between the Class I price (b) In addition to the reports required reconstituted milk for which payments applicable at the location of the pool pursuant to §§ 1005.30, 1005.31, and are made to the producer-settlement plant and the Class IV price) by the 1005.32(a), each handler shall report fund of another Federal order under hundredweight of skim milk and any information the market § 1000.76(a)(4) or (d) shall be excluded butterfat contained in receipts of administrator deems necessary to verify from pricing under this section. nonfluid milk products that are or establish each handler’s obligation (a) Multiply the pounds of skim milk allocated to Class I use pursuant to under the order. and butterfat in producer milk that were § 1000.43(d). classified in each class pursuant to Classification of Milk § 1000.44(c) by the applicable skim milk § 1005.61 Computation of uniform prices. On or before the 11th day of each § 1005.40 Classes of utilization. and butterfat prices, and add the resulting amounts; month, the market administrator shall See § 1000.40. (b) Multiply the pounds of skim milk compute a uniform butterfat price, a § 1005.41 [Reserved] and butterfat overage assigned to each uniform skim milk price, and a uniform class pursuant to § 1000.44(a)(11) by the price for producer milk receipts § 1005.42 Classification of transfers and respective skim milk and butterfat reported for the prior month. The report diversions. prices applicable at the location of the of any handler who has not made See § 1000.42. pool plant; payments required pursuant to

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§ 1005.71 for the preceding month shall § 1005.62 Announcement of uniform price, (1) Partial payment. For each not be included in the computation of uniform butterfat price and uniform skim producer who has not discontinued these prices, and such handler’s report milk price. shipments as of the 23rd day of the shall not be included in the On or before the 11th day after the month, payment shall be made so that computation for succeeding months end of the month, the market it is received by the producer on or until the handler has made full payment administrator shall announce the before the 26th day of the month (except of outstanding monthly obligations. following prices and information: as provided in § 1000.90) for milk (a) The uniform price pursuant to (a) Uniform butterfat price. The received during the first 15 days of the § 1005.61 for such month; uniform butterfat price per pound, month at not less than 90 percent of the (b) The uniform butterfat price preceding month’s uniform price, rounded to the nearest one-hundredth pursuant to § 1005.61(b) for such month; cent, shall be computed by multiplying adjusted for plant location pursuant to and § 1005.75 and proper deductions the pounds of butterfat in producer milk (c) The uniform skim milk price authorized in writing by the producer. allocated to each class pursuant to pursuant to § 1005.61(c) for such month. § 1000.44(b) by the respective class (2) Final payment. For milk received butterfat prices and dividing the sum of Payments for Milk during the month, a payment computed as follows shall be made so that it is such values by the total pounds of such § 1005.70 Producer-settlement fund. butterfat. received by each producer one day after See § 1000.70. (b) Uniform skim milk price. The the payment date required in § 1005.72: (i) Multiply the hundredweight of uniform skim milk price per § 1005.71 Payments to the producer- producer skim milk received times the hundredweight, rounded to the nearest settlement fund. Each handler shall make a payment to uniform skim milk price for the month; cent, shall be computed as follows: (ii) Multiply the pounds of butterfat the producer-settlement fund in a (1) Combine into one total the values received times the uniform butterfat computed pursuant to § 1005.60 for all manner that provides receipt of the funds by the market administrator no price for the month; handlers; (iii) Multiply the hundredweight of later than the 12th day after the end of (2) Add an amount equal to the sum producer milk received times the plant the month (except as provided in of the location adjustments computed location adjustment pursuant to § 1000.90). Payment shall be the pursuant to § 1005.75; § 1005.75; and amount, if any, by which the amount (iv) Add the amounts computed in (3) Add an amount equal to not less specified in paragraph (a) of this section paragraph (a)(2)(i), (ii), and (iii) of this than one-half of the unobligated balance exceeds the amount specified in in the producer-settlement fund; section, and from that sum: paragraph (b) of this section: (A) Subtract the partial payment made (4) Subtract the value of the total (a) The total value of milk of the pursuant to paragraph (a)(1) of this pounds of butterfat for all handlers. The handler for the month as determined section; butterfat value shall be computed by pursuant to § 1005.60; and (B) Subtract the deduction for (b) The sum of the value at the multiplying the pounds of butterfat by marketing services pursuant to uniform prices for skim milk and the butterfat price computed in § 1000.86; paragraph (a) of this section; butterfat, adjusted for plant location, of (C) Add or subtract for errors made in (5) Divide the resulting amount by the the handler’s receipts of producer milk; previous payments to the producer; and sum of the following for all handlers and the value at the uniform price, as (D) Subtract proper deductions included in these computations: adjusted pursuant to § 1005.75, authorized in writing by the producer. (i) The total skim pounds of producer applicable at the location of the plant (b) One day before partial and final milk; and from which received of other source payments are due pursuant to paragraph milk for which a value is computed (a) of this section, each pool plant (ii) The total skim pounds for which pursuant to § 1005.60(e). a value is computed pursuant to operator shall pay a cooperative § 1005.60(e); and § 1005.72 Payments from the producer- association for milk received as follows: (1) Partial payment to a cooperative (6) Subtract not less than 4 cents and settlement fund. association for bulk milk received not more than 5 cents. No later than one day after the date of payment receipt required under directly from producers’ farms. For bulk (c) Uniform price. The uniform price milk (including the milk of producers per hundredweight, rounded to the § 1005.71, the market administrator shall pay to each handler the amount, if who are not members of such nearest cent, shall be the sum of the association and who the market following: any, by which the amount computed pursuant to § 1005.71(b) exceeds the administrator determines have (1) Multiply the uniform butterfat amount computed pursuant to authorized the cooperative association price for the month pursuant to § 1005.71(a). If, at such time, the balance to collect payment for their milk) paragraph (a) of this section times 3.5 in the producer-settlement fund is received during the first 15 days of the pounds of butterfat; and insufficient to make all payments month from a cooperative association in (2) Multiply the uniform skim milk pursuant to this section, the market any capacity, except as the operator of price for the month pursuant to administrator shall reduce uniformly a pool plant, the payment shall be equal paragraph (b) of this section times 96.5 such payments and shall complete the to the hundredweight of milk received pounds of skim milk. payments as soon as the funds are multiplied by 90 percent of the available. preceding month’s uniform price, § 1005.62 Announcement of uniform adjusted for plant location pursuant to prices. § 1005.73 Payments to producers and to § 1005.75. On or before the 11th day after the cooperative associations. (2) Partial payment to a cooperative end of the month, the market (a) Each pool plant operator that is not association for milk transferred from its administrator shall announce the paying a cooperative association for pool plant. For bulk fluid milk products uniform prices for the month computed producer milk shall pay each producer and bulk fluid cream products received pursuant to § 1005.61. as follows: during the first 15 days of the month

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00210 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.203 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16235 from a cooperative association in its (e) In making payments to producers § 1005.81 Payments to the transportation capacity as the operator of a pool plant, pursuant to this section, each pool plant credit balancing fund. the partial payment shall be at the pool operator shall furnish each producer, (a) On or before the 12th day after the plant operator’s estimated use value of except a producer whose milk was end of the month (except as provided in the milk using the most recent class received from a cooperative association § 1000.90), each handler operating a prices available for skim milk and described in § 1000.9(a) or (c), a pool plant and each handler specified in butterfat at the receiving plant’s supporting statement in such form that § 1000.9(c) shall pay to the market location. it may be retained by the recipient administrator a transportation credit (3) Final payment to a cooperative which shall show: balancing fund assessment determined association for milk transferred from its (1) The name, address, Grade A by multiplying the pounds of Class I pool plant. For bulk fluid milk products identifier assigned by a duly constituted producer milk assigned pursuant to and bulk fluid cream products received regulatory agency, and the payroll § 1005.44 by $0.065 per hundredweight during the month from a cooperative number of the producer; or such lesser amount as the market association in its capacity as the (2) The month and dates that milk administrator deems necessary to operator of a pool plant, the final was received from the producer, maintain a balance in the fund equal to payment shall be the classified value of including the daily and total pounds of the total transportation credits such milk as determined by multiplying milk received; disbursed during the prior June–January the pounds of skim milk and butterfat (3) The total pounds of butterfat in the period. In the event that during any assigned to each class pursuant to producer’s milk; month of the June–January period the § 1000.44 by the class prices for the (4) The minimum rate or rates at fund balance is insufficient to cover the month at the receiving plant’s location, which payment to the producer is amount of credits that are due, the and subtracting from this sum the required pursuant to this order; assessment should be based upon the partial payment made pursuant to (5) The rate used in making payment amount of credits that would have been paragraph (b)(2) of this section. if the rate is other than the applicable disbursed had the fund balance been (4) Final payment to a cooperative minimum rate; sufficient. association for bulk milk received (6) The amount, or rate per (b) The market administrator shall directly from producers’ farms. For bulk hundredweight, and nature of each announce publicly on or before the 5th milk received from a cooperative deduction claimed by the handler; and day of the month (except as provided in association during the month, including (7) The net amount of payment to the § 1000.90) the assessment pursuant to the milk of producers who are not producer or cooperative association. paragraph (a) of this section for the following month. members of such association and who § 1005.74 [Reserved] the market administrator determines § 1005.82 Payments from the have authorized the cooperative § 1005.75 Plant location adjustments for transportation credit balancing fund. producer milk and nonpool milk. association to collect payment for their (a) Payments from the transportation milk, the final payment for such milk For purposes of making payments for credit balancing fund to handlers and shall be an amount equal to the sum of producer milk and nonpool milk, a cooperative associations requesting the individual payments otherwise plant location adjustment shall be transportation credits shall be made as payable for such milk pursuant to determined by subtracting the Class I follows: paragraph (a)(2) of this section. price specified in § 1005.50 from the (1) On or before the 13th day (except (c) If a handler has not received full Class I price at the plant’s location. The as provided in § 1000.90) after the end payment from the market administrator difference, plus or minus as the case of each of the months of July through pursuant to § 1005.72 by the payment may be, shall be used to adjust the December and any other month in date specified in paragraph (a) or (b) of payments required pursuant to which transportation credits are in this section, the handler may reduce §§ 1005.73 and 1000.76. effect pursuant to paragraph (b) of this payments pursuant to paragraphs (a) § 1005.76 Payments by a handler section, the market administrator shall and (b) of this section, but by not more operating a partially regulated distributing pay to each handler that received, and than the amount of the underpayment. plant. reported pursuant to § 1005.30(a)(5), The payments shall be completed on the See § 1000.76. bulk milk transferred from a plant fully next scheduled payment date after regulated under another Federal order receipt of the balance due from the § 1005.77 Adjustment of accounts. as described in paragraph (c)(1) of this market administrator. See § 1000.77. section or that received, and reported (d) If a handler claims that a required pursuant to § 1005.30(a)(6), milk payment to a producer cannot be made § 1005.78 Charges on overdue accounts. directly from producers’ farms as because the producer is deceased or See § 1000.78. specified in paragraph (c)(2) of this cannot be located, or because the Marketwide Service Payments section, a preliminary amount cooperative association or its lawful determined pursuant to paragraph (d) of successor or assignee is no longer in § 1005.80 Transportation credit balancing this section to the extent that funds are existence, the payment shall be made to fund. available in the transportation credit the producer-settlement fund, and in the The market administrator shall balancing fund. If an insufficient event that the handler subsequently maintain a separate fund known as the balance exists to pay all of the credits locates and pays the producer or a Transportation Credit Balancing Fund computed pursuant to this section, the lawful claimant, or in the event that the into which shall be deposited the market administrator shall distribute the handler no longer exists and a lawful payments made by handlers pursuant to balance available in the transportation claim is later established, the market § 1005.81 and out of which shall be credit balancing fund by reducing administrator shall make the required made the payments due handlers payments pro rata using the percentage payment from the producer-settlement pursuant to § 1005.82. Payments due a derived by dividing the balance in the fund to the handler or to the lawful handler shall be offset against payments fund by the total credits that are due for claimant as the case may be. due from the handler. the month. The amount of credits

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00211 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.204 pfrm08 PsN: 02APP2 16236 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules resulting from this initial proration shall (1) Bulk milk received from a plant for the county in which the receiving be subject to audit adjustment pursuant regulated under another Federal order, plant is located; to paragraph (a)(2) of this section. except Federal Order 1007, and (iv) Subtract any positive difference (2) The market administrator shall allocated to Class I milk pursuant to computed in paragraph (d)(2)(iii) of this accept adjusted requests for § 1000.44(a)(9); and section from the amount computed in transportation credits on or before the (2) Bulk milk received directly from paragraph (d)(2)(ii) of this section; and 20th day of the month following the the farms of dairy farmers at pool (v) Multiply the remainder computed month for which such credits were distributing plants subject to the in paragraph (d)(2)(iv) of this section by requested pursuant to § 1005.32(a). After following conditions: the hundredweight of milk described in such date, a preliminary audit will be (i) The quantity of such milk that paragraph (d)(2) of this section. conducted by the market administrator, shall be eligible for the transportation (3) For the remaining milk described who will recalculate any necessary credit shall be determined by in paragraph (c)(2) of this section after proration of transportation credit multiplying the total pounds of milk computations described in paragraph payments for the preceding month received from producers meeting the (d)(1) of this section, the market pursuant to paragraph (a) of this section. conditions of this paragraph by the administrator shall: Handlers will be promptly notified of an lower of: (i) Determine an origination point for overpayment of credits based upon this (A) The marketwide estimated Class I each load of milk by locating the nearest final computation and remedial utilization of all handlers for the month city to the last producer’s farm from payments to or from the transportation pursuant to § 1000.45(a); or which milk was picked up for delivery credit balancing fund will be made on (B) The Class I utilization of all to the receiving pool plant; or before the next payment date for the producer milk of the pool plant operator (ii) Determine the shortest hard- following month. receiving the milk after the surface highway distance between the (3) Transportation credits paid computations described in § 1000.44; receiving pool plant and the origination pursuant to paragraphs (a)(1) and (2) of (ii) The dairy farmer was not a point; this section shall be subject to final ‘‘producer’’ under this order during (iii) Subtract 85 miles from the verification by the market administrator more than 2 of the immediately mileage so determined; pursuant to § 1000.77. Adjusted preceding months of February through (iv) Multiply the remaining miles so payments to or from the transportation May and not more than 50 percent of computed by 0.35 cent; credit balancing fund will remain the production of the dairy farmer (v) Subtract the Class I differential subject to the final proration established during those 2 months, in aggregate, was specified in § 1000.52 applicable for the pursuant to paragraph (a)(2) of this received as producer milk under this county in which the origination point is section. order during those 2 months; and located from the Class I differential (4) In the event that a qualified (iii) The farm on which the milk was applicable at the receiving pool plant’s cooperative association is the produced is not located within the location; responsible party for whose account specified marketing area of this order or (vi) Subtract any positive difference such milk is received and written the marketing area of Federal Order computed in paragraph (d)(3)(v) of this documentation of this fact is provided 1007. section from the amount computed in to the market administrator pursuant to (d) Transportation credits shall be paragraph (d)(3)(iv) of this section; and § 1005.30(c)(3) prior to the date payment computed as follows: (vii) Multiply the remainder is due, the transportation credits for (1) The market administrator shall computed in paragraph (d)(3)(vi) of this such milk computed pursuant to this subtract from the pounds of milk section by the hundredweight of milk section shall be made to such described in paragraphs (c)(1) and (2) of described in paragraph (d)(3) of this cooperative association rather than to this section the pounds of bulk milk section. the operator of the pool plant at which transferred from the pool plant receiving the milk was received. the supplemental milk if milk was Administrative Assessment and (b) The market administrator may transferred to a nonpool plant on the Marketing Service Deduction extend the period during which same calendar day that the § 1005.85 Assessment for order transportation credits are in effect (i.e., supplemental milk was received. For administration. the transportation credit period) to the this purpose, the transferred milk shall See § 1000.85. months of January and June if a written be subtracted from the most distant load request to do so is received 15 days of supplemental milk received, and then § 1005.86 Deduction for marketing prior to the beginning of the month for in sequence with the next most distant services. which the request is made and, after load until all of the transfers have been See § 1000.86. conducting an independent offset. investigation, finds that such extension (2) With respect to the pounds of milk PART 1006ÐMILK IN THE FLORIDA is necessary to assure the market of an described in paragraph (c)(1) of this MARKETING AREA adequate supply of milk for fluid use. section that remain after the SubpartÐOrder Regulating Handling Before making such a finding, the computations described in paragraph market administrator shall notify the (d)(1) of this section, the market General Provisions Director of the Dairy Division and all administrator shall: Sec. handlers in the market that an extension (i) Determine the shortest hard-surface 1006.1 General provisions. is being considered and invite written highway distance between the shipping Definitions data, views, and arguments. Any plant and the receiving plant; (ii) Multiply the number of miles so 1006.2 Florida marketing area. decision to extend the transportation 1006.3 Route disposition. credit period must be issued in writing determined by 0.35 cent; 1006.4 Plant. prior to the first day of the month for (iii) Subtract the applicable Class I 1006.5 Distributing plant. which the extension is to be effective. differential in § 1000.52 for the county 1006.6 Supply plant. (c) Transportation credits shall apply in which the shipping plant is located 1006.7 Pool plant. to the following milk: from the Class I differential applicable 1006.8 Nonpool plant.

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1006.9 Handler. in part 1000 refer to part 1000 of this milk that is received during the month 1006.10 Producer-handler. chapter. from dairy farmers and handlers 1006.11 [Reserved] described in § 1000.9(c), including milk Definitions 1006.12 Producer. that is diverted from the plant, is 1006.13 Producer milk. transferred to pool distributing plants. 1006.14 Other source milk. § 1006.2 Florida marketing area. 1006.15 Fluid milk product. The marketing area means all the Concentrated milk transferred from the 1006.16 Fluid cream product. territory within the State of Florida, supply plant to a distributing plant for 1006.17 [Reserved] except the counties of Escambia, an agreed-upon use other than Class I 1006.18 Cooperative association. Okaloosa, Santa Rosa, and Walton, shall be excluded from the supply 1006.19 Commercial food processing including all piers, docks and wharves plant’s shipments in computing the establishment. connected therewith and all craft plant’s shipping percentage. Handler Reports moored thereat, and all territory (d) A plant located within the occupied by government (municipal, marketing area that is operated by a 1006.30 Reports of receipts and utilization. cooperative association if pool plant 1006.31 Payroll reports. State or Federal) reservations, 1006.32 Other reports. installations, institutions, or other status under this paragraph is requested similar establishments if any part for such plant by the cooperative Classification of Milk thereof is within any of the listed states association and during the month 60 1006.40 Classes of utilization. or political subdivisions. percent of the producer milk of 1006.41 [Reserved] members of such cooperative 1006.42 Classification of transfers and § 1006.3 Route disposition. association is delivered directly from diversions. See § 1000.3. farms to pool distributing plants or is 1006.43 General classification rules. transferred to such plants as a fluid milk 1006.44 Classification of producer milk. § 1006.4 Plant. product (excluding concentrated milk 1006.45 Market administrator’s reports and See § 1000.4. announcements concerning transferred to a distributing plant for an classification. § 1006.5 Distributing plant. agreed-upon use other than Class I) from the cooperative’s plant. Class Prices See § 1000.5. (e) Two or more plants operated by 1006.50 Class prices, component prices, § 1006.6 Supply plant. the same handler and that are located and advanced pricing factors. See § 1000.6. within the marketing area may qualify 1006.51 Class I differential and price. for pool status as a unit by meeting the 1006.52 Adjusted Class I differentials. § 1006.7 Pool plant. total and in-area route disposition 1006.53 Announcement of class prices, Pool plant means a plant specified in requirements specified in paragraph (a) component prices, and advanced pricing paragraphs (a) through (d) of this of this section and the following factors. 1006.54 Equivalent price. section, or a unit of plants as specified additional requirements: in paragraph (e) of this section, but (1) At least one of the plants in the Uniform Prices excluding a plant specified in paragraph unit must qualify as a pool plant 1006.60 Handler’s value of milk. (g) of this section. The pooling pursuant to paragraph (a) of this section; 1006.61 Computation of uniform prices. standards described in paragraphs (c) (2) Other plants in the unit must 1006.62 Announcement of uniform prices. and (d) of this section are subject to process only Class I or Class II products Payments for Milk modification pursuant to paragraph (f) and must be located in a pricing zone of this section: providing the same or a lower Class I 1006.70 Producer-settlement fund. price than the price applicable at the 1006.71 Payments to the producer- (a) A distributing plant, other than a settlement fund. plant qualified as a pool plant pursuant distributing plant included in the unit 1006.72 Payments from the producer- to paragraph (b) of this section or pursuant to paragraph (e)(1) of this settlement fund. section 7(b) of any other Federal milk section; and 1006.73 Payments to producers and to order, from which during the month 50 (3) A written request to form a unit, cooperative associations. percent or more of the fluid milk or to add or remove plants from a unit, 1006.74 [Reserved] products received at such plant must be filed with the market 1006.75 Plant location adjustments for (excluding concentrated milk received administrator prior to the first day of the producer milk and nonpool milk. from another plant by agreement for month for which it is to be effective. 1006.76 Payments by a handler operating a other than Class I use) are disposed of (f) The applicable shipping partially regulated distributing plant. percentages of paragraphs (c) and (d) of 1006.77 Adjustment of accounts. as route disposition or are transferred in 1006.78 Charges on overdue accounts. the form of packaged fluid milk this section may be increased or products to other distributing plants. At decreased by the market administrator if Administrative Assessment and Marketing least 25 percent of such route the market administrator finds that such Service Deduction disposition and transfers must be to adjustment is necessary to encourage 1006.85 Assessment for order outlets in the marketing area. needed shipments or to prevent administration. (b) Any distributing plant located in uneconomic shipments. Before making 1006.86 Deduction for marketing services. the marketing area which during the such a finding, the market administrator Authority: 7 U.S.C. 601–674. month processed at least 50 percent of shall investigate the need for adjustment the total quantity of fluid milk products either on the market administrator’s SubpartÐOrder Regulating Handling received at the plant (excluding own initiative or at the request of General Provisions concentrated milk received from interested parties if the request is made another plant by agreement for other in writing at least 15 days prior to the § 1006.1 General provisions. than Class I use) into ultra-pasteurized date for which the requested revision is The terms, definitions, and provisions or aseptically-processed fluid milk desired effective. If the investigation in part 1000 of this chapter apply to and products. shows that an adjustment of the are hereby made a part of this order. In (c) A supply plant from which 60 shipping percentages might be this part 1006, all references to sections percent or more of the total quantity of appropriate, the market administrator

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00213 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.207 pfrm08 PsN: 02APP2 16238 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules shall issue a notice stating that an Class I milk handled, and the processing milk is diverted is physically received at adjustment is being considered and and packaging operations, are the a pool plant during the month; invite data, views and arguments. Any producer-handler’s own enterprise and (2) The total quantity of milk so decision to revise an applicable are operated at the producer-handler’s diverted during the month by a shipping percentage must be issued in own risk. cooperative association shall not exceed writing at least one day before the § 1006.11 [Reserved] 20 percent during the months of July effective date. through November, 25 percent during (g) The term pool plant shall not § 1006.12 Producer. the months of December through apply to the following plants: (a) Except as provided in paragraph February, and 40 percent during all (1) A producer-handler plant; (b) of this section, producer means any other months, of the producer milk that (2) An exempt plant as defined in person who produces milk approved by the cooperative association caused to be § 1000.8(e); a duly constituted regulatory agency for delivered to, and physically received at, (3) A plant qualified pursuant to fluid consumption as Grade A milk and pool plants during the month; paragraph (a) of this section which is whose milk (or components of milk) is: not located within any Federal order (3) The operator of a pool plant that (1) Received at a pool plant directly marketing area, meets the pooling is not a cooperative association may from the producer or diverted by the requirements of another Federal order, divert any milk that is not under the plant operator in accordance with and has had greater route disposition in control of a cooperative association that § 1006.13; or such other Federal order marketing area diverts milk during the month pursuant (2) Received by a handler described in for 3 consecutive months; to paragraph (d) of this section. The § 1000.9(c). (4) A plant qualified pursuant to total quantity of milk so diverted during (b) Producer shall not include: paragraph (a) of this section which is the month shall not exceed 20 percent (1) A producer-handler as defined in located in another Federal order during the months of July through any Federal order; marketing area, meets the pooling November, 25 percent during the (2) A dairy farmer whose milk is standards of the other Federal order, months of December through February, received at an exempt plant, excluding and has not had a majority of its route and 40 percent during all other months, producer milk diverted to the exempt disposition in this marketing area for 3 of the producer milk physically received plant pursuant to § 1006.13(d); consecutive months or is locked into at such plant (or such unit of plants in (3) A dairy farmer whose milk is pool status under such other Federal the case of plants that pool as a unit received by diversion at a pool plant order without regard to its route pursuant to § 1006.7(d)) during the from a handler regulated under another disposition in any other Federal order month, excluding the quantity of Federal order if the other Federal order marketing area; and producer milk received from a handler designates the dairy farmer as a (5) A plant qualified pursuant to described in § 1000.9(c); producer under that order and that milk paragraph (c) of this section which also (4) Any milk diverted in excess of the is allocated by request to a utilization meets the pooling requirements of limits prescribed in paragraphs (d)(3) other than Class I; and another Federal order and from which and (4) of this section shall not be (4) A dairy farmer whose milk is greater qualifying shipments are made producer milk. If the diverting handler reported as diverted to a plant fully to plants regulated under such other or cooperative association fails to regulated under another Federal order order than are made to plants regulated designate the dairy farmers’ deliveries with respect to that portion of the milk under this order, or such plant has that will not be producer milk, no milk so diverted that is assigned to Class I automatic pooling status under such diverted by the handler or cooperative under the provisions of such other other order. association shall be producer milk; order. (5) Diverted milk shall be priced at § 1006.8 Nonpool plant. § 1006.13 Producer milk. the location of the plant to which See § 1000.8. Producer milk means the skim milk diverted; and § 1006.9 Handler. (or the skim equivalent of components (6) The delivery day requirements and See § 1000.9. of skim milk) and butterfat contained in the diversion percentages in paragraphs milk of a producer that is: (d)(1) through (3) of this section may be § 1006.10 Producer-handler. (a) Received by the operator of a pool increased or decreased by the market Producer-handler means a person plant directly from a producer or a administrator if the market who: handler described in § 1000.9(c). All administrator finds that such revision is (a) Operates a dairy farm and a milk received pursuant to this necessary to assure orderly marketing distributing plant from which there is paragraph shall be priced at the location and efficient handling of milk in the monthly route disposition in the of the plant where it is first physically marketing area. Before making such a marketing area; received; finding, the market administrator shall (b) Receives no fluid milk products, (b) Received by a handler described in investigate the need for the revision and acquires no fluid milk products for § 1000.9(c) in excess of the quantity either on the market administrator’s route disposition, from sources other delivered to pool plants; own initiative or at the request of than own farm production; (c) Diverted by a pool plant operator interested persons. If the investigation (c) Disposes of no other source milk to another pool plant. Milk so diverted shows that a revision might be as Class I milk except by increasing the shall be priced at the location of the appropriate, the market administrator nonfat milk solids content of the fluid plant to which diverted; or shall issue a notice stating that the milk products received from own farm (d) Diverted by the operator of a pool revision is being considered and production; and plant or a handler described in inviting written data, views, and (d) Provides proof satisfactory to the § 1000.9(c) to a nonpool plant, subject to arguments. Any decision to revise an market administrator that the care and the following conditions: applicable percentage must be issued in management of the dairy animals and (1) In any month, not less than 10 writing at least one day before the other resources necessary to produce all days’ production of the producer whose effective date.

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§ 1006.14 Other source milk. § 1006.31 Payroll reports. § 1006.54 Equivalent price. See § 1000.14. (a) On or before the 20th day after the See § 1000.54. end of each month, each handler that § 1006.15 Fluid milk product. operates a pool plant pursuant to Uniform Prices See § 1000.15. § 1006.7 and each handler described in § 1006.60 Handler's value of milk. § 1006.16 Fluid cream product. § 1000.9(c) shall report to the market For the purpose of computing a See § 1000.16. administrator its producer payroll for handler’s obligation for producer milk, the month, in detail prescribed by the the market administrator shall § 1006.17 [Reserved] market administrator, showing for each determine for each month the value of producer the information specified in § 1006.18 Cooperative association. milk of each handler with respect to § 1006.73(e). See § 1000.18. each of the handler’s pool plants and of (b) Each handler operating a partially each handler described in § 1000.9(c) § 1006.19 Commercial food processing regulated distributing plant who elects with respect to milk that was not establishment. to make payment pursuant to received at a pool plant by adding the See § 1000.19. § 1000.76(b) shall report for each dairy amounts computed in paragraphs (a) farmer who would have been a producer Handler Reports through (e) of this section and if the plant had been fully regulated in subtracting from that total amount the § 1006.30 Reports of receipts and the same manner as prescribed for value computed in paragraph (f) of this utilization. reports required by paragraph (a) of this section. Receipts of nonfluid milk Each handler shall report monthly so section. products that are distributed as labeled that the market administrator’s office § 1006.32 Other reports. reconstituted milk for which payments receives the report on or before the 7th In addition to the reports required are made to the producer-settlement day after the end of the month, in the pursuant to §§ 1006.30 and 1006.31, fund of another Federal order under detail and on prescribed forms, as each handler shall report any § 1000.76(a)(4) or (d) shall be excluded follows: information the market administrator from pricing under this section. (a) With respect to each of its pool deems necessary to verify or establish (a) Multiply the pounds of skim milk plants, the quantities of skim milk and each handler’s obligation under the and butterfat in producer milk that were butterfat contained in or represented by: order. classified in each class pursuant to (1) Receipts of producer milk, § 1000.44(c) by the applicable skim milk including producer milk diverted by the Classification of Milk and butterfat prices, and add the reporting handler, from sources other § 1006.40 Classes of utilization. resulting amounts; than handlers described in § 1000.9(c); (b) Multiply the pounds of skim milk (2) Receipts of milk from handlers See § 1000.40. and butterfat overage assigned to each described in § 1000.9(c); § 1006.41 [Reserved] class pursuant to § 1000.44(a)(11) by the (3) Receipts of fluid milk products respective skim milk and butterfat and bulk fluid cream products from § 1006.42 Classification of transfers and prices applicable at the location of the other pool plants; diversions. pool plant; (4) Receipts of other source milk; See § 1000.42. (c) Multiply the difference between (5) Inventories at the beginning and the Class IV price for the preceding end of the month of fluid milk products § 1006.43 General classification rules. month and the current month’s Class I, and bulk fluid cream products; and See § 1000.43. (6) The utilization or disposition of all II, or III price, as the case may be, by the milk and milk products required to be § 1006.44 Classification of producer milk. hundredweight of skim milk and reported pursuant to this paragraph. See § 1000.44. butterfat subtracted from Class I, II, or (b) Each handler operating a partially III, respectively, pursuant to regulated distributing plant shall report § 1006.45 Market administrator's reports § 1000.44(a)(7) and the corresponding and announcements concerning step of § 1000.44(b); with respect to such plant in the same classification. manner as prescribed for reports (d) Multiply the difference between required by paragraph (a) of this section. See § 1000.45. the Class I price applicable at the Receipts of milk that would have been Class Prices location of the pool plant and the Class producer milk if the plant had been IV price by the hundredweight of skim fully regulated shall be reported in lieu § 1006.50 Class prices, component prices, milk and butterfat assigned to Class I and advanced pricing factors. of producer milk. The report shall show pursuant to § 1000.43(d) and the also the quantity of any reconstituted See § 1000.50. hundredweight of skim milk and skim milk in route disposition in the butterfat subtracted from Class I § 1006.51 Class I differential and price. pursuant to § 1000.44(a)(3)(i) through marketing area. The Class I differential shall be the (c) Each handler described in (vi) and the corresponding step of differential established for Hillsborough § 1000.9(c) shall report: § 1000.44(b), excluding receipts of bulk (1) The quantities of all skim milk and County, Florida, which is reported in fluid cream products from a plant butterfat contained in receipts of milk § 1000.52. The Class I price shall be the regulated under other Federal orders from producers; and price computed pursuant to § 1000.50(a) and bulk concentrated fluid milk (2) The utilization or disposition of all for Hillsborough County, Florida. products from pool plants, plants such receipts. § 1006.52 Adjusted Class I differentials. regulated under other Federal orders, (d) Each handler not specified in and unregulated supply plants; See § 1000.52. paragraphs (a) through (c) of this section (e) Multiply the Class I price shall report with respect to its receipts § 1006.53 Announcement of class prices, applicable at the location of the nearest and utilization of milk and milk component prices, and advanced pricing unregulated supply plants from which products in such manner as the market factors. an equivalent volume was received by administrator may prescribe. See § 1000.53. the pounds of skim milk and butterfat

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The settlement fund. § 1000.43(d) and § 1000.44(a)(3)(i) and butterfat value shall be computed by No later than one day after the date of the pounds of skim milk and butterfat multiplying the pounds of butterfat by payment receipt required under subtracted from Class I pursuant to the butterfat price computed in § 1006.71, the market administrator § 1000.44(a)(8) and the corresponding paragraph (a) of this section; shall pay to each handler the amount, if step of § 1000.44(b), excluding such (5) Divide the resulting amount by the any, by which the amount computed skim milk and butterfat in receipts of sum of the following for all handlers pursuant to § 1006.71(b) exceeds the fluid milk products from an unregulated included in these computations: amount computed pursuant to supply plant to the extent that an (i) The total skim pounds of producer § 1006.71(a). If, at such time, the balance equivalent amount of skim milk or milk; and in the producer-settlement fund is butterfat disposed of to such plant by (ii) The total skim pounds for which insufficient to make all payments handlers fully regulated under any a value is computed pursuant to pursuant to this section, the market Federal milk order is classified and § 1006.60(e); and administrator shall reduce uniformly priced as Class I milk and is not used such payments and shall complete the (6) Subtract not less than 4 cents and as an offset for any other payment payments as soon as the funds are not more than 5 cents. obligation under any order; and available. (f) For reconstituted milk made from (c) Uniform price. The uniform price per hundredweight, rounded to the § 1006.73 Payments to producers and to receipts of nonfluid milk products, cooperative associations. multiply $1.00 (but not more than the nearest cent, shall be the sum of the (a) Each pool plant operator that is not difference between the Class I price following: paying a cooperative association for applicable at the location of the pool (1) Multiply the uniform butterfat producer milk shall pay each producer plant and the Class IV price) by the price for the month pursuant to as follows: hundredweight of skim milk and paragraph (a) of this section times 3.5 (1) Partial payments. (i) For each butterfat contained in receipts of pounds of butterfat; and producer who has not discontinued nonfluid milk products that are (2) Multiply the uniform skim milk shipments as of the 15th day of the allocated to Class I use pursuant to price for the month pursuant to month, payment shall be made so that § 1000.43(d). paragraph (b) of this section times 96.5 pounds of skim milk. it is received by the producer on or § 1006.61 Computation of uniform prices. before the 20th day of the month (except On or before the 11th day of each § 1006.62 Announcement of uniform as provided in § 1000.90) for milk prices. month, the market administrator shall received during the first 15 days of the compute a uniform butterfat price, a On or before the 11th day after the month at not less than 85 percent of the uniform skim milk price, and a uniform end of the month, the market preceding month’s uniform price, price for producer milk receipts administrator shall announce the adjusted for plant location pursuant to reported for the prior month. The report uniform prices for the month computed § 1006.75 and proper deductions of any handler who has not made pursuant to § 1006.61. authorized in writing by the producer; payments required pursuant to and Payments for Milk (ii) For each producer who has not § 1006.71 for the preceding month shall discontinued shipments as of the last not be included in the computation of § 1006.70 Producer-settlement fund. day of the month, payment shall be these prices, and such handler’s report See § 1000.70. made so that it is received by the shall not be included in the producer on or before the 5th day of the computation for succeeding months § 1006.71 Payments to the producer- following month (except as provided in until the handler has made full payment settlement fund. § 1000.90) for milk received from the of outstanding monthly obligations. Each handler shall make a payment to 16th to the last day of the month at not (a) Uniform butterfat price. The the producer-settlement fund in a less than 85 percent of the preceding uniform butterfat price per pound, manner that provides receipt of the month’s uniform price, adjusted for rounded to the nearest one-hundredth funds by the market administrator no plant location pursuant to § 1006.75 and cent, shall be computed by multiplying later than the 12th day after the end of proper deductions authorized in writing the pounds of butterfat in producer milk the month (except as provided in by the producer. allocated to each class pursuant to § 1000.90). Payment shall be the (2) Final payment. For milk received § 1000.44(b) by the respective class amount, if any, by which the amount during the month, a payment computed butterfat prices and dividing the sum of specified in paragraph (a) of this section as follows shall be made so that it is such values by the total pounds of such exceeds the amount specified in received by each producer one day after butterfat. paragraph (b) of this section: the payment date required in § 1006.72: (b) Uniform skim milk price. The (a) The total value of milk of the (i) Multiply the hundredweight of uniform skim milk price per handler for the month as determined producer skim milk received times the hundredweight, rounded to the nearest pursuant to § 1006.60; and uniform skim milk price for the month; cent, shall be computed as follows: (b) The sum of the value at the (ii) Multiply the pounds of butterfat (1) Combine into one total the values uniform prices for skim milk and received times the uniform butterfat computed pursuant to § 1005.60 for all butterfat, adjusted for plant location, of price for the month; handlers; the handler’s receipts of producer milk; (iii) Multiply the hundredweight of (2) Add an amount equal to the sum and the value at the uniform price, as producer milk received times the plant of the location adjustments computed adjusted pursuant to § 1006.75, location adjustment pursuant to pursuant to § 1006.75; applicable at the location of the plant § 1006.75; and (3) Add an amount equal to not less from which received of other source (iv) Add the amounts computed in than one-half of the unobligated balance milk for which a value is computed paragraphs (a)(2)(i), (ii), and (iii) of this in the producer-settlement fund; pursuant to § 1006.60(e). section, and from that sum:

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(A) Subtract the partial payments have authorized the cooperative § 1006.74 [Reserved] made pursuant to paragraph (a)(1) of association to collect payment for their § 1006.75 Plant location adjustments for this section; milk, the final payment for such milk producer milk and nonpool milk. (B) Subtract the deduction for shall be an amount equal to the sum of marketing services pursuant to the individual payments otherwise For purposes of making payments for § 1000.86; payable for such milk pursuant to producer milk and nonpool milk, a (C) Add or subtract for errors made in paragraph (a)(2) of this section. plant location adjustment shall be determined by subtracting the Class I previous payments to the producer; and (c) If a handler has not received full (D) Subtract proper deductions price specified in § 1006.50 from the payment from the market administrator authorized in writing by the producer. Class I price at the plant’s location. The (b) One day before partial and final pursuant to § 1006.72 by the payment difference, plus or minus as the case payments are due pursuant to paragraph date specified in paragraph (a) or (b) of may be, shall be used to adjust the (a) of this section, each pool plant this section, the handler may reduce payments required pursuant to operator shall pay a cooperative payments pursuant to paragraphs (a) §§ 1006.73 and 1000.76. association for milk received as follows: and (b) of this section, but by not more (1) Partial payment to a cooperative than the amount of the underpayment. § 1006.76 Payments by a handler association for bulk milk received The payments shall be completed on the operating a partially regulated distributing plant. directly from producers’ farms. For bulk next scheduled payment date after milk (including the milk of producers receipt of the balance due from the See § 1000.76. market administrator. who are not members of such § 1006.77 Adjustment of accounts. association and who the market (d) If a handler claims that a required See § 1000.77. administrator determines have payment to a producer cannot be made authorized the cooperative association because the producer is deceased or § 1006.78 Charges on overdue accounts. to collect payment for their milk) cannot be located, or because the See § 1000.78. received from a cooperative association cooperative association or its lawful in any capacity, except as the operator successor or assignee is no longer in Administrative Assessment and of a pool plant, the payment shall be existence, the payment shall be made to Marketing Service Deduction equal to the hundredweight of milk the producer-settlement fund, and in the § 1006.85 Assessment for order received multiplied by 90 percent of the event that the handler subsequently administration. preceding month’s uniform price, locates and pays the producer or a See § 1000.85. adjusted for plant location pursuant to lawful claimant, or in the event that the § 1006.75. handler no longer exists and a lawful § 1006.86 Deduction for marketing (2) Partial payment to a cooperative claim is later established, the market services. association for milk transferred from its administrator shall make the required See § 1000.86. pool plant. For bulk fluid milk products payment from the producer-settlement and bulk fluid cream products received fund to the handler or to the lawful PART 1007ÐMILK IN THE SOUTHEAST during the first 15 days of the month claimant as the case may be. MARKETING AREA from a cooperative association in its (e) In making payments to producers SubpartÐOrder Regulating Handling capacity as the operator of a pool plant, pursuant to this section, each pool plant the partial payment shall be at the pool operator shall furnish each producer, General Provisions plant operator’s estimated use value of except a producer whose milk was Sec. the milk using the most recent class received from a cooperative association 1007.1 General provisions. prices available for skim milk and described in § 1000.9(a) or (c), a Definitions butterfat at the receiving plant’s supporting statement in such form that location. 1007.2 Southeast marketing area. it may be retained by the recipient 1007.3 Route disposition. (3) Final payment to a cooperative which shall show: association for milk transferred from its 1007.4 Plant. 1007.5 Distributing plant. pool plant. For bulk fluid milk products (1) The name, address, Grade A identifier assigned by a duly constituted 1007.6 Supply plant. and bulk fluid cream products received 1007.7 Pool plant. during the month from a cooperative regulatory agency, and the payroll number of the producer; 1007.8 Nonpool plant. association in its capacity as the 1007.9 Handler. operator of a pool plant, the final (2) The month and dates that milk 1007.10 Producer-handler. payment shall be the classified value of was received from the producer, 1007.11 [Reserved] such milk as determined by multiplying including the daily and total pounds of 1007.12 Producer. the pounds of skim milk and butterfat milk received; 1007.13 Producer milk. assigned to each class pursuant to (3) The total pounds of butterfat in the 1007.14 Other source milk. 1007.15 Fluid milk product. § 1000.44 by the class prices for the producer’s milk; 1007.16 Fluid cream product. month at the receiving plant’s location, (4) The minimum rate or rates at 1007.17 [Reserved] and subtracting from this sum the which payment to the producer is 1007.18 Cooperative association. partial payment made pursuant to required pursuant to this order; 1007.19 Commercial food processing paragraph (b)(2) of this section. establishment. (4) Final payment to a cooperative (5) The rate used in making payment Handler Reports association for bulk milk received if the rate is other than the applicable directly from producers’ farms. For bulk minimum rate; 1007.30 Reports of receipts and utilization. milk received from a cooperative (6) The amount, or rate per 1007.31 Payroll reports. 1007.32 Other reports. association during the month, including hundredweight, and nature of each the milk of producers who are not deduction claimed by the handler; and Classification of Milk members of such association and who (7) The net amount of payment to the 1007.40 Classes of utilization. the market administrator determines producer or cooperative association. 1007.41 [Reserved]

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1007.42 Classification of transfers and State or Federal) reservations, to paragraph (b) of this section or diversions. installations, institutions, or other section 7(b) of any other Federal milk 1007.43 General classification rules. similar establishments if any part order, from which during the month 50 1007.44 Classification of producer milk. thereof is within any of the listed states percent or more of the fluid milk 1007.45 Market administrator’s reports and announcements concerning or political subdivisions: products received at such plant (excluding concentrated milk received classification. Alabama, Arkansas, Louisiana, and Mississippi from another plant by agreement for Class Prices other than Class I use) are disposed of 1007.50 Class prices, component prices, All of the States of Alabama, Arkansas, as route disposition or are transferred in Louisiana, and Mississippi. and advanced pricing factors. the form of packaged fluid milk 1007.51 Class I differential and price. Florida Counties products to other distributing plants. At 1007.52 Adjusted Class I differentials. least 25 percent of such route 1007.53 Announcement of class prices, Escambia, Okaloosa, Santa Rosa, and component prices, and advanced pricing Walton. disposition and transfers must be to factors. Georgia Counties outlets in the marketing area. 1007.54 Equivalent price. (b) Any distributing plant located in All of the State of Georgia except for the the marketing area which during the Uniform Prices counties of Catoosa, Chattooga, Dade, Fannin, month processed at least 50 percent of Murray, Walker, and Whitfield. 1007.60 Handler’s value of milk. the total quantity of fluid milk products 1007.61 Computation of uniform prices. Kentucky Counties received at the plant (excluding 1007.62 Announcement of uniform prices. Allen, Ballard, Barren, Caldwell, Calloway, concentrated milk received from Payments for Milk Carlisle, Christian, Crittenden, Fulton, another plant by agreement for other Graves, Hickman, Livingston, Logan, Lyon, 1007.70 Producer-settlement fund. than Class I use) into ultra-pasteurized Marshall, McCracken, Metcalfe, Monroe, 1007.71 Payments to the producer- or aseptically-processed fluid milk Simpson, Todd, Trigg, and Warren. settlement fund. products. 1007.72 Payments from the producer- Missouri Counties (c) A supply plant from which 50 settlement fund. Barry, Barton, Bollinger, Butler, Cape percent or more of the total quantity of 1007.73 Payments to producers and to Girardeau, Carter, Cedar, Christian, Crawford, milk that is received during the month cooperative associations. Dade, Dallas, Dent, Douglas, Dunklin, from dairy farmers and handlers 1007.74 [Reserved] Greene, Howell, Iron, Jasper, Laclede, described in § 1000.9(c), including milk 1007.75 Plant location adjustments for Lawrence, Madison, McDonald, Mississippi, that is diverted from the plant, is producer milk and nonpool milk. New Madrid, Newton, Oregon, Ozark, transferred to pool distributing plants. 1007.76 Payments by a handler operating a Pemiscot, Perry, Polk, Reynolds, Ripley, partially regulated distributing plant. Concentrated milk transferred from the Scott, Shannon, St. Francois, Stoddard, supply plant to a distributing plant for 1007.77 Adjustment of accounts. Stone, Taney, Texas, Vernon, Washington, 1007.78 Charges on overdue accounts. Wayne, Webster, and Wright. an agreed-upon use other than Class I shall be excluded from the supply Marketwide Service Payments Tennessee Counties plant’s shipments in computing the 1007.80 Transportation credit balancing All of the State of Tennessee except for the plant’s shipping percentage. fund. counties of Anderson, Blount, Bradley, (d) A plant located within the 1007.81 Payments to the transportation Campbell, Carter, Claiborne, Cocke, credit balancing fund. marketing area that is operated by a Cumberland, Grainger, Greene, Hamblen, cooperative association if pool plant 1007.82 Payments from the transportation Hamilton, Hancock, Hawkins, Jefferson, credit balancing fund. status under this paragraph is requested Johnson, Knox, Loudon, Marion, McMinn, for such plant by the cooperative Meigs, Monroe, Morgan, Polk, Rhea, Roane, Administrative Assessment and Marketing association and during the month at Service Deduction Scott, Sequatchie, Sevier, Sullivan, Unicoi, Union, and Washington. least 60 percent of the producer milk of 1007.85 Assessment for order members of such cooperative administration. § 1007.3 Route disposition. association is delivered directly from 1007.86 Deduction for marketing services. See § 1000.3. farms to pool distributing plants or is Authority: 7 U.S.C. 601–674. transferred to such plants as a fluid milk § 1007.4 Plant. SubpartÐOrder Regulating Handling product (excluding concentrated milk See § 1000.4. transferred to a distributing plant for an General Provisions § 1007.5 Distributing plant. agreed-upon use other than Class I) from See § 1000.5. the cooperative’s plant. § 1007.1 General provisions. (e) Two or more plants operated by The terms, definitions, and provisions § 1007.6 Supply plant. the same handler and located within the in part 1000 of this chapter apply to and See § 1000.6. marketing area may qualify for pool are hereby made a part of this order. In status as a unit by meeting the total and this part 1007, all references to sections § 1007.7 Pool plant. in-area route disposition requirements in part 1000 refer to part 1000 of this Pool plant means a plant specified in specified in paragraph (a) of this section chapter. paragraphs (a) through (d) of this and the following additional Definitions section, or a unit of plants as specified requirements: in paragraph (e) of this section, but (1) At least one of the plants in the § 1007.2 Southeast marketing area. excluding a plant specified in paragraph unit must qualify as a pool plant The marketing area means all territory (g) of this section. The pooling pursuant to paragraph (a) of this section; within the bounds of the following standards described in paragraphs (c) (2) Other plants in the unit must states and political subdivisions, and (d) of this section are subject to process only Class I or Class II products including all piers, docks and wharves modification pursuant to paragraph (f) and must be located in a pricing zone connected therewith and all craft of this section: providing the same or a lower Class I moored thereat, and all territory (a) A distributing plant, other than a price than the price applicable at the occupied by government (municipal, plant qualified as a pool plant pursuant distributing plant included in the unit

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All percentages of paragraphs (c) and (d) of who: milk received pursuant to this this section may be increased or (a) Operates a dairy farm and a paragraph shall be priced at the location decreased by the market administrator if distributing plant from which there is of the plant where it is first physically the market administrator finds that such monthly route disposition in the received; adjustment is necessary to encourage marketing area; (b) Received by a handler described in needed shipments or to prevent (b) Receives no fluid milk products, § 1000.9(c) in excess of the quantity uneconomic shipments. Before making and acquires no fluid milk products for delivered to pool plants; such a finding, the market administrator route disposition, from sources other (c) Diverted by a pool plant operator shall investigate the need for adjustment than own farm production; to another pool plant. Milk so diverted either on the market administrator’s (c) Disposes of no other source milk shall be priced at the location of the own initiative or at the request of as Class I milk except by increasing the plant to which diverted; or interested parties if the request is made nonfat milk solids content of the fluid (d) Diverted by the operator of a pool in writing at least 15 days prior to the milk products received from own farm plant or a handler described in date for which the requested revision is production; and § 1000.9(c) to a nonpool plant, subject to desired effective. If the investigation (d) Provides proof satisfactory to the the following conditions: shows that an adjustment of the market administrator that the care and (1) In any month of January through shipping percentages might be management of the dairy animals and June, not less than 4 days’ production of appropriate, the market administrator other resources necessary to produce all the producer whose milk is diverted is shall issue a notice stating that an Class I milk handled, and the processing physically received at a pool plant adjustment is being considered and and packaging operations, are the during the month; invite data, views and arguments. Any producer-handler’s own enterprise and (2) In any month of July through decision to revise an applicable are operated at the producer-handler’s December, not less than 10 days’ shipping percentage must be issued in own risk. production of the producer whose milk writing at least one day before the § 1007.11 [Reserved] is diverted is physically received at a effective date. pool plant during the month; (g) The term pool plant shall not § 1007.12 Producer. (3) The total quantity of milk so apply to the following plants: (a) Except as provided in paragraph diverted during the month by a (1) A producer-handler plant; (b) of this section, producer means any cooperative association shall not exceed (2) An exempt plant as defined in person who produces milk approved by 33 percent during the months of July § 1000.8(e); a duly constituted regulatory agency for through December, and 50 percent (3) A plant qualified pursuant to fluid consumption as Grade A milk and during the months of January through paragraph (a) of this section which is whose milk (or components of milk) is: June, of the producer milk that the not located within any Federal order (1) Received at a pool plant directly cooperative association caused to be marketing area, meets the pooling from the producer or diverted by the delivered to, and physically received at, requirements of another Federal order, plant operator in accordance with pool plants during the month; and has had greater route disposition in § 1007.13; or (4) The operator of a pool plant that such other Federal order marketing area (2) Received by a handler described in is not a cooperative association may for 3 consecutive months; § 1000.9(c). divert any milk that is not under the (4) A plant qualified pursuant to (b) Producer shall not include: control of a cooperative association that paragraph (a) of this section which is (1) A producer-handler as defined in diverts milk during the month pursuant located in another Federal order any Federal order; to paragraph (d) of this section. The marketing area, meets the pooling (2) A dairy farmer whose milk is total quantity of milk so diverted during standards of the other Federal order, received at an exempt plant, excluding the month shall not exceed 33 percent and has not had a majority of its route producer milk diverted to the exempt during the months of July through disposition in this marketing area for 3 plant pursuant to § 1007.13(d); December, or 50 percent during the consecutive months or is locked into (3) A dairy farmer whose milk is months of January through June, of the pool status under such other Federal received by diversion at a pool plant producer milk physically received at order without regard to its route from a handler regulated under another such plant (or such unit of plants in the disposition in any other Federal order Federal order if the other Federal order case of plants that pool as a unit marketing area; and designates the dairy farmer as a pursuant to § 1007.7(e)) during the (5) A plant qualified pursuant to producer under that order and that milk month, excluding the quantity of paragraph (c) of this section which also is allocated by request to a utilization producer milk received from a handler meets the pooling requirements of other than Class I; and described in § 1000.9(c); another Federal order and from which (4) A dairy farmer whose milk is (5) Any milk diverted in excess of the greater qualifying shipments are made reported as diverted to a plant fully limits prescribed in paragraphs (d)(3) to plants regulated under such other regulated under another Federal order and (4) of this section shall not be order than are made to plants regulated with respect to that portion of the milk producer milk. If the diverting handler under this order, or such plant has so diverted that is assigned to Class I or cooperative association fails to automatic pooling status under such under the provisions of such other designate the dairy farmers’ deliveries other order. order. that will not be producer milk, no milk

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(d)(1) through (4) of this section may be transportation credit pursuant to that (a) On or before the 20th day after the increased or decreased by the market paragraph and the date that such milk end of each month, each handler administrator if the market was received; described in § 1000.9(a) and (c) shall administrator finds that such revision is (7) For handlers submitting report to the market administrator any necessary to assure orderly marketing transportation credit requests, transfers adjustments to transportation credit and efficient handling of milk in the of bulk milk to nonpool plants, requests as reported pursuant to marketing area. Before making such a including the dates that such milk was § 1007.30(a)(5), (6), and (7). finding, the market administrator shall transferred; (b) In addition to the reports required investigate the need for the revision (8) Inventories at the beginning and pursuant to §§ 1007.30, 31, and 32(a), either on the market administrator’s end of the month of fluid milk products each handler shall report any own initiative or at the request of and bulk fluid cream products; and information the market administrator interested persons. If the investigation (9) The utilization or disposition of all deems necessary to verify or establish shows that a revision might be milk and milk products required to be each handler’s obligation under the appropriate, the market administrator reported pursuant to this paragraph. order. shall issue a notice stating that the (b) Each handler operating a partially Classification of Milk revision is being considered and regulated distributing plant shall report inviting written data, views, and with respect to such plant in the same § 1007.40 Classes of utilization. arguments. Any decision to revise an manner as prescribed for reports See § 1000.40. applicable percentage must be issued in required by paragraphs (a)(1), (a)(2), writing at least one day before the (a)(3), (a)(4), and (a)(8) of this section. § 1007.41 [Reserved] effective date. Receipts of milk that would have been § 1007.42 Classification of transfers and § 1007.14 Other source milk. producer milk if the plant had been diversions. fully regulated shall be reported in lieu See § 1000.42. See § 1000.14. of producer milk. The report shall show § 1007.15 Fluid milk product. also the quantity of any reconstituted § 1007.43 General classification rules. See § 1000.15. skim milk in route disposition in the See § 1000.43. marketing area. § 1007.16 Fluid cream product. (c) Each handler described in § 1007.44 Classification of producer milk. See § 1000.16. § 1000.9(c) shall report: See § 1000.44. (1) The quantities of all skim milk and § 1007.17 [Reserved] § 1007.45 Market administrator's reports butterfat contained in receipts of milk and announcements concerning § 1007.18 Cooperative association. from producers; classification. (2) The utilization or disposition of all See § 1000.18. See § 1000.45. such receipts; and § 1007.19 Commercial food processing (3) With respect to milk for which a Class Prices establishment. cooperative association is requesting a See § 1000.19. transportation credit pursuant to § 1007.50 Class prices, component prices, and advanced pricing factors. § 1007.82, all of the information Handler Reports required in paragraphs (a)(5), (a)(6), and See § 1000.50. § 1007.30 Reports of receipts and (a)(7) of this section. § 1007.51 Class I differential and price. utilization. (d) Each handler not specified in The Class I differential shall be the paragraphs (a) through (c) of this section Each handler shall report monthly so differential established for Fulton shall report with respect to its receipts that the market administrator’s office County, Georgia, which is reported in and utilization of milk and milk receives the report on or before the 7th § 1000.52. The Class I price shall be the products in such manner as the market day after the end of the month, in the price computed pursuant to § 1000.50(a) administrator may prescribe. detail and on prescribed forms, as for Fulton County, Georgia. follows: § 1007.31 Payroll reports. (a) With respect to each of its pool § 1007.52 Adjusted Class I differentials. plants, the quantities of skim milk and (a) On or before the 20th day after the See § 1000.52. butterfat contained in or represented by: end of each month, each handler that (1) Receipts of producer milk, operates a pool plant pursuant to § 1007.53 Announcement of class prices, including producer milk diverted by the § 1007.7 and each handler described in component prices, and advanced pricing reporting handler, from sources other § 1000.9(c) shall report to the market factors. than handlers described in § 1000.9(c); administrator its producer payroll for See § 1000.53. the month, in detail prescribed by the (2) Receipts of milk from handlers § 1007.54 Equivalent price. described in § 1000.9(c); market administrator, showing for each (3) Receipts of fluid milk products producer the information specified in See § 1000.54. and bulk fluid cream products from § 1007.73(e). Uniform Prices other pool plants; (b) Each handler operating a partially (4) Receipts of other source milk; regulated distributing plant who elects § 1007.60 Handler's value of milk. (5) Receipts of bulk milk from a plant to make payment pursuant to For the purpose of computing a regulated under another Federal order, § 1000.76(b) shall report for each dairy handler’s obligation for producer milk,

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00220 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.215 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16245 the market administrator shall fluid milk products from an unregulated (i) The total skim pounds of producer determine for each month the value of supply plant to the extent that an milk; and milk of each handler with respect to equivalent amount of skim milk or (ii) The total skim pounds for which each of the handler’s pool plants and of butterfat disposed of to such plant by a value is computed pursuant to each handler described in § 1000.9(c) handlers fully regulated under any § 1007.60(e); and with respect to milk that was not Federal milk order is classified and (6) Subtract not less than 4 cents and received at a pool plant by adding the priced as Class I milk and is not used not more than 5 cents. amounts computed in paragraphs (a) as an offset for any other payment (c) Uniform price. The uniform price through (e) of this section and obligation under any order; and per hundredweight, rounded to the subtracting from that total amount the (f) For reconstituted milk made from nearest cent, shall be the sum of the value computed in paragraph (f) of this receipts of nonfluid milk products, following: section. Receipts of nonfluid milk multiply $1.00 (but not more than the (1) Multiply the uniform butterfat products that are distributed as labeled difference between the Class I price price for the month pursuant to reconstituted milk for which payments applicable at the location of the pool paragraph (a) of this section times 3.5 are made to the producer-settlement plant and the Class IV price) by the pounds of butterfat; and fund of another Federal order under hundredweight of skim milk and (2) Multiply the uniform skim milk § 1000.76(a)(4) or (d) shall be excluded butterfat contained in receipts of price for the month pursuant to from pricing under this section. nonfluid milk products that are paragraph (b) of this section times 96.5 (a) Multiply the pounds of skim milk allocated to Class I use pursuant to pounds of skim milk. and butterfat in producer milk that were § 1000.43(d). classified in each class pursuant to § 1007.62 Announcement of uniform § 1000.44(c) by the applicable skim milk § 1007.61 Computation of uniform prices. prices. and butterfat prices, and add the On or before the 11th day of each On or before the 11th day after the resulting amounts; month, the market administrator shall end of the month, the market (b) Multiply the pounds of skim milk compute a uniform butterfat price, a administrator shall announce the and butterfat overage assigned to each uniform skim milk price, and a uniform uniform prices for the month computed class pursuant to § 1000.44(a)(11) by the price for producer milk receipts pursuant to § 1007.61. respective skim milk and butterfat reported for the prior month. The report Payments for Milk prices applicable at the location of the of any handler who has not made pool plant; payments required pursuant to § 1007.70 Producer-settlement fund. (c) Multiply the difference between § 1007.71 for the preceding month shall See § 1000.70. the Class IV price for the preceding not be included in the computation of month and the current month’s Class I, these prices, and such handler’s report § 1007.71 Payments to the producer- II, or III price, as the case may be, by the shall not be included in the settlement fund. hundredweight of skim milk and computation for succeeding months Each handler shall make a payment to butterfat subtracted from Class I, II, or until the handler has made full payment the producer-settlement fund in a III, respectively, pursuant to of outstanding monthly obligations. manner that provides receipt of the § 1000.44(a)(7) and the corresponding (a) Uniform butterfat price. The funds by the market administrator no step of § 1000.44(b); uniform butterfat price per pound, later than the 12th day after the end of (d) Multiply the difference between rounded to the nearest one-hundredth the month (except as provided in the Class I price applicable at the cent, shall be computed by multiplying § 1000.90). Payment shall be the location of the pool plant and the Class the pounds of butterfat in producer milk amount, if any, by which the amount IV price by the hundredweight of skim allocated to each class pursuant to specified in paragraph (a) of this section milk and butterfat assigned to Class I § 1000.44(b) by the respective class exceeds the amount specified in pursuant to § 1000.43(d) and the butterfat prices and dividing the sum of paragraph (b) of this section: hundredweight of skim milk and such values by the total pounds of such (a) The total value of milk of the butterfat subtracted from Class I butterfat. handler for the month as determined pursuant to § 1000.44(a)(3) (i) through (b) Uniform skim milk price. The pursuant to § 1007.60; and (vi) and the corresponding step of uniform skim milk price per (b) The sum of the value at the § 1000.44(b), excluding receipts of bulk hundredweight, rounded to the nearest uniform prices for skim milk and fluid cream products from a plant cent, shall be computed as follows: butterfat, adjusted for plant location, of regulated under other Federal orders (1) Combine into one total the values the handler’s receipts of producer milk; and bulk concentrated fluid milk computed pursuant to § 1005.60 for all and the value at the uniform price, as products from pool plants, plants handlers; adjusted pursuant to § 1007.75, regulated under other Federal orders, (2) Add an amount equal to the sum applicable at the location of the plant and unregulated supply plants; of the location adjustments computed from which received of other source (e) Multiply the Class I price pursuant to § 1007.75; milk for which a value is computed applicable at the location of the nearest (3) Add an amount equal to not less pursuant to § 1007.60(e). unregulated supply plants from which than one-half of the unobligated balance an equivalent volume was received by in the producer-settlement fund; § 1007.72 Payments from the producer- the pounds of skim milk and butterfat (4) Subtract the value of the total settlement fund. in receipts of concentrated fluid milk pounds of butterfat for all handlers. The No later than one day after the date of products assigned to Class I pursuant to butterfat value shall be computed by payment receipt required under § 1000.43(d) and § 1000.44(a)(3)(i) and multiplying the pounds of butterfat by § 1007.71, the market administrator the pounds of skim milk and butterfat the butterfat price computed in shall pay to each handler the amount, if subtracted from Class I pursuant to paragraph (a) of this section; any, by which the amount computed § 1000.44(a)(8) and the corresponding (5) Divide the resulting amount by the pursuant to § 1007.71(b) exceeds the step of § 1000.44(b), excluding such sum of the following for all handlers amount computed pursuant to skim milk and butterfat in receipts of included in these computations: § 1007.71(a). If, at such time, the balance

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00221 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.217 pfrm08 PsN: 02APP2 16246 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules in the producer-settlement fund is received during the first 15 days of the cooperative association or its lawful insufficient to make all payments month from a cooperative association in successor or assignee is no longer in pursuant to this section, the market any capacity, except as the operator of existence, the payment shall be made to administrator shall reduce uniformly a pool plant, the payment shall be equal the producer-settlement fund, and in the such payments and shall complete the to the hundredweight of milk received event that the handler subsequently payments as soon as the funds are multiplied by 90 percent of the locates and pays the producer or a available. preceding month’s uniform price, lawful claimant, or in the event that the adjusted for plant location pursuant to handler no longer exists and a lawful § 1007.73 Payments to producers and to § 1007.75. claim is later established, the market cooperative associations. (2) Partial payment to a cooperative administrator shall make the required (a) Each pool plant operator that is not association for milk transferred from its payment from the producer-settlement paying a cooperative association for pool plant. For bulk fluid milk products fund to the handler or to the lawful producer milk shall pay each producer and bulk fluid cream products received claimant as the case may be. as follows: during the first 15 days of the month (e) In making payments to producers (1) Partial payment. For each from a cooperative association in its pursuant to this section, each pool plant producer who has not discontinued capacity as the operator of a pool plant, operator shall furnish each producer, shipments as of the 23rd day of the the partial payment shall be at the pool except a producer whose milk was month, payment shall be made so that plant operator’s estimated use value of received from a cooperative association it is received by the producer on or the milk using the most recent class described in § 1000.9(a) or (c), a before the 26th day of the month (except prices available for skim milk and supporting statement in such form that as provided in § 1000.90) for milk butterfat at the receiving plant’s it may be retained by the recipient received during the first 15 days of the location. which shall show: month at not less than 90 percent of the (3) Final payment to a cooperative (1) The name, address, Grade A preceding month’s uniform price, association for milk transferred from its identifier assigned by a duly constituted adjusted for plant location pursuant to pool plant. For bulk fluid milk products regulatory agency, and the payroll § 1007.75 and proper deductions and bulk fluid cream products received number of the producer; authorized in writing by the producer. during the month from a cooperative (2) Final payment. For milk received association in its capacity as the (2) The month and dates that milk during the month, a payment computed operator of a pool plant, the final was received from the producer, as follows shall be made so that it is payment shall be the classified value of including the daily and total pounds of received by each producer one day after such milk as determined by multiplying milk received; the payment date required in § 1007.72: the pounds of skim milk and butterfat (3) The total pounds of butterfat in the (i) Multiply the hundredweight of assigned to each class pursuant to producer’s milk; producer skim milk received times the § 1000.44 by the class prices for the (4) The minimum rate or rates at uniform skim milk price for the month; month at the receiving plant’s location, which payment to the producer is (ii) Multiply the pounds of butterfat and subtracting from this sum the required pursuant to this order; received times the uniform butterfat partial payment made pursuant to (5) The rate used in making payment price for the month; paragraph (b)(2) of this section. if the rate is other than the applicable (iii) Multiply the hundredweight of (4) Final payment to a cooperative minimum rate; producer milk received times the plant association for bulk milk received (6) The amount, or rate per location adjustment pursuant to directly from producers’ farms. For bulk hundredweight, and nature of each § 1007.75; and milk received from a cooperative deduction claimed by the handler; and (iv) Add the amounts computed in association during the month, including (7) The net amount of payment to the paragraph (a)(2)(i), (ii), and (iii) of this the milk of producers who are not producer or cooperative association. section, and from that sum: members of such association and who (A) Subtract the partial payment made the market administrator determines § 1007.74 [Reserved] pursuant to paragraph (a)(1) of this have authorized the cooperative § 1007.75 Plant location adjustments for section; association to collect payment for their producer milk and nonpool milk. (B) Subtract the deduction for milk, the final payment for such milk For purposes of making payments for marketing services pursuant to shall be an amount equal to the sum of producer milk and nonpool milk, a § 1000.86; the individual payments otherwise plant location adjustment shall be (C) Add or subtract for errors made in payable for such milk pursuant to determined by subtracting the Class I previous payments to the producer; and paragraph (a)(2) of this section. (D) Subtract proper deductions (c) If a handler has not received full price specified in § 1007.50 from the authorized in writing by the producer. payment from the market administrator Class I price at the plant’s location. The (b) One day before partial and final pursuant to § 1007.72 by the payment difference, plus or minus as the case payments are due pursuant to paragraph date specified in paragraph (a) or (b) of may be, shall be used to adjust the (a) of this section, each pool plant this section, the handler may reduce payments required pursuant to operator shall pay a cooperative payments pursuant to paragraphs (a) §§ 1007.73 and 1000.76. association for milk received as follows: and (b) of this section, but by not more § 1007.76 Payments by a handler (1) Partial payment to a cooperative than the amount of the underpayment. operating a partially regulated distributing association for bulk milk received The payments shall be completed on the plant. directly from producers’ farms. For bulk next scheduled payment date after See § 1000.76. milk (including the milk of producers receipt of the balance due from the who are not members of such market administrator. § 1007.77 Adjustment of accounts. association and who the market (d) If a handler claims that a required See § 1000.77. administrator determines have payment to a producer cannot be made authorized the cooperative association because the producer is deceased or § 1007.78 Charges on overdue accounts. to collect payment for their milk) cannot be located, or because the See § 1000.78.

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Marketwide Service Payments section, a preliminary amount is necessary to assure the market of an determined pursuant to paragraph (d) of adequate supply of milk for fluid use. § 1007.80 Transportation credit balancing this section to the extent that funds are Before making such a finding, the fund. available in the transportation credit market administrator shall notify the The market administrator shall balancing fund. If an insufficient Director of the Dairy Division and all maintain a separate fund known as the balance exists to pay all of the credits handlers in the market that an extension Transportation Credit Balancing Fund computed pursuant to this section, the is being considered and invite written into which shall be deposited the market administrator shall distribute the data, views, and arguments. Any payments made by handlers pursuant to balance available in the transportation decision to extend the transportation § 1007.81 and out of which shall be credit balancing fund by reducing credit period must be issued in writing made the payments due handlers payments pro rata using the percentage prior to the first day of the month for pursuant to § 1007.82. Payments due a derived by dividing the balance in the which the extension is to be effective. handler shall be offset against payments fund by the total credits that are due for (c) Transportation credits shall apply due from the handler. the month. The amount of credits to the following milk: § 1007.81 Payments to the transportation resulting from this initial proration shall (1) Bulk milk received from a plant credit balancing fund. be subject to audit adjustment pursuant regulated under another Federal order, (a) On or before the 12th day after the to paragraph (a)(2) of this section; except Federal Order 1005, and end of the month (except as provided in (2) The market administrator shall allocated to Class I milk pursuant to § 1000.90), each handler operating a accept adjusted requests for § 1000.44(a)(9); and pool plant and each handler specified in transportation credits on or before the (2) Bulk milk received directly from § 1000.9(c) shall pay to the market 20th day of the month following the the farms of dairy farmers at pool administrator a transportation credit month for which such credits were distributing plants subject to the balancing fund assessment determined requested pursuant to § 1007.32(a). After following conditions: by multiplying the pounds of Class I such date, a preliminary audit will be (i) The quantity of such milk that producer milk assigned pursuant to conducted by the market administrator, shall be eligible for the transportation § 1000.44 by $0.07 per hundredweight who will recalculate any necessary credit shall be determined by or such lesser amount as the market proration of transportation credit multiplying the total pounds of milk administrator deems necessary to payments for the preceding month received from producers meeting the maintain a balance in the fund equal to pursuant to paragraph (a) of this section. conditions of this paragraph by the the total transportation credits Handlers will be promptly notified of an lower of: overpayment of credits based upon this disbursed during the prior June-January (A) The marketwide estimated Class I final computation and remedial period. In the event that during any utilization of all handlers for the month payments to or from the transportation month of the June-January period the pursuant to § 1000.45(a); or credit balancing fund will be made on fund balance is insufficient to cover the (B) The Class I utilization of all or before the next payment date for the amount of credits that are due, the producer milk of the pool plant operator following month; assessment should be based upon the receiving the milk after the amount of credits that would have been (3) Transportation credits paid pursuant to paragraphs (a)(1) and (2) of computations described in § 1000.44; disbursed had the fund balance been (ii) The dairy farmer was not a sufficient. this section shall be subject to final verification by the market administrator ‘‘producer’’ under this order during (b) The market administrator shall more than 2 of the immediately announce publicly on or before the 5th pursuant to § 1000.77. Adjusted payments to or from the transportation preceding months of February through day of the month (except as provided in May and not more than 50 percent of § 1000.90) the assessment pursuant to credit balancing fund will remain subject to the final proration established the production of the dairy farmer paragraph (a) of this section for the during those 2 months, in aggregate, was following month. pursuant to paragraph (a)(2) of this section; and received as producer milk under this § 1007.82 Payments from the (4) In the event that a qualified order during those 2 months; and transportation credit balancing fund. cooperative association is the (iii) The farm on which the milk was (a) Payments from the transportation responsible party for whose account produced is not located within the credit balancing fund to handlers and such milk is received and written specified marketing area of this order or cooperative associations requesting documentation of this fact is provided the marketing area of Federal Order transportation credits shall be made as to the market administrator pursuant to 1005. follows: § 1007.30(c)(3) prior to the date payment (d) Transportation credits shall be (1) On or before the 13th day (except is due, the transportation credits for computed as follows: as provided in § 1000.90) after the end such milk computed pursuant to this (1) The market administrator shall of each of the months of July through section shall be made to such subtract from the pounds of milk December and any other month in cooperative association rather than to described in paragraphs (c)(1) and (2) of which transportation credits are in the operator of the pool plant at which this section the pounds of bulk milk effect pursuant to paragraph (b) of this the milk was received. transferred from the pool plant receiving section, the market administrator shall (b) The market administrator may the supplemental milk if milk was pay to each handler that received, and extend the period during which transferred to a nonpool plant on the reported pursuant to § 1007.30(a)(5), transportation credits are in effect (i.e., same calendar day that the bulk milk transferred from a plant fully the transportation credit period) to the supplemental milk was received. For regulated under another Federal order months of January and June if a written this purpose, the transferred milk shall as described in paragraph (c)(1) of this request to do so is received 15 days be subtracted from the most distant load section or that received, and reported prior to the beginning of the month for of supplemental milk received, and then pursuant to § 1007.30(a)(6), milk which the request is made and, after in sequence with the next most distant directly from producers’ farms as conducting an independent load until all of the transfers have been specified in paragraph (c)(2) of this investigation, finds that such extension offset;

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(2) With respect to the pounds of milk PART 1030ÐMILK IN THE UPPER 1030.77 Adjustment of accounts. described in paragraph (c)(1) of this MIDWEST MARKETING AREA 1030.78 Charges on overdue accounts. section that remain after the Administrative Assessment and Marketing SubpartÐOrder Regulating Handling computations described in paragraph Service Deduction (d)(1) of this section, the market General Provisions 1030.85 Assessment for order administrator shall: Sec. administration. (i) Determine the shortest hard-surface 1030.1 General provisions. 1030.86 Deduction for marketing services. highway distance between the shipping Authority: 7 U.S.C. 601–674. plant and the receiving plant; Definitions (ii) Multiply the number of miles so 1030.2 Upper Midwest marketing area. SubpartÐOrder Regulating Handling determined by 0.35 cent; 1030.3 Route disposition. 1030.4 Plant. General Provisions (iii) Subtract the applicable Class I 1030.5 Distributing plant. differential in § 1000.52 for the county 1030.6 Supply plant. § 1030.1 General provisions. in which the shipping plant is located 1030.7 Pool plant. The terms, definitions, and provisions from the Class I differential applicable 1030.8 Nonpool plant. in part 1000 of this chapter apply to and for the county in which the receiving 1030.9 Handler. are hereby made a part of this order. In plant is located; 1030.10 Producer-handler. this part 1030, all references to sections (iv) Subtract any positive difference 1030.11 [Reserved] in part 1000 refer to part 1000 of this computed in paragraph (d)(2)(iii) of this 1030.12 Producer. 1030.13 Producer milk. chapter. section from the amount computed in 1030.14 Other source milk. Definitions paragraph (d)(2)(ii) of this section; and 1030.15 Fluid milk product. (v) Multiply the remainder computed 1030.16 Fluid cream product. § 1030.2 Upper Midwest marketing area. in paragraph (d)(2)(iv) of this section by 1030.17 [Reserved] The marketing area means all territory the hundredweight of milk described in 1030.18 Cooperative association. within the bounds of the following paragraph (d)(2) of this section. 1030.19 Commercial food processing states and political subdivisions, establishment. (3) For the remaining milk described including all piers, docks, and wharves in paragraph (c)(2) of this section after Handler Reports connected therewith and all craft computations described in paragraph 1030.30 Reports of receipts and utilization. moored thereat, and all territory (d)(1) of this section, the market 1030.31 Payroll reports. occupied by government (municipal, administrator shall: 1030.32 Other reports. State, or Federal) reservations, (i) Determine an origination point for Classification of Milk installations, institutions, or other each load of milk by locating the nearest similar establishments if any part city to the last producer’s farm from 1030.40 Classes of utilization. 1030.41 [Reserved] thereof is within any of the listed states which milk was picked up for delivery 1030.42 Classification of transfers and or political subdivisions: to the receiving pool plant; diversions. Illinois Counties (ii) Determine the shortest hard- 1030.43 General classification rules. surface highway distance between the 1030.44 Classification of producer milk. Boone, Carroll, Cook, De Kalb, Du Page, Jo 1030.45 Market administrator’s reports and Daviess, Kane, Kendall, Lake, Lee, McHenry, receiving pool plant and the origination Ogle, Stephenson, Will, and Winnebago. point; announcements concerning (iii) Subtract 85 miles from the classification. Iowa Counties mileage so determined; Class Prices Howard, Kossuth, Mitchell, Winnebago, Winneshiek, and Worth. (iv) Multiply the remaining miles so 1030.50 Class prices, component prices, computed by 0.35 cent; and advanced pricing factors. Michigan Counties (v) Subtract the Class I differential 1030.51 Class I differential and price. Delta, Dickinson, Gogebic, Iron, specified in § 1000.52 applicable for the 1030.52 Adjusted Class I differentials. Menominee, and Ontonagon. county in which the origination point is 1030.53 Announcement of class prices, located from the Class I differential component prices, and advanced pricing Minnesota applicable at the receiving pool plant’s factors. All counties except Lincoln, Nobles, 1030.54 Equivalent price. Pipestone, and Rock. location; 1030.55 Transportation credits and (vi) Subtract any positive difference assembly credits. North Dakota Counties computed in paragraph (d)(3)(v) of this Barnes, Cass, Cavalier, Dickey, Grand Producer Price Differential section from the amount computed in Forks, Griggs, La Moure, Nelson, Pembina, paragraph (d)(3)(iv) of this section; and 1030.60 Handler’s value of milk. Ramsey, Ransom, Richland, Sargent, Steele, (vii) Multiply the remainder 1030.61 Computation of producer price Traill, and Walsh. computed in paragraph (d)(3)(vi) of this differential. 1030.62 Announcement of producer prices. South Dakota Counties section by the hundredweight of milk Brown, Day, Edmunds, Grant, Marshall, described in paragraph (d)(3) of this Payments for Milk McPherson, Roberts, and Walworth. section. 1030.70 Producer-settlement fund. 1030.71 Payments to the producer- Wisconsin Counties Administrative Assessment and settlement fund. All counties except Crawford and Grant. Marketing Service Deduction 1030.72 Payments from the producer- settlement fund. § 1030.3 Route disposition. § 1007.85 Assessment for order 1030.73 Payments to producers and to administration. See § 1000.3. cooperative associations. See § 1000.85. 1030.74 [Reserved] § 1030.4 Plant. 1030.75 Plant location adjustments for See § 1000.4. § 1007.86 Deduction for marketing producer milk and nonpool milk. services. 1030.76 Payments by a handler operating a § 1030.5 Distributing plant. See § 1000.86. partially regulated distributing plant. See § 1000.5.

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§ 1030.6 Supply plant. (iv) Distributing plants fully regulated pursuant to § 1000.9(c) to qualify plants See § 1000.6. under other Federal orders, except that located outside the marketing area; credit for shipments to such plants shall (2) The handler(s) establishing the § 1030.7 Pool plant. be limited to the quantity shipped to system submits a written request to the Pool plant means a plant, unit of pool distributing plants during the market administrator on or before July plants, or system of plants as specified month and credits for shipments to 15 requesting that such plants qualify as in paragraphs (a) through (f) of this other order plants shall not include any a system for the period of August section, but excluding a plant specified such shipments made on the basis of through July of the following year. Such in paragraph (h) of this section. The agreed-upon Class II, Class III, or Class request will contain a list of the plants pooling standards described in IV utilization. participating in the system in the order, paragraphs (c) and (f) of this section are (2) The operator of a supply plant may beginning with the last plant, in which subject to modification pursuant to include as qualifying shipments under the plants will be dropped from the paragraph (g) of this section: this paragraph milk delivered directly system if the system fails to qualify. (a) A distributing plant, other than a from producers’ farms pursuant to Each plant that qualifies as a pool plant plant qualified as a pool plant pursuant §§ 1000.9(c) or 1030.13(c) to plants within a system shall continue each to paragraph (b) of this section or described in paragraphs (a), (b), and (e) month as a plant in the system through section 7(b) of any other Federal milk of this section. the following July unless the handler(s) order, from which during the month 15 (3) Concentrated milk transferred establishing the system submits a percent or more of the total quantity of from the supply plant to a distributing written request to the market fluid milk products physically received plant for an agreed-upon use other than administrator that the plant be deleted at the plant (excluding concentrated Class I shall be excluded from the from the system or that the system be milk received from another plant by supply plant’s shipments in computing discontinued. Any plant that has been agreement for other than Class I use) are the supply plant’s shipping percentage. so deleted from a system, or that has disposed of as route disposition or are (d) [Reserved] failed to qualify in any month, will not transferred in the form of packaged fluid (e) Two or more plants operated by be part of any system for the remaining milk products to other distributing the same handler and located in the months through July. The handler(s) plants. At least 25 percent of such route marketing area may qualify for pool that established a system may add a disposition and transfers must be to status as a unit by meeting the total and plant operated by such handler(s) to a outlets in the marketing area. in-area route disposition requirements system if such plant has been a pool (b) Any distributing plant located in of a pool distributing plant specified in plant each of the 6 prior months and the marketing area which during the paragraph (a) of this section and subject would otherwise be eligible to be in a month processed at least 15 percent of to the following additional system, upon written request to the the total quantity of fluid milk products requirements: market administrator no later than the physically received at the plant (1) At least one of the plants in the 15th day of the prior month. In the (excluding concentrated milk received unit must qualify as a pool plant event of an ownership change or the from another plant by agreement for pursuant to paragraph (a) of this section; business failure of a handler that is a other than Class I use) into ultra- (2) Other plants in the unit must participant in a system, the system may pasteurized or aseptically-processed process Class I or Class II products, be reorganized to reflect such changes if fluid milk products. using 50 percent or more of the total a written request to file a new marketing (c) A supply plant from which the Grade A fluid milk products received in agreement is submitted to the market quantity of bulk fluid milk products bulk form at such plant or diverted administrator; and shipped to (and physically unloaded therefrom by the plant operator in Class (3) If a system fails to qualify under into) plants described in paragraph I or Class II products; and the requirements of this paragraph, the (c)(1) of this section is not less than 10 (3) The operator of the unit has filed handler responsible for qualifying the percent of the Grade A milk received a written request with the market system shall notify the market from dairy farmers (except dairy farmers administrator prior to the first day of the administrator which plant or plants will described in § 1030.12(b)) and handlers month for which such status is desired be deleted from the system so that the described in § 1000.9(c), including milk to be effective. The unit shall continue remaining plants may be pooled as a diverted pursuant to § 1030.13, subject from month-to-month thereafter without system. If the handler fails to do so, the to the following conditions: further notification. The handler shall market administrator shall exclude one (1) Qualifying shipments may be notify the market administrator in or more plants, beginning at the bottom made to plants described in paragraphs writing prior to the first day of any of the list of plants in the system and (c)(1)(i) through (iv) of this section, month for which termination or any continuing up the list as necessary until except that whenever shipping change of the unit is desired. the deliveries are sufficient to qualify requirements are increased pursuant to (f) A system of 2 or more supply the remaining plants in the system. paragraph (g) of this section, only plants operated by one or more handlers (g) The applicable shipping shipments to pool plants described in may qualify for pooling by meeting the percentages of paragraphs (c) and (f) of paragraphs (a), (b), and (e) of this shipping requirements of paragraph (c) this section and the diversion limits section shall count as qualifying of this section in the same manner as a described in § 1030.13(d)(2) may be shipments for the purpose of meeting single plant subject to the following increased or decreased, for all or part of the increased shipments: additional requirements: the marketing area, by the market (i) Pool plants described in (1) Each plant in the system is located administrator if the market § 1030.7(a), (b) and (e); within the marketing area or was a pool administrator finds that such (ii) Plants of producer-handlers; supply plant pursuant to § 1030.7(c) for adjustment is necessary to encourage (iii) Partially regulated distributing each of the 3 months immediately needed shipments or to prevent plants, except that credit for such preceding the effective date of this uneconomic shipments. Before making shipments shall be limited to the paragraph so long as it continues to such a finding, the market administrator amount of such milk classified as Class maintain pool status. Cooperative shall investigate the need for adjustment I at the transferee plant; and associations may not use shipments either on the market administrator’s

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00225 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.222 pfrm08 PsN: 02APP2 16250 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules own initiative or at the request of (i) Any plant that qualifies as a pool (1) Received at a pool plant directly interested parties if the request is made plant in each of the immediately from the producer or diverted by the in writing at least 15 days prior to the preceding 3 months pursuant to plant operator in accordance with month for which the requested revision paragraph (a) of this section or the § 1030.13; or is desired effective. If the investigation shipping percentages in paragraph (c) of (2) Received by a handler described in shows that an adjustment of the this section that is unable to meet such § 1000.9(c). shipping percentages might be performance standards for the current (b) Producer shall not include: appropriate, the market administrator month because of unavoidable (1) A producer-handler as defined in shall issue a notice stating that an circumstances determined by the market any Federal order; adjustment is being considered and administrator to be beyond the control (2) A dairy farmer whose milk is invite data, views and arguments. Any of the handler operating the plant, such received at an exempt plant, excluding decision to revise an applicable as a natural disaster (ice storm, wind producer milk diverted to the exempt shipping or diversion percentage must storm, flood), fire, breakdown of plant pursuant to § 1030.13(d); be issued in writing at least one day equipment, or work stoppage, shall be (3) A dairy farmer whose milk is before the effective date. considered to have met the minimum received by diversion at a pool plant (h) The term pool plant shall not performance standards during the from a handler regulated under another apply to the following plants: period of such unavoidable Federal order if the other Federal order (1) A producer-handler as defined circumstances, but such relief shall not designates the dairy farmer as a under any Federal order; be granted for more than 2 consecutive producer under that order and that milk (2) An exempt plant as defined in months. is allocated by request to a utilization § 1000.8(e); other than Class I; and (3) A plant located within the § 1030.8 Nonpool plant. (4) A dairy farmer whose milk is marketing area and qualified pursuant See § 1000.8. reported as diverted to a plant fully to paragraph (a) of this section which regulated under another Federal order meets the pooling requirements of § 1030.9 Handler. with respect to that portion of the milk another Federal order, and from which See § 1000.9. so diverted that is assigned to Class I more than 50 percent of its route § 1030.10 Producer-handler. under the provisions of such other disposition has been in the other order. Federal order marketing area for 3 Producer-handler means a person consecutive months; who: § 1030.13 Producer milk. (4) A plant located outside any (a) Operates a dairy farm and a Producer milk means the skim milk Federal order marketing area and distributing plant from which there is (or the skim equivalent of components qualified pursuant to paragraph (a) of route disposition in the marketing of skim milk), including nonfat this section that meets the pooling during the month; components, and butterfat in milk of a requirements of another Federal order (b) Receives fluid milk from own farm producer that is: and has had greater route disposition in production or milk that is fully subject (a) Received by the operator of a pool such other Federal order’s marketing to the pricing and pooling provisions of plant directly from a producer or a area for 3 consecutive months; this or any other Federal order; handler described in § 1000.9(c). All (5) A plant located in another Federal (c) Receives at its plant or acquires for milk received pursuant to this order marketing area and qualified route disposition no more than 150,000 paragraph shall be priced at the location pursuant to paragraph (a) of this section pounds of fluid milk products from of the plant where it is first physically that meets the pooling requirements of handlers fully regulated under any received; such other Federal order and does not Federal order. This limitation shall not (b) Received by a handler described in have a majority of its route distribution apply if the producer-handler’s own § 1000.9(c) in excess of the quantity in this marketing area for 3 consecutive farm production is less than 150,000 delivered to pool plants; months or if the plant is required to be pounds during the month; (c) Diverted by a pool plant operator regulated under such other Federal (d) Disposes of no other source milk to another pool plant. Milk so diverted order without regard to its route as Class I milk except by increasing the shall be priced at the location of the disposition in any other Federal order nonfat milk solids content of the fluid plant to which diverted; or marketing area; milk products; and (d) Diverted by the operator of a pool (6) A plant qualified pursuant to (e) Provides proof satisfactory to the plant or a cooperative association paragraph (c) of this section which also market administrator that the care and described in § 1000.9(c) to a nonpool meets the pooling requirements of management of the dairy animals and plant, subject to the following another Federal order and from which other resources necessary to produce all conditions: greater qualifying shipments are made Class I milk handled (excluding receipts (1) Milk of a dairy farmer shall not be to plants regulated under the other from handlers fully regulated under any eligible for diversion unless at least one Federal order than are made to plants Federal order) and the processing and day’s production of such dairy farmer is regulated under this order, or the plant packaging operations are the producer- physically received as producer milk at has automatic pooling status under the handler’s own enterprise and at its own a pool plant during the first month the other Federal order; and risk. dairy farmer is a producer. If a dairy (7) That portion of a regulated plant § 1030.11 [Reserved] farmer loses producer status under this designated as a nonpool plant that is order (except as a result of a temporary physically separate and operated § 1030.12 Producer. loss of Grade A approval or as a result separately from the pool portion of such (a) Except as provided in paragraph of the handler of the dairy farmer’s milk plant. The designation of a portion of a (b) of this section, producer means any failing to pool the milk under any regulated plant as a nonpool plant must person who produces milk approved by order), the dairy farmer’s milk shall not be requested in advance and in writing a duly constituted regulatory agency for be eligible for diversion unless at least by the handler and must be approved by fluid consumption as Grade A milk and one day’s production of the dairy farmer the market administrator. whose milk is: has been physically received as

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00226 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.223 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16251 producer milk at a pool plant during the (3) The utilization or disposition of all Classification of Milk first month the dairy farmer is re- milk and milk products required to be associated with the market; reported pursuant to this paragraph; and § 1030.40 Classes of utilization. (2) The quantity of milk diverted by (4) Such other information with See § 1000.40. a handler described in § 1000.9(c) may respect to the receipts and utilization of § 1030.41 [Reserved] not exceed 90 percent of the producer skim milk, butterfat, milk protein, other milk receipts reported by the handler nonfat solids, and somatic cell § 1030.42 Classification of transfers and pursuant to § 1030.30(c) provided that information, as the market administrator diversions. not less than 10 percent of such receipts may prescribe. See § 1000.42. are delivered to plants described in (b) Each handler operating a partially § 1030.43 General classification rules. § 1030.7(c)(1)(i) through (iii). These regulated distributing plant shall report percentages are subject to any with respect to such plant in the same See § 1000.43. adjustments that may be made pursuant manner as prescribed for reports § 1030.44 Classification of producer milk. to § 1030.7(g); and required by paragraph (a) of this section. See § 1000.44. (3) Diverted milk shall be priced at Receipts of milk that would have been the location of the plant to which producer milk if the plant had been § 1030.45 Market administrator's reports diverted. fully regulated shall be reported in lieu and announcements concerning classification. § 1030.14 Other source milk. of producer milk. The report shall show also the quantity of any reconstituted See § 1000.45. See § 1000.14. skim milk in route disposition in the Class Prices § 1030.15 Fluid milk product. marketing area. See § 1000.15. (c) Each handler described in § 1030.50 Class prices, component prices, § 1000.9(c) shall report: and advanced pricing factors. § 1030.16 Fluid cream product. (1) The product pounds, pounds of See § 1000.50. See § 1000.16. butterfat, pounds of protein, pounds of § 1030.51 Class I differential and price. solids-not-fat other than protein (other § 1030.17 [Reserved] solids), and the value of the somatic cell The Class I differential shall be the adjustment pursuant to § 1000.50(p), differential established for Cook County, § 1030.18 Cooperative association. Illinois, which is reported in § 1000.52. See § 1000.18. contained in receipts of milk from producers; and The Class I price shall be the price computed pursuant to § 1000.50(a) for § 1030.19 Commercial food processing (2) The utilization or disposition of Cook County, Illinois. establishment. such receipts. See § 1000.19. (d) Each handler not specified in § 1030.52 Adjusted Class I differentials. Handler Reports paragraphs (a) through (c) of this section See § 1000.52. shall report with respect to its receipts § 1030.30 Reports of receipts and and utilization of milk and milk § 1030.53 Announcement of class prices, utilization. products in such manner as the market component prices, and advanced pricing factors. Each handler shall report monthly so administrator may prescribe. that the market administrator’s office See § 1000.53. § 1030.31 Payroll reports. receives the report on or before the 9th § 1030.54 Equivalent price. (a) On or before the 22nd day after the day after the end of the month, in the See § 1000.54. detail and on the prescribed forms, as end of each month, each handler that follows: operates a pool plant pursuant to § 1030.55 Transportation credits and (a) Each handler that operates a pool § 1030.7 and each handler described in assembly credits. plant shall report for each of its § 1000.9(c) shall report to the market (a) Each handler operating a pool operations the following information: administrator its producer payroll for distributing plant described in (1) Product pounds, pounds of the month, in the detail prescribed by § 1030.7(a), (b), or (e) that receives bulk butterfat, pounds of protein, pounds of the market administrator, showing for milk from another pool plant shall solids-not-fat other than protein (other each producer the information receive a transportation credit for such solids), and the value of the somatic cell described in § 1030.73(f). milk computed as follows: adjustment pursuant to § 1000.50(p), (b) Each handler operating a partially (1) Determine the hundredweight of contained in or represented by: regulated distributing plant who elects milk eligible for the credit by (i) Receipts of producer milk, to make payment pursuant to completing the steps in paragraph (c) of including producer milk diverted by the § 1000.76(b) shall report for each dairy this section; reporting handler, from sources other farmer who would have been a producer (2) Multiply the hundredweight of than handlers described in § 1000.9(c); if the plant had been fully regulated in milk eligible for the credit by .28 cents and the same manner as prescribed for times the number of miles between the (ii) Receipts of milk from handlers reports required by paragraph (a) of this transferor plant and the transferee plant; described in § 1000.9(c); section. (3) Subtract the effective Class I price (2) Product pounds and pounds of at the transferor plant from the effective butterfat contained in: § 1030.32 Other reports. Class I price at the transferee plant; (i) Receipts of fluid milk products and In addition to the reports required (4) Multiply any positive amount bulk fluid cream products from other pursuant to §§ 1030.30 and 1030.31, resulting from the subtraction in pool plants; each handler shall report any paragraph (a)(3) of this section by the (ii) Receipts of other source milk; and information the market administrator hundredweight of milk eligible for the (iii) Inventories at the beginning and deems necessary to verify or establish credit; and end of the month of fluid milk products each handler’s obligation under the (5) Subtract the amount computed in and bulk fluid cream products; order. paragraph (a)(4) of this section from the

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00227 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.224 pfrm08 PsN: 02APP2 16252 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules amount computed in paragraph (a)(2) of redetermination by the market multiplying the values reported this section. If the amount computed in administrator. pursuant to § 1030.30(a)(1) and (c)(1) by paragraph (a)(4) of this section exceeds the percentage of total producer milk Producer Price Differential the amount computed in paragraph allocated to Class II, Class III, and Class (a)(2) of this section, the transportation § 1030.60 Handler's value of milk. IV pursuant to § 1000.44(c); credit shall be zero. For the purpose of computing a (f) Multiply the pounds of skim milk (b) Each handler operating a pool handler’s obligation for producer milk, and butterfat overage assigned to each distributing plant described in the market administrator shall class pursuant to § 1000.44(a)(11) and § 1030.7(a), (b), or (e) that receives milk determine for each month the value of the corresponding step of § 1000.44(b) by the skim milk prices and butterfat from dairy farmers, each handler that milk of each handler with respect to prices applicable to each class. transfers or diverts bulk milk from a each of the handler’s pool plants and of pool plant to a pool distributing plant, (g) Multiply the difference between each handler described in § 1000.9(c) the current month’s Class I, II, or III and each handler described in with respect to milk that was not § 1000.9(c) that delivers producer milk price, as the case may be, and the Class received at a pool plant by adding the IV price for the preceding month and by to a pool distributing plant shall receive amounts computed in paragraphs (a) an assembly credit on the portion of the hundredweight of skim milk and through (i) of this section and butterfat subtracted from Class I, II, or such milk eligible for the credit subtracting from that total amount the pursuant to paragraph (c) of this section. III, respectively, pursuant to values computed in paragraphs (j) and § 1000.44(a)(7) and the corresponding The credit shall be computed by (k) of this section. Unless otherwise multiplying the hundredweight of milk step of § 1000.44(b); specified, the skim milk, butterfat, and (h) Multiply the difference between eligible for the credit by 8 cents. the combined pounds of skim milk and (c) The following procedure shall be the Class I price applicable at the butterfat referred to in this section shall used to determine the amount of milk location of the pool plant and the Class result from the steps set forth in eligible for transportation and assembly IV price by the hundredweight of skim § 1000.44(a), (b), and (c), respectively, credits pursuant to paragraphs (a) and milk and butterfat assigned to Class I and the nonfat components of producer (b) of this section: pursuant to § 1000.43(d) and the milk in each class shall be based upon (1) At each pool distributing plant, hundredweight of skim milk and the proportion of such components in determine the aggregate quantity of butterfat subtracted from Class I producer skim milk. Receipts of Class I milk, excluding beginning pursuant to § 1000.44(a)(3)(i) through nonfluid milk products that are inventory of packaged fluid milk (vi) and the corresponding step of distributed as labeled reconstituted milk products; § 1000.44(b), excluding receipts of bulk (2) Subtract the quantity of packaged for which payments are made to the fluid cream products from plants fluid milk products received at the pool producer-settlement fund of another regulated under other Federal orders distributing plant from other pool plants Federal order under § 1000.76(a)(4) or and bulk concentrated fluid milk and from nonpool plants if such receipts (d) shall be excluded from pricing under products from pool plants, plants are assigned to Class I; this section. regulated under other Federal orders, (3) Subtract the quantity of bulk milk (a) Class I value. and unregulated supply plants. shipped from the pool distributing plant (1) Multiply the pounds of skim milk (i) Multiply the difference between to other plants to the extent that such in Class I by the Class I skim milk price; the Class I price applicable at the milk is classified as Class I milk; and location of the nearest unregulated (4) Subtract the quantity of bulk milk (2) Add an amount obtained by supply plants from which an equivalent received at the pool distributing plant multiplying the pounds of butterfat in volume was received and the Class III from other order plants and unregulated Class I by the Class I butterfat price. price by the pounds of skim milk and supply plants that is assigned to Class (b) Class II value. butterfat in receipts of concentrated I pursuant to §§ 1000.43(d) and 1000.44; (1) Multiply the pounds of nonfat fluid milk products assigned to Class I and solids in Class II skim milk by the Class pursuant to § 1000.43(d) and (5) Assign the remaining quantity pro II nonfat solids price; and § 1000.44(a)(3)(i) and the corresponding rata to physical receipts during the (2) Add an amount obtained by step of § 1000.44(b) and the pounds of month from: multiplying the pounds of butterfat in skim milk and butterfat subtracted from (i) Producers; Class II times the Class II butterfat price. Class I pursuant to § 1000.44(a)(8) and (ii) Handlers described in § 1000.9(c); (c) Class III value. the corresponding step of § 1000.44(b), and (1) Multiply the pounds of protein in excluding such skim milk and butterfat (iii) Other pool plants. Class III skim milk by the protein price; in receipts of fluid milk products from (d) For purposes of this section, the (2) Add an amount obtained by an unregulated supply plant to the distances to be computed shall be multiplying the pounds of other solids extent that an equivalent amount of determined by the market administrator in Class III skim milk by the other solids skim milk or butterfat disposed of to using the shortest available state and/or price; and such plant by handlers fully regulated Federal highway mileage. Mileage (3) Add an amount obtained by under any Federal milk order is determinations are subject to multiplying the pounds of butterfat in classified and priced as Class I milk and redetermination at all times. In the Class III by the butterfat price. is not used as an offset for any other event a handler requests a (d) Class IV value. payment obligation under any order. redetermination of the mileage (1) Multiply the pounds of nonfat (j) For reconstituted milk made from pertaining to any plant, the market solids in Class IV skim milk by the receipts of nonfluid milk products, administrator shall notify the handler of nonfat solids price; and multiply $1.00 (but not more than the such redetermination within 30 days (2) Add an amount obtained by difference between the Class I price after the receipt of such request. Any multiplying the pounds of butterfat in applicable at the location of the pool financial obligations resulting from a Class IV by the butterfat price. plant and the Class IV price) by the change in mileage shall not be (e) Compute an adjustment for the hundredweight of skim milk and retroactive for any periods prior to the somatic cell content of producer milk by butterfat contained in receipts of

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00228 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.225 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16253 nonfluid milk products that are (d) The other solids price; such payments and shall complete the allocated to Class I use pursuant to (e) The butterfat price; payments as soon as the funds are § 1000.43(d). (f) The somatic cell adjustment rate; available. (k) Compute the amount of credits (g) The average butterfat, nonfat applicable pursuant to § 1030.55. solids, protein and other solids content § 1030.73 Payments to producers and to of producer milk; and cooperative associations. § 1030.61 Computation of producer price (h) The statistical uniform price for (a) Each handler shall pay each differential. milk containing 3.5 percent butterfat, producer for producer milk for which For each month the market computed by combining the Class III payment is not made to a cooperative administrator shall compute a producer price and the producer price association pursuant to paragraph (b) of price differential per hundredweight. differential. this section, as follows: The report of any handler who has not (1) Partial payment. For each made payments required pursuant to Payments for Milk producer who has not discontinued § 1030.71 for the preceding month shall § 1030.70 Producer-settlement fund. shipments as of the date of this partial payment, payment shall be made so that not be included in the computation of See § 1000.70. the producer price differential, and such it is received by each producer on or handler’s report shall not be included in § 1030.71 Payments to the producer- before the 26th day of the month (except the computation for succeeding months settlement fund. as provided in § 1000.90) for milk until the handler has made full payment Each handler shall make payment to received during the first 15 days of the of outstanding monthly obligations. the producer-settlement fund in a month from the producer at not less Subject to the aforementioned manner that provides receipt of the than the lowest announced class price conditions, the market administrator funds by the market administrator no for the preceding month, less proper shall compute the producer price later than the 15th day after the end of deductions authorized in writing by the differential in the following manner: the month (except as provided in producer. (a) Combine into one total the values § 1000.90). Payment shall be the (2) Final payment. For milk received computed pursuant to § 1030.60 for all amount, if any, by which the amount during the month, payment shall be handlers required to file reports specified in paragraph (a) of this section made so that it is received by each prescribed in § 1030.30; exceeds the amount specified in producer no later than the 17th day after (b) Subtract the total values obtained paragraph (b) of this section: the end of the month (except as by multiplying each handler’s total (a) The total value of milk to the provided in § 1000.90) in an amount pounds of protein, other solids, and handler for the month as determined equal to not less than the sum of: butterfat contained in the milk for pursuant to § 1030.60. (i) The hundredweight of producer which an obligation was computed (b) The sum of: milk received times the producer price pursuant to § 1030.60 by the protein (1) An amount obtained by differential for the month as adjusted price, the other solids price, and the multiplying the total hundredweight of pursuant to § 1030.75; butterfat price, respectively, and the producer milk as determined pursuant (ii) The pounds of butterfat received total value of the somatic cell to § 1000.44(c) by the producer price times the butterfat price for the month; adjustment pursuant to § 1030.30(a)(1) differential as adjusted pursuant to (iii) The pounds of protein received and (c)(1); § 1030.75; times the protein price for the month; (c) Add an amount equal to the sum (2) An amount obtained by (iv) The pounds of other solids of the location adjustments computed multiplying the total pounds of protein, received times the other solids price for pursuant to § 1030.75; other solids, and butterfat contained in the month; (d) Add an amount equal to not less producer milk by the protein, other (v) The hundredweight of milk than one-half of the unobligated balance solids, and butterfat prices respectively; received times the somatic cell in the producer-settlement fund; (3) The total value of the somatic cell adjustment for the month; (e) Divide the resulting amount by the adjustment to producer milk; and (vi) Less any payment made pursuant sum of the following for all handlers (4) An amount obtained by to paragraph (a)(1) of this section; included in these computations: multiplying the pounds of skim milk (vii) Less proper deductions (1) The total hundredweight of and butterfat for which a value was authorized in writing by such producer, producer milk; and computed pursuant to § 1030.60(i) by and plus or minus adjustments for (2) The total hundredweight for which the producer price differential as errors in previous payments to such a value is computed pursuant to adjusted pursuant to § 1030.75 for the producer subject to approval by the § 1030.60(i); and location of the plant from which market administrator; and (f) Subtract not less than 4 cents nor received. (viii) Less deductions for marketing more than 5 cents from the price services pursuant to § 1000.86. computed pursuant to paragraph (e) of § 1030.72 Payments from the producer- (b) Payments for milk received from settlement fund. this section. The result shall be known cooperative association members. On or as the producer price differential for the No later than the 16th day after the before the day prior to the dates month. end of each month (except as provided specified in paragraphs (a)(1) and (a)(2) in § 1000.90), the market administrator of this section (except as provided in § 1030.62 Announcement of producer shall pay to each handler the amount, if § 1000.90), each handler shall pay to a prices. any, by which the amount computed cooperative association for milk from On or before the 13th day after the pursuant to § 1030.71(b) exceeds the producers who market their milk end of each month, the market amount computed pursuant to through the cooperative association and administrator shall announce publicly § 1030.71(a). If, at such time, the balance who have authorized the cooperative to the following prices and information: in the producer-settlement fund is collect such payments on their behalf an (a) The producer price differential; insufficient to make all payments amount equal to the sum of the (b) The protein price; pursuant to this section, the market individual payments otherwise payable (c) The nonfat solids price; administrator shall reduce uniformly for such producer milk pursuant to

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00229 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.226 pfrm08 PsN: 02APP2 16254 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules paragraphs (a)(1) and (a)(2) of this (ix) Add together the amounts producer whose milk was received from section. computed in paragraphs (c)(2)(i) a cooperative association handler (c) Payment for milk received from through (viii) of this section and from described in § 1000.9(a) or (c), a cooperative association pool plants or that sum deduct any payment made supporting statement in a form that may from cooperatives as handlers pursuant pursuant to paragraph (c)(1) of this be retained by the recipient which shall to § 1000.9(c). On or before the day prior section; and show: to the dates specified in paragraphs (3) For the total quantity of milk (1) The name, address, Grade A (a)(1) and (a)(2) of this section (except received during the month from a identifier assigned by a duly constituted as provided in § 1000.90), each handler cooperative association in its capacity as regulatory agency, and payroll number who receives fluid milk products at its a handler under § 1000.9(c) as follows: of the producer; plant from a cooperative association in (i) The hundredweight of producer (2) The daily and total pounds, and its capacity as the operator of a pool milk received times the producer price the month and dates such milk was plant or who receives milk from a differential as adjusted pursuant to received from that producer; cooperative association in its capacity as § 1030.75; a handler pursuant to § 1000.9(c), (ii) The pounds of butterfat received (3) The total pounds of butterfat, including the milk of producers who are times the butterfat price for the month; protein, and other solids contained in not members of such association and (iii) The pounds of protein received the producer’s milk; who the market administrator times the protein price for the month; (4) The somatic cell count of the (iv) The pounds of other solids determines have authorized the producer’s milk; received times the other solids price for cooperative association to collect (5) The minimum rate or rates at payment for their milk, shall pay the the month; (v) The hundredweight of milk which payment to the producer is cooperative for such milk as follows: received times the somatic cell required pursuant to this order; (1) For bulk fluid milk products and adjustment for the month; and (6) The rate used in making payment bulk fluid cream products received from (vi) Add together the amounts a cooperative association in its capacity if the rate is other than the applicable computed in paragraphs (c)(3)(i) minimum rate; as the operator of a pool plant and for through (v) of this section and from that (7) The amount, or rate per milk received from a cooperative sum deduct any payment made hundredweight, or rate per pound of association in its capacity as a handler pursuant to paragraph (c)(1) of this component, and the nature of each pursuant to § 1000.9(c) during the first section. deduction claimed by the handler; and 15 days of the month, at not less than (d) If a handler has not received full the lowest announced class prices per payment from the market administrator (8) The net amount of payment to the hundredweight for the preceding pursuant to § 1030.72 by the payment producer or cooperative association. month; date specified in paragraph (a), (b) or (c) § 1030.74 [Reserved] (2) For the total quantity of bulk fluid of this section, the handler may reduce milk products and bulk fluid cream pro rata its payments to producers or to § 1030.75 Plant location adjustments for products received from a cooperative the cooperative association (with producer milk and nonpool milk. association in its capacity as the respect to receipts described in operator of a pool plant, at not less than For purposes of making payments for paragraph (b) of this section, prorating producer milk and nonpool milk, a the total value of such products received the underpayment to the volume of milk from the association’s pool plants, as plant location adjustment shall be received from the cooperative determined by subtracting the Class I determined by multiplying the association in proportion to the total respective quantities assigned to each price specified in § 1030.51 from the milk received from producers by the Class I price at the plant’s location. The class under § 1000.44, as follows: handler), but not by more than the (i) The hundredweight of Class I skim difference, plus or minus as the case amount of the underpayment. The may be, shall be used to adjust the milk times the Class I skim milk price payments shall be completed on the for the month plus the pounds of Class payments required pursuant to next scheduled payment date after §§ 1030.73 and 1000.76. I butterfat times the Class I butterfat receipt of the balance due from the price for the month. The Class I price to market administrator. § 1030.76 Payments by a handler be used shall be that price effective at (e) If a handler claims that a required operating a partially regulated distributing the location of the receiving plant; payment to a producer cannot be made plant. (ii) The pounds of nonfat solids in because the producer is deceased or See § 1000.76. Class II skim milk by the Class II nonfat cannot be located, or because the solids price; cooperative association or its lawful § 1030.77 Adjustment of accounts. (iii) The pounds of butterfat in Class successor or assignee is no longer in See § 1000.77. II times the Class II butterfat price; existence, the payment shall be made to (iv) The pounds of nonfat solids in the producer-settlement fund, and in the § 1030.78 Charges on overdue accounts. Class IV times the nonfat solids price; event that the handler subsequently See § 1000.78. (v) The pounds of butterfat in Class III locates and pays the producer or a and Class IV milk times the butterfat lawful claimant, or in the event that the Administrative Assessment and price; handler no longer exists and a lawful Marketing Service Deduction (vi) The pounds of protein in Class III claim is later established, the market milk times the protein price; administrator shall make the required § 1030.85 Assessment for order administration. (vii) The pounds of other solids in payment from the producer-settlement Class III milk times the other solids fund to the handler or to the lawful See § 1000.85. price; claimant, as the case may be. (viii) The hundredweight of Class II, (f) In making payments to producers § 1030.86 Deduction for marketing services. Class III, and Class IV milk times the pursuant to this section, each handler somatic cell adjustment; and shall furnish each producer, except a See § 1000.86.

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PART 1032ÐMILK IN THE CENTRAL Administrative Assessment and Marketing Minnesota Counties MARKETING AREA Service Deduction Lincoln, Nobles, Pipestone, and Rock. 1032.85 Assessment for order SubpartÐOrder Regulating Handling administration. Missouri Counties and Cities General Provisions 1032.86 Deduction for marketing services. The counties of Andrew, Atchison, Bates, Authority: 7 U.S.C. 601—674. Buchanan, Caldwell, Carroll, Cass, Clay, Sec. Clinton, Daviess, De Kalb, Franklin, Gentry, 1032.1 General provisions. SubpartÐOrder Regulating Handling Grundy, Harrison, Henry, Hickory, Holt, Definitions Jackson, Jefferson, Johnson, Lafayette, General Provisions Lincoln, Livingston, Mercer, Nodaway, 1032.2 Central marketing area. Pettis, Platte, Putnam, Ray, Saline, Schuyler, 1032.3 Route disposition. § 1032.1 General provisions. St. Charles, St. Clair, Ste. Genevieve, St. 1032.4 Plant. The terms, definitions, and provisions Louis, Sullivan, Warren, and Worth; and the 1032.5 Distributing plant. city of St. Louis. 1032.6 Supply plant. in part 1000 of this chapter apply to and 1032.7 Pool plant. are hereby made a part of this order. In Nebraska Counties this part 1032, all references to sections 1032.8 Nonpool plant. Adams, Antelope, Boone, Buffalo, Burt, 1032.9 Handler. in part 1000 refer to part 1000 of this Butler, Cass, Cedar, Chase, Clay, Colfax, 1032.10 Producer-handler. chapter. Cuming, Custer, Dakota, Dawson, Dixon, 1032.11 [Reserved] Definitions Dodge, Douglas, Dundy, Fillmore, Franklin, 1032.12 Producer. Frontier, Furnas, Gage, Gosper, Greeley, Hall, 1032.13 Producer milk. § 1032.2 Central marketing area. Hamilton, Harlan, Hayes, Hitchcock, 1032.14 Other source milk. The marketing area means all territory Howard, Jefferson, Johnson, Kearney, Keith, 1032.15 Fluid milk product. Knox, Lancaster, Lincoln, Madison, Merrick, 1032.16 Fluid cream product. within the bounds of the following Nance, Nemaha, Nuckolls, Otoe, Pawnee, 1032.17 [Reserved] states and political subdivisions, Perkins, Phelps, Pierce, Platte, Polk, Red 1032.18 Cooperative association. including all piers, docks, and wharves Willow, Richardson, Saline, Sarpy, Saunders, 1032.19 Commercial food processing connected therewith and all craft Seward, Sherman, Stanton, Thayer, establishment. moored thereat, and all territory Thurston, Valley, Washington, Wayne, Handler Reports occupied by government (municipal, Webster, and York. 1032.30 Reports of receipts and utilization. State, or Federal) reservations, Oklahoma 1032.31 Payroll reports. installations, institutions, or other All of the State of Oklahoma. 1032.32 Other reports. similar establishments if any part thereof is within any of the listed states South Dakota Counties Classification of Milk or political subdivisions: Aurora, Beadle, Bon Homme, Brookings, 1032.40 Classes of utilization. 1032.41 [Reserved] Colorado Counties Clark, Clay, Codington, Davison, Deuel, 1032.42 Classification of transfers and Douglas, Hamlin, Hanson, Hutchinson, Adams, Arapahoe, Baca, Bent, Boulder, Jerauld, Kingsbury, Lake, Lincoln, McCook, diversions. Chaffee, Clear Creek, Cheyenne, Crowley, 1032.43 General classification rules. Miner, Minnehaha, Moody, Sanborn, Spink, Custer, Delta, Denver, Douglas, Eagle, El Turner, Union, and Yankton. 1032.44 Classification of producer milk. Paso, Elbert, Freemont, Garfield, Gilpin, 1032.45 Market administrator’s reports and Gunnison, Huerfano, Jefferson, Kiowa, Kit Wisconsin Counties announcements concerning Carson, Lake, Larimer, Las Animas, Lincoln, Crawford and Grant. classification. Logan, Mesa, Montrose, Morgan, Otero, Park, Class Prices Phillips, Pitkin, Prowers, Pueblo, Sedgwick, § 1032.3 Route disposition. Summit, Teller, Washington, Weld, and See § 1000.3. 1032.50 Class prices, component prices, Yuma. and advanced pricing factors. § 1032.4 Plant. 1032.51 Class I differential and price. Illinois Counties 1032.52 Adjusted Class I differentials. Adams, Alexander, Bond, Brown, Bureau, See § 1000.4. 1032.53 Announcement of class prices, Calhoun, Cass, Champaign, Christian, Clark, § 1032.5 Distributing plant. component prices, and advanced pricing Clay, Clinton, Coles, Crawford, Cumberland, factors. De Witt, Douglas, Edgar, Edwards, Effingham, See § 1000.5. 1032.54 Equivalent price. Fayette, Ford, Franklin, Fulton, Gallatin, § 1032.6 Supply plant. Greene, Grundy, Hamilton, Hancock, Hardin, Producer Price Differential Henderson, Henry, Iroquois, Jackson, Jasper, See § 1000.6. 1032.60 Handler’s value of milk. Jefferson, Jersey, Johnson, Kankakee, Knox, 1032.61 Computation of producer price La Salle, Lawrence, Livingston, Logan, § 1032.7 Pool plant. differential. McDonough, McLean, Macon, Macoupin, Pool plant means a plant, unit of 1032.62 Announcement of producer prices. Madison, Marion, Marshall, Mason, Massac, plants, or system of plants as specified Payments for Milk Menard, Mercer, Monroe, Montgomery, in paragraphs (a) through (f) of this Morgan, Moultrie, Peoria, Perry, Piatt, Pike, 1032.70 Producer-settlement fund. section, but excluding a plant specified Pope, Pulaski, Putnam, Randolph, Richland, in paragraph (h) of this section. The 1032.71 Payments to the producer- Rock Island, Saline, Sangamon, Schuyler, settlement fund. Scott, Shelby, St. Clair, Stark, Tazewell, pooling standards described in 1032.72 Payments from the producer- Union, Vermilion, Wabash, Warren, paragraphs (c), (d), and (f) of this section settlement fund. Washington, Wayne, White, Whiteside, are subject to modification pursuant to 1032.73 Payments to producers and to Williamson, and Woodford. paragraph (g) of this section: cooperative associations. (a) A distributing plant, other than a Iowa Counties 1032.74 [Reserved] plant qualified as a pool plant pursuant 1032.75 Plant location adjustments for All Iowa counties except Howard, Kossuth, to paragraph (b) of this section or producer milk and nonpool milk. Mitchell, Winnebago, Winneshiek, and 1032.76 Payments by a handler operating a Worth. section 7(b) of any other Federal milk partially regulated distributing plant. order, from which during the month 25 1032.77 Adjustment of accounts. Kansas percent or more of the total quantity of 1032.78 Charges on overdue accounts. All of the State of Kansas. fluid milk products physically received

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00231 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.229 pfrm08 PsN: 02APP2 16256 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules at the plant (excluding concentrated percentage pursuant to paragraph (g) of (f) A system of supply plants may milk received from another plant by this section unless it has been a pool qualify for pooling if 2 or more plants agreement for other than Class I use) are supply plant during each of the operated by one or more handlers meet disposed of as route disposition or are immediately preceding 3 months. the applicable percentage requirements transferred in the form of packaged fluid (d) A plant located in the marketing of paragraph (c) of this section in the milk products to other distributing area and operated by a cooperative same manner as a single plant, subject plants. At least 25 percent of such route association if, during the month or the to the following additional disposition and transfers must be to immediately preceding 12-month requirements: outlets in the marketing area. period, 35 percent or more of the (1) Each plant in the system is located (b) Any distributing plant located in producer milk of members of the within the marketing area; the marketing area which during the association (and any producer milk of (2) The handler(s) establishing the month processed at least 25 percent of nonmembers and members of another system submits a written request to the the total quantity of fluid milk products cooperative association which may be market administrator on or before physically received at the plant marketed by the cooperative September 1 requesting that such plants (excluding concentrated milk received association) is physically received in the qualify as a system for the period of from another plant by agreement for form of bulk fluid milk products September through August of the other than Class I use) into ultra- (excluding concentrated milk following year. Such request will pasteurized or aseptically-processed transferred to a distributing plant for an contain a list of the plants participating fluid milk products. agreed-upon use other than Class I) at in the system; (c) A supply plant from which the plants specified in paragraph (a) or (b) (3) Each plant included within a pool quantity of bulk fluid milk products of this section either directly from farms supply plant system shall continue each transferred or diverted to plants or by transfer from supply plants month as a plant in the system through described in paragraph (a) or (b) of this operated by the cooperative association the following August unless the section during each of the months of and from plants of the cooperative handler(s) establishing the system September through November and association for which pool plant status submits a written request to the market January is 35 percent or more of the has been requested under this paragraph administrator that the plant be deleted total Grade A milk received at the plant subject to the following conditions: from the system or that the system be from dairy farmers (except dairy farmers (1) The plant does not qualify as a discontinued. Any plant that has been described in § 1032.12(b)) and handlers pool plant under paragraph (a), (b) or (c) so deleted from a system, or that has described in § 1000.9(c), including milk of this section or under comparable failed to qualify in any month, will not diverted by the plant operator, and 25 provisions of another Federal order; and be part of any system for the remaining percent for all other months, subject to (2) The plant is approved by a duly months through August. No plant may the following conditions: constituted regulatory agency for the be added in any subsequent month (1) A supply plant that has qualified handling of milk approved for fluid through the following August to a as a pool plant during each of the consumption in the marketing area. system that qualifies in September; and immediately preceding months of (e) Two or more plants operated by (4) If a system fails to qualify under August through April shall continue to the same handler and located in the the requirements of this paragraph, the so qualify in each of the following marketing area may qualify for pool handler responsible for qualifying the months of May through July, unless the status as a unit by meeting the total and system shall notify the market plant operator files a written request in-area route disposition requirements administrator which plant or plants will with the market administrator that such of a pool distributing plant specified in be deleted from the system so that the plant not be a pool plant, such nonpool paragraph (a) of this section subject to remaining plants may be pooled as a status to be effective the first month the following additional requirements: system. If the handler fails to do so, the following such request and thereafter (1) At least one of the plants in the market administrator shall exclude one until the plant qualifies as a pool plant unit must qualify as a pool plant or more plants, beginning at the bottom on the basis of milk shipments; pursuant to paragraph (a) of this section; of the list of plants in the system and (2) A pool plant operator may include (2) Other plants in the unit must continuing up the list as necessary until as qualifying shipments milk diverted to process Class I or Class II products, the deliveries are sufficient to qualify pool distributing plants pursuant to using 50 percent or more of the total the remaining plants in the system. § 1032.13(c); Grade A fluid milk products received in (g) The applicable shipping (3) Concentrated milk transferred bulk form at such plant or diverted percentages of paragraphs (c), (d), and from the supply plant to a distributing therefrom by the plant operator in Class (f) of this section may be increased or plant for an agreed-upon use other than I or Class II products, and must be decreased, for all or part of the Class I shall be excluded from the located in a pricing zone providing the marketing area, by the market supply plant’s shipments in computing same or a lower Class I price than the administrator if the market the supply plant’s shipping percentage; price applicable at the distributing plant administrator finds that such (4) The operator of a supply plant may included in the unit pursuant to adjustment is necessary to encourage include as qualifying shipments paragraph (e)(1) of this section; and needed shipments or to prevent transfers of fluid milk products to (3) The operator of the unit has filed uneconomic shipments. Before making distributing plants regulated under any a written request with the market such a finding, the market administrator other Federal order, except that credit administrator prior to the first day of the shall investigate the need for adjustment for such transfers shall be limited to the month for which such status is desired either on the market administrator’s amount of milk, including milk shipped to be effective. The unit shall continue own initiative or at the request of directly from producers’ farms, from month to month thereafter without interested parties if the request is made delivered to distributing plants qualified further notification. The handler shall in writing at least 15 days prior to the as pool plants pursuant to paragraphs notify the market administrator in month for which the requested revision (a) or (b) of this section; and writing prior to the first day of any is desired effective. If the investigation (5) No plant may qualify as a pool month for which termination or any shows that an adjustment of the plant due to a reduction in the shipping change of the unit is desired. shipping percentages might be

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00232 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.230 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16257 appropriate, the market administrator plant. The designation of a portion of a from a handler regulated under another shall issue a notice stating that an regulated plant as a nonpool plant must Federal order if the other Federal order adjustment is being considered and be requested in advance and in writing designates the dairy farmer as a invite data, views and arguments. Any by the handler and must be approved by producer under that order and that milk decision to revise an applicable the market administrator. is allocated by request to a utilization shipping percentage must be issued in other than Class I; and writing at least one day before the § 1032.8 Nonpool plant. (4) A dairy farmer whose milk is effective date. See § 1000.8. reported as diverted to a plant fully (h) The term pool plant shall not § 1032.9 Handler. regulated under another Federal order apply to the following plants: with respect to that portion of the milk (1) A producer-handler as defined See § 1000.9. so diverted that is assigned to Class I under any Federal order; § 1032.10 Producer-handler. under the provisions of such other (2) An exempt plant as defined in order. § 1000.8(e); Producer-handler means a person (3) A plant located within the who: § 1032.13 Producer milk. marketing area and qualified pursuant (a) Operates a dairy farm and a Producer milk means the skim milk to paragraph (a) of this section which distributing plant from which there is (or the skim equivalent of components meets the pooling requirements of route disposition in the marketing area of skim milk), including nonfat another Federal order, and from which during the month; components, and butterfat in milk of a (b) Receives fluid milk from own farm more than 50 percent of its route producer that is: disposition has been in the other production or milk that is fully subject (a) Received by the operator of a pool Federal order marketing area for 3 to the pricing and pooling provisions of plant directly from a producer or a consecutive months. On the basis of a this or any other Federal order; handler described in § 1000.9(c). All (c) Receives at its plant or acquires for written application made by the plant milk received pursuant to this route disposition no more than 150,000 operator at least 15 days prior to the paragraph shall be priced at the location pounds of fluid milk products from date for which a determination of the of the plant where it is first physically handlers fully regulated under any market administrator is to be effective, received; the market administrator may determine Federal order. This limitation shall not (b) Received by a handler described in that the route disposition in the apply if the producer-handler’s own § 1000.9(c) in excess of the quantity respective marketing areas to be used for farm production is less than 150,000 delivered to pool plants; purposes of this paragraph shall exclude pounds during the month; (c) Diverted by a pool plant operator (for a specified period of time) route (d) Disposes of no other source milk to another pool plant. Milk so diverted disposition made under limited term as Class I milk except by increasing the shall be priced at the location of the contracts to governmental bases and nonfat milk solids content of the fluid plant to which diverted; or institutions; milk products; and (d) Diverted by the operator of a pool (4) A plant located outside any (e) Provides proof satisfactory to the plant or a cooperative association Federal order marketing area and market administrator that the care and described in § 1000.9(c) to a nonpool qualified pursuant to paragraph (a) of management of the dairy animals and plant, subject to the following this section that meets the pooling other resources necessary to produce all conditions: requirements of another Federal order Class I milk handled (excluding receipts (1) Milk of a dairy farmer shall not be and has had greater route disposition in from handlers fully regulated under any eligible for diversion until at least one such other Federal order’s marketing Federal order) and the processing and day’s production of such dairy farmer area for 3 consecutive months; packaging operations are the producer- has been physically received as (5) A plant located in another Federal handler’s own enterprise and at its own producer milk at a pool plant and the order marketing area and qualified risk. dairy farmer has continuously retained pursuant to paragraph (a) of this section § 1032.11 [Reserved] producer status since that time. If a that meets the pooling requirements of dairy farmer loses producer status under such other Federal order and does not § 1032.12 Producer. this order (except as a result of a have a majority of its route distribution (a) Except as provided in paragraph temporary loss of Grade A approval), the in this marketing area for 3 consecutive (b) of this section, producer means any dairy farmer’s milk shall not be eligible months or if the plant is required to be person who produces milk approved by for diversion until milk of the dairy regulated under such other Federal a duly constituted regulatory agency for farmer has been physically received as order without regard to its route fluid consumption as Grade A milk and producer milk at a pool plant; disposition in any other Federal order whose milk (or components of milk) is: (2) Of the quantity of producer milk marketing area; (1) Received at a pool plant directly received during the month (including (6) A plant qualified pursuant to from the producer or diverted by the diversions, but excluding the quantity of paragraph (c) of this section which also plant operator in accordance with producer milk received from a handler meets the pooling requirements of § 1032.13; or described in § 1000.9(c)) the handler another Federal order and from which (2) Received by a handler described in diverts to nonpool plants not more than greater qualifying shipments are made § 1000.9(c). 65 percent during the months of to plants regulated under the other (b) Producer shall not include: September through November and Federal order than are made to plants (1) A producer-handler as defined in January, and not more than 75 percent regulated under this order, or the plant any Federal order; during the months of February through has automatic pooling status under the (2) A dairy farmer whose milk is April and December; other Federal order; and received at an exempt plant, excluding (3) Diverted milk shall be priced at (7) That portion of a regulated plant producer milk diverted to the exempt the location of the plant to which designated as a nonpool plant that is plant pursuant to § 1032.13(d); diverted; physically separate and operated (3) A dairy farmer whose milk is (4) Any milk diverted in excess of the separately from the pool portion of such received by diversion at a pool plant limits prescribed in paragraph (d)(2) of

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00233 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.231 pfrm08 PsN: 02APP2 16258 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules this section shall not be producer milk. adjustment pursuant to § 1000.50(p), to make payment pursuant to If the diverting handler or cooperative contained in or represented by: § 1000.76(b) shall report for each dairy association fails to designate the dairy (i) Receipts of producer milk, farmer who would have been a producer farmers’ deliveries that are not to be including producer milk diverted by the if the plant had been fully regulated in producer milk, no milk diverted by the reporting handler, from sources other the same manner as prescribed for handler or cooperative association than handlers described in § 1000.9(c); reports required by paragraph (a) of this during the month to a nonpool plant and section. shall be producer milk; and (ii) Receipts of milk from handlers § 1032.32 Other reports. (5) The applicable diversion limits in described in § 1000.9(c); paragraph (d)(2) of this section may be (2) Product pounds and pounds of In addition to the reports required increased or decreased by the market butterfat contained in: pursuant to §§ 1032.30 and 1032.31, (i) Receipts of fluid milk products and administrator if the market each handler shall report any bulk fluid cream products from other administrator finds that such revision is information the market administrator pool plants; deems necessary to verify or establish necessary to assure orderly marketing (ii) Receipts of other source milk; and and efficient handling of milk in the each handler’s obligation under the (iii) Inventories at the beginning and order. marketing area. Before making such a end of the month of fluid milk products finding, the market administrator shall and bulk fluid cream products; Classification of Milk investigate the need for the revision (3) The utilization or disposition of all § 1032.40 Classes of utilization. either on the market administrator’s milk and milk products required to be own initiative or at the request of reported pursuant to this paragraph; and See § 1000.40. interested persons if the request is made (4) Such other information with § 1032.41 [Reserved] in writing at least 15 days prior to the respect to the receipts and utilization of month for which the requested revision skim milk, butterfat, milk protein, other § 1032.42 Classification of transfers and is desired effective. If the investigation nonfat solids, and somatic cell diversions. shows that a revision might be information, as the market administrator See § 1000.42. appropriate, the market administrator may prescribe. shall issue a notice stating that the (b) Each handler operating a partially § 1032.43 General classification rules. revision is being considered and regulated distributing plant shall report See § 1000.43. inviting written data, views, and with respect to such plant in the same § 1032.44 Classification of producer milk. arguments. Any decision to revise an manner as prescribed for reports See § 1000.44. applicable percentage must be issued in required by paragraph (a) of this section. writing at least one day before the Receipts of milk that would have been § 1032.45 Market administrator's reports effective date. producer milk if the plant had been and announcements concerning fully regulated shall be reported in lieu classification. § 1032.14 Other source milk. of producer milk. The report shall show See § 1000.45. See § 1000.14. also the quantity of any reconstituted Class Prices § 1032.15 Fluid milk product. skim milk in route disposition in the marketing area. § 1032.50 Class prices, component prices, See § 1000.15. (c) Each handler described in and advanced pricing factors. § 1032.16 Fluid cream product. § 1000.9(c) shall report: See § 1000.50. (1) The product pounds, pounds of See § 1000.16. butterfat, pounds of protein, pounds of § 1032.51 Class I differential and price. § 1032.17 [Reserved] solids-not-fat other than protein (other The Class I differential shall be the solids), and the value of the somatic cell differential established for Jackson § 1032.18 Cooperative association. adjustment pursuant to § 1000.50(p), County, Missouri, which is reported in See § 1000.18. contained in receipts of milk from § 1000.52. The Class I price shall be the producers; and price computed pursuant to § 1000.50(a) § 1032.19 Commercial food processing (2) The utilization or disposition of for Jackson County, Missouri. establishment. such receipts. See § 1000.19. (d) Each handler not specified in § 1032.52 Adjusted Class I differentials. paragraphs (a) through (c) of this section See § 1000.52. Handler Reports shall report with respect to its receipts § 1032.53 Announcement of class prices, § 1032.30 Reports of receipts and and utilization of milk and milk products in such manner as the market component prices, and advanced pricing utilization. factors. administrator may prescribe. Each handler shall report monthly so See § 1000.53. that the market administrator’s office § 1032.31 Payroll reports. § 1032.54 Equivalent price. receives the report on or before the 7th (a) On or before the 20th day after the day after the end of the month, in the end of each month, each handler that See § 1000.54. detail and on the prescribed forms, as operates a pool plant pursuant to Producer Price Differential follows: § 1032.7 and each handler described in (a) Each handler that operates a pool § 1000.9(c) shall report to the market § 1032.60 Handler's value of milk. plant pursuant to § 1032.7 shall report administrator its producer payroll for For the purpose of computing a for each of its operations the following the month, in the detail prescribed by handler’s obligation for producer milk, information: the market administrator, showing for the market administrator shall (1) Product pounds, pounds of each producer the information determine for each month the value of butterfat, pounds of protein, pounds of described in § 1032.73(f). milk of each handler with respect to solids-not-fat other than protein (other (b) Each handler operating a partially each of the handler’s pool plants and of solids), and the value of the somatic cell regulated distributing plant who elects each handler described in § 1000.9(c)

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00234 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.233 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16259 with respect to milk that was not IV price for the preceding month by the handler’s report shall not be included in received at a pool plant by adding the hundredweight of skim milk and the computation for succeeding months amounts computed in paragraphs (a) butterfat subtracted from Class I, II, or until the handler has made full payment through (i) of this section and III, respectively, pursuant to of outstanding monthly obligations. subtracting from that total amount the § 1000.44(a)(7) and the corresponding Subject to the aforementioned value computed in paragraph (j) of this step of § 1000.44(b); conditions, the market administrator section. Unless otherwise specified, the (h) Multiply the difference between shall compute the producer price skim milk, butterfat, and the combined the Class I price applicable at the differential in the following manner: pounds of skim milk and butterfat location of the pool plant and the Class (a) Combine into one total the values referred to in this section shall result IV price by the hundredweight of skim computed pursuant to § 1032.60 for all from the steps set forth in § 1000.44(a), milk and butterfat assigned to Class I handlers required to file reports (b), and (c), respectively, and the nonfat pursuant to § 1000.43(d) and the prescribed in § 1032.30; components of producer milk in each hundredweight of skim milk and (b) Subtract the total values obtained class shall be based upon the proportion butterfat subtracted from Class I by multiplying each handler’s total of such components in producer skim pursuant to § 1000.44(a)(3)(i) through pounds of protein, other solids, and milk. Receipts of nonfluid milk (vi) and the corresponding step of butterfat contained in the milk for products that are distributed as labeled § 1000.44(b), excluding receipts of bulk which an obligation was computed reconstituted milk for which payments fluid cream products from a plant pursuant to § 1032.60 by the protein are made to the producer-settlement regulated under other Federal orders price, the other solids price, and the fund of another Federal order under and bulk concentrated fluid milk butterfat price, respectively, and the § 1000.76(a)(4) or (d) shall be excluded products from pool plants, plants total value of the somatic cell from pricing under this section. regulated under other Federal orders, adjustment pursuant to § 1032.30(a)(1) (a) Class I value. and unregulated supply plants. and (c)(1); (1) Multiply the pounds of skim milk (i) Multiply the difference between (c) Add an amount equal to the sum in Class I by the Class I skim milk price; the Class I price applicable at the of the location adjustments computed and location of the nearest unregulated pursuant to § 1032.75; (2) Add an amount obtained by supply plants from which an equivalent (d) Add an amount equal to not less multiplying the pounds of butterfat in volume was received and the Class III than one-half of the unobligated balance Class I by the Class I butterfat price. price by the pounds of skim milk and in the producer-settlement fund; (b) Class II value. butterfat in receipts of concentrated (e) Divide the resulting amount by the (1) Multiply the pounds of nonfat fluid milk products assigned to Class I sum of the following for all handlers solids in Class II skim milk by the Class pursuant to § 1000.43(d) and included in these computations: II nonfat solids price; and § 1000.44(a)(3)(i) and the corresponding (1) The total hundredweight of (2) Add an amount obtained by step of § 1000.44(b) and the pounds of producer milk; and multiplying the pounds of butterfat in skim milk and butterfat subtracted from (2) The total hundredweight for which Class II times the Class II butterfat price. Class I pursuant to § 1000.44(a)(8) and a value is computed pursuant to (c) Class III value. the corresponding step of § 1000.44(b), § 1032.60(i); and (1) Multiply the pounds of protein in excluding such skim milk and butterfat (f) Subtract not less than 4 cents nor Class III skim milk by the protein price; in receipts of fluid milk products from more than 5 cents from the price (2) Add an amount obtained by an unregulated supply plant to the computed pursuant to paragraph (e) of multiplying the pounds of other solids extent that an equivalent amount of this section. The result shall be known in Class III skim milk by the other solids skim milk or butterfat disposed of to as the producer price differential for the price; and such plant by handlers fully regulated month. (3) Add an amount obtained by under any Federal milk order is multiplying the pounds of butterfat in classified and priced as Class I milk and § 1032.62 Announcement of producer Class III by the butterfat price. is not used as an offset for any other prices. (d) Class IV value. payment obligation under any order. On or before the 11th day after the (1) Multiply the pounds of nonfat (j) For reconstituted milk made from end of each month, the market solids in Class IV skim milk by the receipts of nonfluid milk products, administrator shall announce publicly nonfat solids price; and multiply $1.00 (but not more than the the following prices and information: (2) Add an amount obtained by difference between the Class I price (a) The producer price differential; multiplying the pounds of butterfat in applicable at the location of the pool (b) The protein price; Class IV by the butterfat price. plant and the Class IV price) by the (c) The nonfat solids price; (e) Compute an adjustment for the hundredweight of skim milk and (d) The other solids price; somatic cell content of producer milk by butterfat contained in receipts of (e) The butterfat price; multiplying the values reported nonfluid milk products that are pursuant to § 1032.30(a)(1) and (c)(1) by (f) The somatic cell adjustment rate; allocated to Class I use pursuant to (g) The average butterfat, protein, the percentage of total producer milk § 1000.43(d). allocated to Class II, Class III, and Class nonfat solids, and other solids content IV pursuant to § 1000.44(c); § 1032.61 Computation of producer price of producer milk; and (f) Multiply the pounds of skim milk differential. (h) The statistical uniform price for and butterfat overage assigned to each For each month the market milk containing 3.5 percent butterfat, class pursuant to § 1000.44(a)(11) and administrator shall compute a producer computed by combining the Class III the corresponding step of § 1000.44(b) price differential per hundredweight. price and the producer price by the skim milk prices and butterfat The report of any handler who has not differential. prices applicable to each class. made payments required pursuant to Payments for Milk (g) Multiply the difference between § 1032.71 for the preceding month shall the current month’s Class I, II, or III not be included in the computation of § 1032.70 Producer-settlement fund. price, as the case may be, and the Class the producer price differential, and such See § 1000.70.

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§ 1032.71 Payments to the producer- before the 26th day of the month (except who the market administrator settlement fund. as provided in § 1000.90) for milk determines have authorized the Each handler shall make payment to received during the first 15 days of the cooperative association to collect the producer-settlement fund in a month from the producer at not less payment for their milk, shall pay the manner that provides receipt of the than the lowest announced class price cooperative for such milk as follows: funds by the market administrator no for the preceding month, less proper (1) For bulk fluid milk products and later than the 14th day after the end of deductions authorized in writing by the bulk fluid cream products received from the month (except as provided in producer. a cooperative association in its capacity § 1000.90). Payment shall be the (2) Final payment. For milk received as the operator of a pool plant and for amount, if any, by which the amount during the month, payment shall be milk received from a cooperative specified in paragraph (a) of this section made so that it is received by each association in its capacity as a handler exceeds the amount specified in producer no later than the 17th day after pursuant to § 1000.9(c) during the first paragraph (b) of this section: the end of the month (except as 15 days of the month, at not less than (a) The total value of milk to the provided in § 1000.90) in an amount the lowest announced class prices per handler for the month as determined equal to not less than the sum of: hundredweight for the preceding pursuant to § 1032.60. (i) The hundredweight of producer month; (b) The sum of: milk received times the producer price (2) For the total quantity of bulk fluid (1) An amount obtained by differential for the month as adjusted milk products and bulk fluid cream multiplying the total hundredweight of pursuant to § 1032.75; products received from a cooperative producer milk as determined pursuant (ii) The pounds of butterfat received association in its capacity as the to § 1000.44(c) by the producer price times the butterfat price for the month; operator of a pool plant, at not less than differential as adjusted pursuant to (iii) The pounds of protein received the total value of such products received § 1032.75; times the protein price for the month; from the association’s pool plants, as (2) An amount obtained by (iv) The pounds of other solids determined by multiplying the multiplying the total pounds of protein, received times the other solids price for respective quantities assigned to each other solids, and butterfat contained in the month; class under § 1000.44 as follows: producer milk by the protein, other (v) The hundredweight of milk (i) The hundredweight of Class I skim solids, and butterfat prices respectively; received times the somatic cell milk times the Class I skim milk price (3) The total value of the somatic cell adjustment for the month; for the month plus the pounds of Class adjustment to producer milk; and (vi) Less any payment made pursuant I butterfat times the Class I butterfat (4) An amount obtained by to paragraph (a)(1) of this section; price for the month. The Class I prices (vii) Less proper deductions multiplying the pounds of skim milk to be used shall be the prices effective authorized in writing by such producer and butterfat for which a value was at the location of the receiving plant; and plus or minus adjustments for computed pursuant to § 1032.60(i) by (ii) The pounds of nonfat solids in errors in previous payments to such the producer price differential as Class II skim milk by the Class II nonfat producer; and adjusted pursuant to § 1032.75 for the solids price; (viii) Less deductions for marketing location of the plant from which (iii) The pounds of butterfat in Class services pursuant to § 1000.86. received. II times the Class II butterfat price; (b) Payments for milk received from (iv) The pounds of nonfat solids in § 1032.72 Payments from the producer- cooperative association members. On or Class IV times the nonfat solids price; settlement fund. before the day prior to the dates (v) The pounds of butterfat in Class III No later than the 15th day after the specified in paragraphs (a)(1) and (a)(2) and Class IV milk times the butterfat end of each month (except as provided of this section (except as provided in price; in § 1000.90), the market administrator § 1000.90), each handler shall pay to a (vi) The pounds of protein in Class III shall pay to each handler the amount, if cooperative association for milk from milk times the protein price; any, by which the amount computed producers who market their milk (vii) The pounds of other solids in pursuant to § 1032.71(b) exceeds the through the cooperative association and Class III milk times the other solids amount computed pursuant to who have authorized the cooperative to price; § 1032.71(a). If, at such time, the balance collect such payments on their behalf an (viii) The hundredweight of Class II, in the producer-settlement fund is amount equal to the sum of the Class III, and Class IV milk times the insufficient to make all payments individual payments otherwise payable somatic cell adjustment; and pursuant to this section, the market for such producer milk pursuant to (ix) Add together the amounts administrator shall reduce uniformly paragraphs (a)(1) and (a)(2) of this computed in paragraphs (c)(2)(i) such payments and shall complete the section. through (viii) of this section and from payments as soon as the funds are (c) Payment for milk received from that sum deduct any payment made available. cooperative association pool plants or pursuant to paragraph (c)(1) of this from cooperatives as handlers pursuant section; and § 1032.73 Payments to producers and to to § 1000.9(c). On or before the day prior (3) For the total quantity of milk cooperative associations. to the dates specified in paragraphs received during the month from a (a) Each handler shall pay each (a)(1) and (a)(2) of this section (except cooperative association in its capacity as producer for producer milk for which as provided in § 1000.90), each handler a handler under § 1000.9(c) as follows: payment is not made to a cooperative who receives fluid milk products at its (i) The hundredweight of producer association pursuant to paragraph (b) of plant from a cooperative association in milk received times the producer price this section, as follows: its capacity as the operator of a pool differential as adjusted pursuant to (1) Partial payment. For each plant or who receives milk from a § 1032.75; producer who has not discontinued cooperative association in its capacity as (ii) The pounds of butterfat received shipments as of the date of this partial a handler pursuant to § 1000.9(c), times the butterfat price for the month; payment, payment shall be made so that including the milk of producers who are (iii) The pounds of protein received it is received by each producer on or not members of such association and times the protein price for the month;

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(iv) The pounds of other solids (5) The minimum rate or rates at 1033.16 Fluid cream product. received times the other solids price for which payment to the producer is 1033.17 [Reserved] the month; required pursuant to this order; 1033.18 Cooperative association. (v) The hundredweight of milk (6) The rate used in making payment 1033.19 Commercial food processing received times the somatic cell if the rate is other than the applicable establishment. adjustment for the month; and minimum rate; Handler Reports (vi) Add together the amounts (7) The amount, or rate per 1033.30 Reports of receipts and utilization. computed in paragraphs (c)(3)(i) hundredweight, or rate per pound of 1033.31 Payroll reports. through (v) of this section and from that component, and the nature of each 1033.32 Other reports. sum deduct any payment made deduction claimed by the handler; and pursuant to paragraph (c)(1) of this (8) The net amount of payment to the Classification of Milk section. producer or cooperative association. 1033.40 Classes of utilization. (d) If a handler has not received full 1033.41 [Reserved] payment from the market administrator § 1032.74 [Reserved] 1033.42 Classification of transfers and pursuant to § 1032.72 by the payment diversions. § 1032.75 Plant location adjustments for 1033.43 General classification rules. date specified in paragraph (a), (b) or (c) producer milk and nonpool milk. of this section, the handler may reduce 1033.44 Classification of producer milk. pro rata its payments to producers or to For purposes of making payments for 1033.45 Market administrator’s reports and the cooperative association (with producer milk and nonpool milk, a announcements concerning respect to receipts described in plant location adjustment shall be classification. paragraph (b) of this section, prorating determined by subtracting the Class I Class Prices price specified in § 1032.51 from the the underpayment to the volume of milk 1033.50 Class prices, component prices, received from the cooperative Class I price at the plant’s location. The difference, plus or minus as the case and advanced pricing factors. association in proportion to the total 1033.51 Class I differential and price. milk received from producers by the may be, shall be used to adjust the payments required pursuant to 1033.52 Adjusted Class I differentials. handler), but not by more than the 1033.53 Announcement of class prices, amount of the underpayment. The §§ 1032.73 and 1000.76. component prices, and advanced pricing payments shall be completed on the § 1032.76 Payments by a handler factors. next scheduled payment date after operating a partially regulated distributing 1033.54 Equivalent price. receipt of the balance due from the plant. Producer Price Differential market administrator. See § 1000.76. (e) If a handler claims that a required 1033.60 Handler’s value of milk. payment to a producer cannot be made § 1032.77 Adjustment of accounts. 1033.61 Computation of producer price differential. because the producer is deceased or See § 1000.77. 1033.62 Announcement of producer prices. cannot be located, or because the cooperative association or its lawful § 1032.78 Charges on overdue accounts. Payments for Milk successor or assignee is no longer in See § 1000.78. 1033.70 Producer-settlement fund. existence, the payment shall be made to Administrative Assessment and 1033.71 Payments to the producer- settlement fund. the producer-settlement fund, and in the Marketing Service Deduction event that the handler subsequently 1033.72 Payments from the producer- locates and pays the producer or a § 1032.85 Assessment for order settlement fund. lawful claimant, or in the event that the administration. 1033.73 Payments to producers and to cooperative associations. handler no longer exists and a lawful See § 1000.85. claim is later established, the market 1033.74 [Reserved] administrator shall make the required § 1032.86 Deduction for marketing 1033.75 Plant location adjustments for producer milk and nonpool milk. payment from the producer-settlement services. See § 1000.86. 1033.76 Payments by a handler operating a fund to the handler or to the lawful partially regulated distributing plant. claimant, as the case may be. PART 1033ÐMILK IN THE MIDEAST 1033.77 Adjustment of accounts. (f) In making payments to producers 1033.78 Charges on overdue accounts. pursuant to this section, each handler MARKETING AREA Administrative Assessment and Marketing shall furnish each producer, except a SubpartÐOrder Regulating Handling producer whose milk was received from Service Deduction General Provisions a cooperative association handler 1033.85 Assessment for order described in § 1000.9(a) or (c), a Sec. administration. supporting statement in a form that may 1033.1 General provisions. 1033.86 Deduction for marketing services. be retained by the recipient which shall Definitions Authority: 7 U.S.C. 601–674. show: 1033.2 Mideast marketing area. (1) The name, address, Grade A 1033.3 Route disposition. SubpartÐOrder Regulating Handling identifier assigned by a duly constituted 1033.4 Plant. regulatory agency, and payroll number 1033.5 Distributing plant. General Provisions of the producer; 1033.6 Supply plant. (2) The daily and total pounds, and 1033.7 Pool plant. § 1033.1 General provisions. the month and dates such milk was 1033.8 Nonpool plant. 1033.9 Handler. The terms, definitions, and provisions received from that producer; 1033.10 Producer-handler. in part 1000 of this chapter apply to and (3) The total pounds of butterfat, 1033.11 [Reserved] protein, and other solids contained in are hereby made a part of this order. In 1033.12 Producer. this part 1033, all references to sections the producer’s milk; 1033.13 Producer milk. (4) The somatic cell count of the 1033.14 Other source milk. in part 1000 refer to part 1000 of this producer’s milk; 1033.15 Fluid milk product. chapter.

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Definitions § 1033.4 Plant. purpose of meeting the increased See § 1000.4. shipments: § 1033.2 Mideast marketing area. (i) Pool plants described in § 1033.7(a) The marketing area means all territory § 1033.5 Distributing plant. and (b); within the bounds of the following See § 1000.5. (ii) Plants of producer-handlers; states and political subdivisions, (iii) Partially regulated distributing § 1033.6 Supply plant. including all piers, docks, and wharves plants, except that credit for such connected therewith and all craft See § 1000.6. shipments shall be limited to the amount of such milk classified as Class moored thereat, and all territory § 1033.7 Pool plant. occupied by government (municipal, I at the transferee plant; and State, or Federal) reservations, Pool plant means a plant, unit of (iv) Distributing plants fully regulated installations, institutions, or other plants, or a system of plants as specified under other Federal orders, except that similar establishments if any part in paragraphs (a) through (f) of this credit for transfers to such plants shall thereof is within any of the listed states section, but excluding a plant specified be limited to the quantity shipped to or political subdivisions: in paragraph (h) of this section. The pool distributing plants during the pooling standards described in Ohio month. Qualifying transfers to other paragraphs (c) through (f) of this section order plants shall not include transfers The townships of Woodville and Madison are subject to modification pursuant to made on the basis of agreed-upon Class in Sandusky County and all other counties in paragraph (g) of this section: II, Class III, or Class IV utilization. Ohio except Erie, Huron, and Ottawa. (a) A distributing plant, other than a (2) The operator of a supply plant may Indiana Counties plant qualified as a pool plant pursuant include deliveries to pool distributing Adams, Allen, Bartholomew, Benton, to paragraph (b) of this section or plants directly from farms of producers Blackford, Boone, Brown, Carroll, Cass, Clay, section 7(b) of any other Federal milk pursuant to § 1033.13(c) as up to 90 Clinton, Dearborn, Decatur, De Kalb, order, from which during the month 30 percent of the supply plant’s qualifying Delaware, Elkhart, Fayette, Fountain, percent or more of the total quantity of shipments. Franklin, Fulton, Grant, Hamilton, Hancock, fluid milk products physically received (3) Concentrated milk transferred Hendricks, Henry, Howard, Huntington, at the plant (excluding concentrated from the supply plant to a distributing Jackson, Jasper, Jay, Jefferson, Jennings, milk received from another plant by plant for an agreed-upon use other than Johnson, Kosciusko, Lagrange, Lake, La Porte, agreement for other than Class I use) are Lawrence, Madison, Marion, Marshall, Class I shall be excluded from the disposed of as route disposition or are Miami, Monroe, Montgomery, Morgan, supply plant’s shipments in computing Newton, Noble, Ohio, Owen, Parke, Porter, transferred in the form of packaged fluid the supply plant’s shipping percentage. Pulaski, Putnam, Randolph, Ripley, Rush, milk products to other distributing (4) A supply plant that meets the Shelby, St. Joseph, Starke, Steuben, plants. At least 25 percent of such route shipping requirements of this paragraph Switzerland, Tippecanoe, Tipton, Union, disposition and transfers must be to during each of the immediately Vermillion, Vigo, Wabash, Warren, Wayne, outlets in the marketing area. preceding months of September through Wells, White, and Whitley. (b) Any distributing plant located in February shall be a pool plant during Kentucky Counties the marketing area which during the the following months of March through Boone, Boyd, Bracken, Campbell, Floyd, month processed at least 30 percent of August unless the milk received at the Grant, Greenup, Harrison, Johnson, Kenton, the total quantity of fluid milk products plant fails to meet the requirements of Lawrence, Lewis, Magoffin, Martin, Mason, physically received at the plant a duly constituted regulatory agency, Pendleton, Pike, and Robertson. (excluding concentrated milk received the plant fails to meet a shipping from another plant by agreement for Michigan Counties requirement instituted pursuant to other than Class I use) into ultra- paragraph (g) of this section, or the plant All counties except Delta, Dickinson, pasteurized or aseptically-processed Gogebic, Iron, Menominee, and Ontonagon. operator requests nonpool status for the fluid milk products. plant. Such nonpool status shall be Pennsylvania Counties (c) A supply plant from which the effective on the first day of the month Allegheny, Armstrong, Beaver, Butler, quantity of bulk fluid milk products following the receipt of such request Crawford, Erie, Fayette, Greene, Lawrence, shipped to, received at, and physically and thereafter until the plant again Mercer, Venango, and Washington. unloaded into plants described in qualifies as a pool plant on the basis of In Clarion County only the townships of paragraph (a) or (b) of this section as a its deliveries to a pool distributing Ashland, Beaver, Licking, Madison, Perry, percent of the Grade A milk received at plant(s). The automatic pool Piney, Richland, Salem, and Toby. the plant from dairy farmers (except All of Westmoreland County except the qualification of a plant can be waived if townships of Cook, Donegal, Fairfield, dairy farmers described in § 1033.12(b)) the handler or cooperative requests in Ligonier, and St. Clair, and the boroughs of and handlers described in § 1033.9(c), as writing to the market administrator the Bolivar, Donegal, Ligonier, New Florence, reported in § 1033.30(a), is not less than nonpool status of such plant. The and Seward. 30 percent of the milk received from request must be made prior to the dairy farmers, including milk diverted West Virginia Counties beginning of any month during the pursuant to § 1033.13, subject to the March through August period. The plant Barbour, Boone, Brooke, Cabell, Calhoun, following conditions: shall be a nonpool plant for such month Doddridge, Fayette, Gilmer, Hancock, Harrison, Jackson, Kanawha, Lewis, Lincoln, (1) Qualifying shipments pursuant to and thereafter until it requalifies under Logan, Marion, Marshall, Mason, Mingo, this paragraph may be made to the paragraph (c) of this section on the basis Monongalia, Ohio, Pleasants, Preston, following plants, except whenever the of actual shipments therefrom. To Putnam, Raleigh, Randolph, Ritchie, Roane, authority provided in paragraph (g) of requalify as a pool plant under Taylor, Tucker, Tyler, Upshur, Wayne, this section is applied to increase the paragraph (d), (e) or (f) of this section, Wetzel, Wirt, Wood, and Wyoming. shipping requirements specified in this such plant must first have met the section, only shipments to pool plants percentage shipping requirements of § 1033.3 Route disposition. described in § 1033.7(a) and (b), shall paragraph (c) of this section for 6 See § 1000.3. count as qualifying shipments for the consecutive months.

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(5) A supply plant that does not meet same manner as a single plant subject to month for which the requested revision the minimum delivery requirements the following additional requirements: is desired effective. If the investigation specified in this paragraph to qualify for (1) Each plant in the system is located shows that an adjustment of the pool status in the current month within the marketing area, or was a pool shipping percentages might be because a distributing plant to which supply plant for each of the 3 months appropriate, the market administrator the supply plant delivered its fluid milk immediately preceding the effective shall issue a notice stating that an products during such month failed to date of this paragraph so long as it adjustment is being considered and qualify as a pool plant pursuant to continues to maintain pool status. invite data, views and arguments. Any paragraph (a) or (b) of this section shall Cooperative associations may not use decision to revise an applicable continue to be a pool plant for the shipments pursuant to § 1033.9(c) to shipping percentage must be issued in current month if such supply plant qualify plants located outside the writing at least one day before the qualified as a pool plant in the 3 marketing area; effective date. immediately preceding months. (2) A written notification to the (h) The term pool plant shall not (d) A plant operated by a cooperative market administrator listing the plants apply to the following plants: association if, during the month, 30 to be included in the system and the (1) A producer-handler as defined percent or more of the producer milk of handler that is responsible for meeting under any Federal order; members of the association is delivered the performance requirements of this (2) An exempt plant as defined in to a distributing pool plant(s) or to a paragraph under a marketing agreement § 1000.8(e); nonpool plant(s), and classification certified to the market administrator by (3) A plant located within the other than Class I is not requested. the designated handler and any others marketing area and qualified pursuant Deliveries for qualification purposes included in the system, and the period to paragraph (a) of this section that may be made directly from the farm or during which such consideration shall meets the pooling requirements of by transfer from such association’s apply. Such notice, and notice of any another Federal order, and from which plant, subject to the following change in designation, shall be more than 50 percent of its route conditions: furnished on or before the 5th working disposition has been in the other (1) The cooperative requests pool day following the month to which the Federal order marketing area for 3 status for such plant; notice applies. The listed plants consecutive months; (2) The 30-percent delivery included in the system shall also be in (4) A plant located outside any requirement may be met for the current the sequence in which they shall qualify Federal order marketing area and month or it may be met on the basis of for pool plant status based on the qualified pursuant to paragraph (a) of deliveries during the preceding 12- minimum deliveries required. If the this section that meets the pooling month period ending with the current deliveries made are insufficient to requirements of another Federal order month; qualify the entire system for pooling, the and has had greater route disposition in (3) The plant is approved by a duly last listed plant shall be excluded from such other Federal order’s marketing constituted regulatory authority to the system, followed by the plant next- area for 3 consecutive months; handle milk for fluid consumption; and to-last on the list, and continuing in this (5) A plant located in another Federal (4) The plant does not qualify as a sequence until remaining listed plants order marketing area and qualified pool plant under paragraph (a), (b), or have met the minimum shipping pursuant to paragraph (a) of this section (c) of this section or under the similar requirements; and that meets the pooling requirements of provisions of another Federal order (3) Each plant that qualifies as a pool such other Federal order and does not applicable to a distributing plant or plant within a system shall continue have a majority of its route distribution supply plant. each month as a plant in the system in this marketing area for 3 consecutive (e) A plant located inside the unless the plant subsequently fails to months or if the plant is required to be marketing area which has been a pool qualify for pooling, or the responsible regulated under such other Federal plant under this order or its predecessor handler submits a written notification to order without regard to its route orders for twelve consecutive months, the market administrator prior to the disposition in any other Federal order but is not otherwise qualified under this first day of the month that the plant is marketing area; paragraph, if it has a marketing to be deleted from the system, or that (6) A plant qualified pursuant to agreement with a cooperative the system is to be discontinued. In any paragraph (c) of this section that also association and it fulfills the following month of March through August, a meets the pooling requirements of conditions: system shall not contain any plant another Federal order and from which (1) The aggregate monthly quantity which was not qualified under this greater qualifying shipments are made supplied by all parties to such an paragraph, either individually or as a to plants regulated under the other agreement as a percentage of the member of a system, during the Federal order than are made to plants producer milk receipts included in the previous September through February. regulated under this order, or the plant unit during the month is not less than (g) The applicable shipping has automatic pooling status under the 35 percent; and percentages of paragraphs (c) through (f) other Federal order; and (2) Shipments for qualification of this section may be increased or (7) That portion of a regulated plant purposes shall include both transfers decreased by the market administrator if designated as a nonpool plant that is from supply plants to plants described the market administrator finds that such physically separate and operated in paragraph (c)(1) of this section, and adjustment is necessary to encourage separately from the pool portion of such deliveries made direct from the farm to needed shipments or to prevent plant. The designation of a portion of a plants qualified under paragraph (a) of uneconomic shipments. Before making regulated plant as a nonpool plant must this section. such a finding, the market administrator be requested in advance and in writing (f) A system of supply plants may shall investigate the need for adjustment by the handler and must be approved by qualify for pooling if 2 or more plants either on the market administrator’s the market administrator. operated by one or more handlers meet own initiative or at the request of (i) Any plant that qualifies as a pool the applicable percentage requirements interested parties if the request is made plant in each of the immediately of paragraph (c) of this section in the in writing at least 15 days prior to the preceding 3 months pursuant to

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00239 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.240 pfrm08 PsN: 02APP2 16264 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules paragraph (a) of this section or the plant operator in accordance with each of the months of September shipping percentages in paragraph (c) of § 1033.13; or through November; this section that is unable to meet such (2) Received by a handler described in (3) Of the total quantity of producer performance standards for the current § 1033.9(c). milk received during the month month because of unavoidable (b) Producer shall not include: (including diversions but excluding the circumstances determined by the market (1) A producer-handler as defined in quantity of producer milk received from administrator to be beyond the control any Federal order; a handler described in § 1000.9(c)), the of the handler operating the plant, such (2) A dairy farmer whose milk is handler diverted to nonpool plants not as a natural disaster (ice storm, wind received at an exempt plant, excluding more than 60 percent during the months storm, flood), fire, breakdown of producer milk diverted to the exempt of September through February; plant pursuant to § 1033.13(d); equipment, or work stoppage, shall be (4) Diverted milk shall be priced at considered to have met the minimum (3) A dairy farmer whose milk is received by diversion at a pool plant the location of the plant to which performance standards during the diverted; period of such unavoidable from a handler regulated under another circumstances, but such relief shall not Federal order if the other Federal order (5) Any milk diverted in excess of the be granted for more than 2 consecutive designates the dairy farmer as a limits set forth in paragraph (d)(3) of months. producer under that order and that milk this section shall not be producer milk. is allocated by request to a utilization The diverting handler shall designate § 1033.8 Nonpool plant. other than Class I; and the dairy farmer deliveries that shall not See § 1000.8. (4) A dairy farmer whose milk is be producer milk. If the handler fails to reported as diverted to a plant fully designate the dairy farmer deliveries § 1033.9 Handler. regulated under another Federal order which are ineligible, producer milk See § 1000.9. with respect to that portion of the milk status shall be forfeited with respect to so diverted that is assigned to Class I all milk diverted to nonpool plants by § 1033.10 Producer-handler. under the provisions of such other such handler; and Producer-handler means a person order. (6) The delivery day requirements and who: the diversion percentages in paragraphs § 1033.13 Producer milk. (a) Operates a dairy farm and a (d)(2) and (d)(3) of this section may be distributing plant from which there is Producer milk means the skim milk increased or decreased by the market route disposition in the marketing area (or the skim equivalent of components administrator if the market during the month; of skim milk), including nonfat administrator finds that such revision is (b) Receives fluid milk from own farm components, and butterfat in milk of a necessary to assure orderly marketing production or that is fully subject to the producer that is: and efficient handling of milk in the pricing and pooling provisions of this or (a) Received by the operator of a pool marketing area. Before making such a any other Federal order; plant directly from a producer or a finding, the market administrator shall (c) Receives at its plant or acquires for handler described in § 1000.9(c). All investigate the need for the revision route disposition no more than 150,000 milk received pursuant to this either on the market administrator’s pounds of fluid milk products from paragraph shall be priced at the location own initiative or at the request of handlers fully regulated under any of the plant where it is first physically interested persons if the request is made Federal order. This limitation shall not received; in writing at least 15 days prior to the apply if the producer-handler’s own (b) Received by a handler described in month for which the requested revision farm production is less than 150,000 § 1000.9(c) in excess of the quantity is desired effective. If the investigation pounds during the month; delivered to pool plants; shows that a revision might be (d) Disposes of no other source milk (c) Diverted by a pool plant operator appropriate, the market administrator as Class I milk except by increasing the to another pool plant. Milk so diverted shall issue a notice stating that the nonfat milk solids content of the fluid shall be priced at the location of the revision is being considered and milk products; and plant to which diverted; or inviting written data, views, and (d) Diverted by the operator of a pool (e) Provides proof satisfactory to the arguments. Any decision to revise an plant or by a cooperative association market administrator that the care and applicable percentage must be issued in described in § 1033.9(c) to a nonpool management of the dairy animals and writing at least one day before the plant, subject to the following other resources necessary to produce all effective date. Class I milk handled (excluding receipts conditions: (1) Milk of a dairy farmer shall not be from handlers fully regulated under any § 1033.14 Other source milk. eligible for diversion until milk of such Federal order) and the processing and See § 1000.14. dairy farmer has been physically packaging operations are the producer- received as producer milk at a pool handler’s own enterprise and at its own § 1033.15 Fluid milk products. plant and the dairy farmer has risk. See § 1000.15. continuously retained producer status § 1033.11 [Reserved] since that time. If a dairy farmer loses § 1033.16 Fluid cream product. producer status under this order (except See § 1000.16. § 1033.12 Producer. as a result of a temporary loss of Grade (a) Except as provided in paragraph A approval), the dairy farmer’s milk § 1033.17 [Reserved] (b) of this section, producer means any shall not be eligible for diversion until person who produces milk approved by milk of the dairy farmer has been § 1033.18 Cooperative association. a duly constituted regulatory agency for physically received as producer milk at See § 1000.18. fluid consumption as Grade A milk and a pool plant; whose milk is: (2) The equivalent of at least one day’s § 1033.19 Commercial food processing (1) Received at a pool plant directly production is caused by the handler to establishment. from the producer or diverted by the be physically received at a pool plant in See § 1000.19.

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Handler Reports shall report with respect to its receipts § 1033.53 Announcement of class prices, and utilization of milk and milk component prices, and advanced pricing § 1033.30 Reports of receipts and products in such manner as the market factors. utilization. administrator may prescribe. See § 1000.53. Each handler shall report monthly so that the market administrator’s office § 1033.31 Payroll reports. § 1033.54 Equivalent price. receives the report on or before the 7th (a) On or before the 22nd day after the See § 1000.54. day after the end of the month, in the end of each month, each handler that Producer Price Differential detail and on the prescribed forms, as operates a pool plant pursuant to follows: § 1033.7 and each handler described in § 1033.60 Handler's value of milk. (a) Each handler that operates a pool § 1000.9(c) shall report to the market For the purpose of computing a plant pursuant to § 1033.7 shall report administrator its producer payroll for handler’s obligation for producer milk, for each of its operations the following the month, in the detail prescribed by the market administrator shall information: the market administrator, showing for determine for each month the value of (1) Product pounds, pounds of each producer the information milk of each handler with respect to butterfat, pounds of protein, pounds of described in § 1033.73(e). each of the handler’s pool plants and of solids-not-fat other than protein (other (b) Each handler operating a partially each handler described in § 1000.9(c) solids), and the value of the somatic cell regulated distributing plant who elects with respect to milk that was not adjustment pursuant to § 1000.50(p), to make payment pursuant to received at a pool plant by adding the contained in or represented by: § 1000.76(b) shall report for each dairy amounts computed in paragraphs (a) (i) Receipts of producer milk, farmer who would have been a producer through (i) of this section and including producer milk diverted by the if the plant had been fully regulated in subtracting from that total amount the reporting handler, from sources other the same manner as prescribed for value computed in paragraph (j) of this than handlers described in § 1000.9(c); reports required by paragraph (a) of this section. Unless otherwise specified, the and section. skim milk, butterfat, and the combined (ii) Receipts of milk from handlers pounds of skim milk and butterfat described in § 1000.9(c); § 1033.32 Other reports. referred to in this section shall result (2) Product pounds and pounds of In addition to the reports required from the steps set forth in § 1000.44(a), butterfat contained in: pursuant to §§ 1033.30 and 1033.31, (b), and (c), respectively, and the nonfat (i) Receipts of fluid milk products and each handler shall report any bulk fluid cream products from other components of producer milk in each information the market administrator class shall be based upon the proportion pool plants; deems necessary to verify or establish (ii) Receipts of other source milk; and of such components in producer skim (iii) Inventories at the beginning and each handler’s obligation under the milk. Receipts of nonfluid milk end of the month of fluid milk products order. products that are distributed as labeled and bulk fluid cream products; Classification of Milk reconstituted milk for which payments (3) The utilization or disposition of all are made to the producer-settlement milk and milk products required to be § 1033.40 Classes of utilization. fund of another Federal order under reported pursuant to this paragraph; and See § 1000.40. § 1000.76(a)(4) or (d) shall be excluded (4) Such other information with from pricing under this section. § 1033.41 [Reserved] respect to the receipts and utilization of (a) Class I value. (1) Multiply the pounds of skim milk skim milk, butterfat, milk protein, other § 1033.42 Classification of transfers and nonfat solids, and somatic cell diversions. in Class I by the Class I skim milk price; information as the market administrator and See § 1000.42. (2) Add an amount obtained by may prescribe. (b) Each handler operating a partially § 1033.43 General classification rules. multiplying the pounds of butterfat in regulated distributing plant shall report See § 1000.43. Class I by the Class I butterfat price. (b) Class II value. with respect to such plant in the same § 1033.44 Classification of producer milk. (1) Multiply the pounds of nonfat manner as prescribed for reports See § 1000.44. solids in Class II skim milk by the Class required by paragraph (a) of this section. II nonfat solids price; and Receipts of milk that would have been § 1033.45 Market administrator's reports (2) Add an amount obtained by producer milk if the plant had been and announcements concerning multiplying the pounds of butterfat in fully regulated shall be reported in lieu classification. Class II times the Class II butterfat price. of producer milk. The report shall show See § 1000.45. (c) Class III value. also the quantity of any reconstituted (1) Multiply the pounds of protein in Class Prices skim milk in route disposition in the Class III skim milk by the protein price; marketing area. § 1033.50 Class prices, component prices, (2) Add an amount obtained by (c) Each handler described in and advanced pricing factors. multiplying the pounds of other solids § 1000.9(c) shall report: See § 1000.50. in Class III skim milk by the other solids (1) The product pounds, pounds of price; and butterfat, pounds of protein, pounds of § 1033.51 Class I differential and price. (3) Add an amount obtained by solids-not-fat other than protein (other The Class I differential shall be the multiplying the pounds of butterfat in solids), and the value of the somatic cell differential established for Cuyahoga Class III by the butterfat price. adjustment pursuant to § 1000.50(p), County, Ohio which is reported in (d) Class IV value. contained in receipts of milk from § 1000.52. The Class I price shall be the (1) Multiply the pounds of nonfat producers; and price computed pursuant to § 1000.50(a) solids in Class IV skim milk by the (2) The utilization or disposition of for Cuyahoga County, Ohio. nonfat solids price; and such receipts. (2) Add an amount obtained by (d) Each handler not specified in § 1033.52 Adjusted Class I differentials. multiplying the pounds of butterfat in paragraphs (a) through (c) of this section See § 1000.52. Class IV by the butterfat price.

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(e) Compute an adjustment for the hundredweight of skim milk and (d) The other solids price; somatic cell content of producer milk by butterfat contained in receipts of (e) The butterfat price; multiplying the values reported nonfluid milk products that are (f) The somatic cell adjustment rate; pursuant to § 1033.30(a)(1) and (c)(1) by allocated to Class I use pursuant to (g) The average butterfat, protein, the percentage of total producer milk § 1000.43(d). nonfat solids, and other solids content allocated to Class II, Class III, and Class of producer milk; and IV pursuant to § 1000.44(c); § 1033.61 Computation of producer price (h) The statistical uniform price for (f) Multiply the pounds of skim milk differential. milk containing 3.5 percent butterfat, and butterfat overage assigned to each For each month the market computed by combining the Class III class pursuant to § 1000.44(a)(11) and administrator shall compute a producer price and the producer price the corresponding step of § 1000.44(b) price differential per hundredweight. differential. by the skim milk prices and butterfat The report of any handler who has not Payments for Milk prices applicable to each class. made payments required pursuant to (g) Multiply the difference between § 1033.71 for the preceding month shall § 1033.70 Producer-settlement fund. the current month’s Class I, II, or III not be included in the computation of See § 1000.70. price, as the case may be, and the Class the producer price differential, and such IV price for the preceding month by the handler’s report shall not be included in § 1033.71 Payments to the producer- hundredweight of skim milk and the computation for succeeding months settlement fund. butterfat subtracted from Class I, II, or until the handler has made full payment Each handler shall make payment to III, respectively, pursuant to of outstanding monthly obligations. the producer-settlement fund in a § 1000.44(a)(7) and the corresponding Subject to the aforementioned manner that provides receipt of the step of § 1000.44(b); conditions, the market administrator funds by the market administrator no (h) Multiply the difference between shall compute the producer price later than the 15th day after the end of the Class I price applicable at the differential in the following manner: the month (except as provided in location of the pool plant and the Class (a) Combine into one total the values § 1000.90). Payment shall be the IV price by the hundredweight of skim computed pursuant to § 1033.60 for all amount, if any, by which the amount milk and butterfat assigned to Class I handlers required to file reports specified in paragraph (a) of this section pursuant to § 1000.43(d) and the prescribed in § 1033.30; exceeds the amount specified in hundredweight of skim milk and (b) Subtract the total values obtained paragraph (b) of this section: butterfat subtracted from Class I by multiplying each handler’s total (a) The total value of milk to the pursuant to § 1000.44(a)(3)(i) through pounds of protein, other solids, and handler for the month as determined (vi) and the corresponding step of butterfat contained in the milk for pursuant to § 1033.60. § 1000.44(b), excluding receipts of bulk which an obligation was computed (b) The sum of: fluid cream products from a plant pursuant to § 1033.60 by the protein (1) An amount obtained by regulated under other Federal orders price, the other solids price, and the multiplying the total hundredweight of and bulk concentrated fluid milk butterfat price, respectively, and the producer milk as determined pursuant products from pool plants, plants total value of the somatic cell to § 1000.44(c) by the producer price regulated under other Federal orders, adjustment pursuant to § 1033.30(a)(1) differential as adjusted pursuant to and unregulated supply plants. and (c)(1); § 1033.75; (i) Multiply the difference between (c) Add an amount equal to the sum (2) An amount obtained by the Class I price applicable at the of the location adjustments computed multiplying the total pounds of protein, location of the nearest unregulated pursuant to § 1033.75; other solids, and butterfat contained in supply plants from which an equivalent (d) Add an amount equal to not less producer milk by the protein, other volume was received and the Class III than one-half of the unobligated balance solids, and butterfat prices, respectively; price by the pounds of skim milk and in the producer-settlement fund; (3) The total value of the somatic cell butterfat in receipts of concentrated (e) Divide the resulting amount by the adjustment to producer milk; and fluid milk products assigned to Class I sum of the following for all handlers (4) An amount obtained by pursuant to § 1000.43(d) and included in these computations: multiplying the pounds of skim milk § 1000.44(a)(3)(i) and the corresponding (1) The total hundredweight of and butterfat for which a value was step of § 1000.44(b) and the pounds of producer milk; and computed pursuant to § 1033.60(i) by skim milk and butterfat subtracted from (2) The total hundredweight for which the producer price differential as Class I pursuant to § 1000.44(a)(8) and a value is computed pursuant to adjusted pursuant to § 1033.75 for the the corresponding step of § 1000.44(b), § 1033.60(i); and location of the plant from which excluding such skim milk and butterfat (f) Subtract not less than 4 cents nor received. in receipts of fluid milk products from more than 5 cents from the price an unregulated supply plant to the computed pursuant to paragraph (e) of § 1033.72 Payments from the producer- settlement fund. extent that an equivalent amount of this section. The result shall be known skim milk or butterfat disposed of to as the producer price differential for the No later than the 16th day after the such plant by handlers fully regulated month. end of each month (except as provided under any Federal milk order is in § 1000.90), the market administrator classified and priced as Class I milk and § 1033.62 Announcement of producer shall pay to each handler the amount, if is not used as an offset for any other prices. any, by which the amount computed payment obligation under any order. On or before the 13th day after the pursuant to § 1033.71(b) exceeds the (j) For reconstituted milk made from end of each month, the market amount computed pursuant to receipts of nonfluid milk products, administrator shall announce publicly § 1033.71(a). If, at such time, the balance multiply $1.00 (but not more than the the following prices and information: in the producer-settlement fund is difference between the Class I price (a) The producer price differential; insufficient to make all payments applicable at the location of the pool (b) The protein price; pursuant to this section, the market plant and the Class IV price) by the (c) The nonfat solids price; administrator shall reduce uniformly

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For bulk fluid milk/skimmed date specified in paragraph (a) or (b) of (a) Each handler shall pay each milk products received during the first this section, the handler may reduce producer for producer milk for which 15 days of the month from a cooperative payments pursuant to paragraphs (a) payment is not made to a cooperative association in its capacity as the and (b) of this section, but not by more association pursuant to paragraph (b) of operator of a pool plant, the partial than the amount of the underpayment. this section, as follows: payment shall be at the pool plant (1) Partial payment. For each operator’s estimated use value of the The payments shall be completed on the producer who has not discontinued milk using the most recent class prices next scheduled payment date after shipments as of the date of this partial available at the receiving plant’s receipt of the balance due from the payment, payment shall be made so that location. market administrator. it is received by each producer on or (3) Final payment to a cooperative (d) If a handler claims that a required before the 26th day of the month (except association for milk transferred from its payment to a producer cannot be made as provided in § 1000.90) for milk pool plant. Following the classification because the producer is deceased or received during the first 15 days of the of bulk fluid milk products and bulk cannot be located, or because the month from the producer at not less fluid cream products received during cooperative association or its lawful than the lowest announced class price the month from a cooperative successor or assignee is no longer in for the preceding month, less proper association in its capacity as the existence, the payment shall be made to deductions authorized in writing by the operator of a pool plant, the final the producer-settlement fund, and in the producer. payment for such receipts shall be event that the handler subsequently (2) Final payment. For milk received determined as follows: locates and pays the producer or a during the month, payment shall be (i) The hundredweight of Class I skim lawful claimant, or in the event that the made so that it is received by each milk times the Class I skim milk price handler no longer exists and a lawful producer no later than the 17th day after for the month plus the pounds of Class claim is later established, the market the end of the month (except as I butterfat times the Class I butterfat administrator shall make the required provided in § 1000.90) in an amount price for the month. The Class I prices payment from the producer-settlement equal to not less than the sum of: to be used shall be the prices effective fund to the handler or to the lawful (i) The hundredweight of producer at the location of the receiving plant; claimant, as the case may be. milk received times the producer price (ii) The pounds of nonfat solids in differential for the month as adjusted Class II skim milk by the Class II nonfat (e) In making payments to producers pursuant to § 1033.75; solids price; pursuant to this section, each handler (ii) The pounds of butterfat received (iii) The pounds of butterfat in Class shall furnish each producer, except a times the butterfat price for the month; II times the Class II butterfat price; producer whose milk was received from (iii) The pounds of protein received (iv) The pounds of nonfat solids in a cooperative association handler times the protein price for the month; Class IV times the nonfat solids price; described in § 1000.9(a) or (c), a (iv) The pounds of other solids (v) The pounds of butterfat in Class III supporting statement in a form that may received times the other solids price for and Class IV milk times the butterfat be retained by the recipient which shall the month; price; show: (v) The hundredweight of milk (vi) The pounds of protein in Class III (1) The name, address, Grade A received times the somatic cell milk times the protein price; identifier assigned by a duly constituted adjustment for the month; (vii) The pounds of other solids in regulatory agency, and payroll number (vi) Less any payment made pursuant Class III milk times the other solids of the producer; to paragraph (a)(1) of this section; price; (vii) Less proper deductions (viii) The hundredweight of Class II, (2) The daily and total pounds, and authorized in writing by such producer Class III, and Class IV milk times the the month and dates such milk was and plus or minus adjustments for somatic cell adjustment; and received from that producer; errors in previous payments to such (ix) Add together the amounts (3) The total pounds of butterfat, producer; and computed in paragraphs (b)(3)(i) protein, and other solids contained in (viii) Less deductions for marketing through (viii) of this section and from the producer’s milk; services pursuant to § 1000.86. that sum deduct any payment made (b) Payments for milk received from pursuant to paragraph (b)(2) of this (4) The somatic cell count of the cooperative associations. On or before section; and producer’s milk; the day prior to the dates specified in (4) Final payment to a cooperative (5) The minimum rate or rates at paragraphs (a)(1) and (a)(2) of this association for bulk milk received which payment to the producer is section (except as provided in directly from producers’ farms. For bulk required pursuant to this order; § 1000.90), each handler shall pay to a milk received from a cooperative (6) The rate used in making payment cooperative association for milk association during the month, including if the rate is other than the applicable received as follows: the milk of producers who are not minimum rate; (1) Partial payment to a cooperative members of such association and who association. For bulk fluid milk/ the market administrator determines (7) The amount, or rate per skimmed milk received during the first have authorized the cooperative hundredweight, or rate per pound of 15 days of the month from a cooperative association to collect payment for their component, and the nature of each association in any capacity, except as milk, the final payment for such milk deduction claimed by the handler; and the operator of a pool plant, the partial shall be an amount equal to the sum of (8) The net amount of payment to the payment shall be equal to the the individual payments otherwise producer or cooperative association.

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§ 1033.74 [Reserved] 1124.42 Classification of transfers and Washington diversions. All of the State of Washington. § 1033.75 Plant location adjustments for 1124.43 General classification rules. producer milk and nonpool milk. 1124.44 Classification of producer milk. Idaho Counties For purposes of making payments for 1124.45 Market administrator’s reports and Benewah, Bonner, Boundary, Kootenai, producer milk and nonpool milk, a announcements concerning Latah, and Shoshone. classification. plant location adjustment shall be Oregon Counties determined by subtracting the Class I Class Prices price specified in § 1033.51 from the Benton, Clackamas, Clatsop, Columbia, 1124.50 Class prices, component prices, Coos, Crook, Curry, Deschutes, Douglas, Class I price at the plant’s location. The and advanced pricing factors. Gilliam, Hood River, Jackson, Jefferson, difference, plus or minus as the case 1124.51 Class I differential and price. Josephine, Klamath, Lake, Lane, Lincoln, may be, shall be used to adjust the 1124.52 Adjusted Class I differentials. Linn, Marion, Morrow, Multnomah, Polk, payments required pursuant to 1124.53 Announcement of class prices, Sherman, Tillamook, Umatilla, Wasco, §§ 1033.73 and 1000.76. component prices, and advanced pricing Washington, Wheeler, and Yamhill. factors. § 1033.76 Payments by a handler 1124.54 Equivalent price. § 1124.3 Route disposition. operating a partially regulated distributing See § 1000.3. plant. Producer Price Differential See § 1000.76. 1124.60 Handler’s value of milk. § 1124.4 Plant. 1124.61 Computation of producer price See § 1000.4. § 1033.77 Adjustment of accounts. differential. See § 1000.77. 1124.62 Announcement of producer prices. § 1124.5 Distributing plant. Payments for Milk See § 1000.5. § 1033.78 Charges on overdue accounts. 1124.70 Producer-settlement fund. § 1124.6 Supply plant. See § 1000.78. 1124.71 Payments to the producer- See § 1000.6. Administrative Assessment and settlement fund. Marketing Service Deduction 1124.72 Payments from the producer- § 1124.7 Pool plant. settlement fund. Pool plant means a plant, unit of § 1033.85 Assessment for order 1124.73 Payments to producers and to administration. cooperative associations. plants, or a system of plants as specified 1124.74 [Reserved] in paragraphs (a) through (f) of this See § 1000.85. 1124.75 Plant location adjustments for section, but excluding a plant specified § 1033.86 Deduction for marketing producer milk and nonpool milk. in paragraph (h) of this section. The services. 1124.76 Payments by a handler operating a pooling standards described in partially regulated distributing plant. See § 1000.86. paragraph (c) of this section are subject 1124.77 Adjustment of accounts. to modification pursuant to paragraph 1124.78 Charges on overdue accounts. PART 1124ÐMILK IN THE PACIFIC (g) of this section: NORTHWEST MARKETING AREA Administrative Assessment and Marketing (a) A distributing plant, other than a Service Deduction plant qualified as a pool plant pursuant SubpartÐOrder Regulating Handling 1124.85 Assessment for order to paragraph (b) of this section or General Provisions administration. section 7(b) of any other Federal milk 1124.86 Deduction for marketing services. Sec. order, from which during the month 25 1124.1 General provisions. Authority: 7 U.S.C. 601–674. percent or more of the total quantity of fluid milk products physically received Definitions SubpartÐOrder Regulating Handling at the plant (excluding concentrated 1124.2 Pacific Northwest marketing area. General Provisions milk received from another plant by 1124.3 Route disposition. agreement for other than Class I use) are 1124.4 Plant. § 1124.1 General provisions. disposed of as route disposition or are 1124.5 Distributing plant. 1124.6 Supply plant. The terms, definitions, and provisions transferred in the form of packaged fluid 1124.7 Pool plant. in part 1000 of this chapter apply to and milk products to other distributing 1124.8 Nonpool plant. are hereby made a part of this order. In plants. At least 25 percent of such route 1124.9 Handler. this part 1124, all references to sections disposition and transfers must be to 1124.10 Producer-handler. in part 1000 refer to part 1000 of this outlets in the marketing area. 1124.11 Cooperative reserve supply unit. chapter. (b) Any distributing plant located in 1124.12 Producer. the marketing area which during the 1124.13 Producer milk. Definitions month processed at least 25 percent of 1124.14 Other source milk. the total quantity of fluid milk products § 1124.2 Pacific Northwest marketing area. 1124.15 Fluid milk product. physically received at the plant 1124.16 Fluid cream product. 1124.17 [Reserved] The marketing area means all territory (excluding concentrated milk received 1124.18 Cooperative association. within the bounds of the following from another plant by agreement for 1124.19 Commercial food processing states and political subdivisions, other than Class I use) into ultra- establishment. including all piers, docks, and wharves pasteurized or aseptically-processed connected therewith and all craft fluid milk products. Handler Reports moored thereat, and all territory (c) A supply plant from which during 1124.30 Reports of receipts and utilization. occupied by government (municipal, any month not less than 20 percent of 1124.31 Payroll reports. State, or Federal) reservations, the total quantity of milk that is 1124.32 Other reports. installations, institutions, or other physically received at such plant from Classification of Milk similar establishments if any part dairy farmers eligible to be producers 1124.40 Classes of utilization. thereof is within any of the listed states pursuant to § 1124.12 (excluding milk 1124.41 [Reserved] or political subdivisions: received at such plant as diverted milk

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Following the cancellation of a order and is subject to the pricing and (h) The term pool plant shall not previous producer-handler designation, pooling provisions of this or another apply to the following plants: a person seeking to have his/her order issued pursuant to the Act) or (1) A producer-handler as defined producer-handler designation reinstated diverted as producer milk to another under any Federal order; must demonstrate that these conditions plant pursuant to § 1124.13, is shipped (2) An exempt plant as defined in have been met for the preceding month. in the form of a fluid milk product § 1000.8(e); (1) The care and management of the (excluding concentrated milk (3) A plant located within the dairy animals and other resources and transferred by agreement for other than marketing area and qualified pursuant facilities designated in paragraph (b)(1) Class I use) to a pool distributing plant to paragraph (a) of this section which of this section necessary to produce all or is a route disposition in the meets the pooling requirements of Class I milk handled (excluding receipts marketing area of fluid milk products another Federal order, and from which from handlers fully regulated under any processed and packaged at such plant; more than 50 percent of its route Federal order) are under the complete (1) A supply plant that has qualified disposition has been in the other and exclusive control and management as a pool plant during each of the Federal order marketing area for 3 of the producer-handler and are immediately preceding months of consecutive months; operated as the producer-handler’s own September through February shall (4) A plant located outside any enterprise and at its own risk. continue to so qualify in each of the Federal order marketing area and (2) The plant operation designated in following months of March through qualified pursuant to paragraph (a) of paragraph (b)(2) of this section at which August, unless the plant operator files a this section that meets the pooling the producer-handler processes and written request with the market requirements of another Federal order packages, and from which it distributes, administrator that such plant not be a and has had greater route disposition in its own milk production is under the pool plant, such nonpool status to be such other Federal order’s marketing complete and exclusive control and effective the first month following such area for 3 consecutive months; management of the producer-handler request and thereafter until the plant (5) A plant located in another Federal and is operated as the producer- qualifies as a pool plant on the basis of order marketing area and qualified handler’s own enterprise and at its sole milk shipments; pursuant to paragraph (a) of this section risk. (2) A cooperative association that that meets the pooling requirements of (3) The producer-handler neither operates a supply plant may include as such other Federal order and does not receives at its designated milk qualifying shipments its deliveries to have a majority of its route distribution production resources and facilities nor pool distributing plants directly from in this marketing area for 3 consecutive receives, handles, processes, or farms of producers pursuant to months or if the plant is required to be distributes at or through any of its § 1000.9(c); regulated under such other Federal designated milk handling, processing, or (3) A pool plant operator may include order without regard to its route distributing resources and facilities as qualifying shipments milk diverted to disposition in any other Federal order other source milk products for pool distributing plants pursuant to marketing area; and reconstitution into fluid milk products § 1124.13(d); (6) A plant qualified pursuant to or fluid milk products derived from any (4) No plant may qualify as a pool paragraph (c) of this section which also source other than: plant due to a reduction in the shipping meets the pooling requirements of (i) Its designated milk production percentage pursuant to paragraph (g) of another Federal order and from which resources and facilities (own farm this section unless it has been a pool greater qualifying shipments are made production); supply plant during each of the to plants regulated under the other (ii) Pool handlers and plants regulated immediately preceding 3 months. under any Federal order within the (d)—(f) [Reserved] Federal order than are made to plants regulated under this order, or the plant limitation specified in paragraph (c)(2) (g) The applicable shipping of this section; or percentage of paragraph (c) of this has automatic pooling status under the other Federal order. (iii) Nonfat milk solids which are section may be increased or decreased used to fortify fluid milk products. by the market administrator if the § 1124.8 Nonpool plant. (4) The producer-handler is neither market administrator finds that such See § 1000.8. directly nor indirectly associated with adjustment is necessary to encourage the business control or management of, needed shipments or to prevent § 1124.9 Handler. nor has a financial interest in, another uneconomic shipments. Before making See § 1000.9. handler’s operation; nor is any other such a finding, the market administrator handler so associated with the shall investigate the need for adjustment § 1124.10 Producer-handler. producer-handler’s operation. either on the market administrator’s Producer-handler means a person (b) Designation of resources and own initiative or at the request of who operates a dairy farm and a facilities. Designation of a person as a interested parties if the request is made distributing plant from which there is producer-handler shall include the in writing at least 15 days prior to the route disposition within the marketing determination of what shall constitute month for which the requested revision area during the month and who the the person’s milk production, handling, is desired effective. If the investigation market administrator has designated a processing, and distribution resources shows that an adjustment of the producer-handler after determining that and facilities, all of which shall be shipping percentages might be all of the requirements of this section considered an integrated operation. appropriate, the market administrator have been met. (1) Milk production resources and shall issue a notice stating that an (a) Requirements for designation. facilities shall include all resources and adjustment is being considered and Designation of any person as a facilities (milking herd(s), buildings invite data, views and arguments. Any producer-handler by the market housing such herd(s), and the land on decision to revise an applicable administrator shall be contingent upon which such buildings are located) used shipping percentage must be issued in meeting the conditions set forth in for the production of milk which are

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00245 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.248 pfrm08 PsN: 02APP2 16270 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules directly or indirectly, solely or partially, farm production is less than 150,000 (1) The market administrator may owned, operated, or controlled by the pounds during the month. require such supplies of bulk fluid milk producer-handler, in which the (d) Public announcement. The market from cooperative reserve supply units producer-handler in any way has an administrator shall publicly announce: whenever the market administrator interest, including any contractual (1) The name, plant location(s), and finds that milk supplies for Class I use arrangement, or which are directly, farm location(s) of persons designated as are needed for plants defined in indirectly, or partially owned, operated, producer-handlers; § 1124.7(a) or (b). Before making such a or controlled by any partner or (2) The names of those persons whose finding, the market administrator shall stockholder of the producer-handler. designations have been canceled; and investigate the need for such shipments However, for purposes of this (3) The effective dates of producer- either on the market administrator’s paragraph, any such milk production handler status or loss of producer- own initiative or at the request of resources and facilities which do not handler status for each. Such interested persons if the request is made constitute an actual or potential source announcements shall be controlling in writing at least 15 days prior to the of milk supply for the producer- with respect to the accounting at plants month for which the requested revision handler’s operation shall not be of other handlers for fluid milk products is desired effective. If the market considered a part of the producer- received from any producer-handler. administrator’s investigation shows that handler’s milk production resources and (e) Burden of establishing and such shipments might be appropriate, facilities. maintaining producer-handler status. the market administrator shall issue a (2) Milk handling, processing, and The burden rests upon the handler who notice stating that a shipping distribution resources and facilities is designated as a producer-handler to announcement is being considered and shall include all resources and facilities establish through records required inviting data, views and arguments with (including store outlets) used for pursuant to § 1000.27 that the respect to the proposed shipping handling, processing, and distributing requirements set forth in paragraph (a) announcement. Any decision on the fluid milk products which are solely or of this section have been and are required shipment of bulk fluid milk partially owned by, and directly or from cooperative reserve supply units indirectly operated or controlled by, the continuing to be met, and that the conditions set forth in paragraph (c) of must be made in writing at least one day producer-handler or in which the before the effective date. producer-handler in any way has an this section for cancellation of designation do not exist. (2) Failure of a cooperative reserve interest, including any contractual supply unit to comply with any arrangement, or over which the § 1124.11 Cooperative reserve supply unit. announced shipping requirements, producer-handler directly or indirectly Cooperative reserve supply unit including making any significant change exercises any degree of management or means any cooperative association or its in the unit’s marketing operation that control. agent that is a handler pursuant to the market administrator determines has (3) All designations shall remain in the impact of evading or forcing such an effect until canceled pursuant to § 1000.9(c) that does not own or operate a plant, if such cooperative has been announcement, shall result in paragraph (c) of this section. immediate loss of cooperative reserve (c) Cancellation. The designation as a qualified to receive payments pursuant supply unit status until such time as the producer-handler shall be canceled to § 1124.73 and has been a handler of unit has been a handler pursuant to upon determination by the market producer milk under this or its § 1000.9(c) for at least 12 consecutive administrator that any of the predecessor order during each of the 12 months. requirements of paragraphs (a)(1) previous months, and if a majority of through (4) of this section are not the cooperative’s member producers are § 1124.12 Producer. located within 125 miles of a plant continuing to be met, or under any of (a) Except as provided in paragraph described in § 1124.7(a). A cooperative the conditions described in paragraphs (b) of this section, producer means any reserve supply unit shall be subject to (c)(1) and (2) of this section. person who produces milk approved by the following conditions: Cancellation of a producer-handler’s a duly constituted regulatory agency for (a) The cooperative shall file a request status pursuant to this paragraph shall fluid consumption as Grade A milk and with the market administrator for be effective on the first day of the month whose milk (or components of milk) is: following the month in which the cooperative reserve supply unit status at (1) Received at a pool plant directly requirements were not met or the least 15 days prior to the first day of the from the producer or diverted by the conditions for cancellation occurred. month in which such status is desired plant operator in accordance with (1) Milk from the milk production to be effective. Once qualified as a § 1124.13; or resources and facilities of the producer- cooperative reserve supply unit (2) Received by a handler described in handler, designated in paragraph (b)(1) pursuant to this paragraph, such status § 1000.9(c). of this section, is delivered in the name shall continue to be effective unless the (b) Producer shall not include: of another person as producer milk to cooperative requests termination prior (1) A producer-handler as defined in another handler. to the first day of the month that change any Federal order; (2) The producer-handler handles of status is requested, or the cooperative (2) A dairy farmer whose milk is fluid milk products derived from fails to meet all of the conditions of this received at an exempt plant, excluding sources other than the milk production section. producer milk diverted to the exempt facilities and resources designated in (b) The cooperative reserve supply plant pursuant to § 1124.13(e); paragraph (b)(1) of this section, except unit supplies fluid milk products to (3) A dairy farmer whose milk is that it may receive at its plant, or pool distributing plants located within received by diversion at a pool plant acquire for route disposition, fluid milk 125 miles of a majority of the from a handler regulated under another products from fully regulated plants and cooperative’s member producers in Federal order if the other Federal order handlers under any Federal order if compliance with any announcement by designates the dairy farmer as a such receipts do not exceed 150,000 the market administrator requesting a producer under that order and that milk pounds monthly. This limitation shall minimum level of shipments as further is allocated by request to a utilization not apply if the producer-handler’s own provided below: other than Class I;

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(4) A dairy farmer whose milk is agreement is to be effective. The request Handler Reports reported as diverted to a plant fully shall specify the basis for assigning regulated under another Federal order § 1124.30 Reports of receipts and overdiverted milk to the producer utilization. with respect to that portion of the milk deliveries of each according to a method Each handler shall report monthly so so diverted that is assigned to Class I approved by the market administrator. under the provisions of such other that the market administrator’s office (3) Diverted milk shall be priced at receives the report on or before the 9th order; and the location of the plant to which (5) A dairy farmer whose milk was day after the end of the month, in the diverted; received at a nonpool plant during the detail and on the prescribed forms, as month from the same farm as other than (4) Any milk diverted in excess of the follows: (a) Each handler that operates a pool producer milk under this or any other limits prescribed in paragraph (e)(1) of plant pursuant to § 1124.7 shall report Federal order. Such a dairy farmer shall this section shall not be producer milk. for each of its operations the following be known as a dairy farmer for other If the diverting handler or cooperative association fails to designate the dairy information: markets. (1) Product pounds, pounds of farmers’ deliveries that are not to be butterfat, pounds of protein, and pounds § 1124.13 Producer milk. producer milk, no milk diverted by the of solids-not-fat other than protein Producer milk means the skim milk handler or cooperative association (or the skim equivalent of components (other solids) contained in or during the month to a nonpool plant represented by: of skim milk), including nonfat shall be producer milk. In the event components, and butterfat in milk of a (i) Receipts of producer milk, some of the milk of any producer is including producer milk diverted by the producer that is: determined not to be producer milk (a) Received by the operator of a pool reporting handler, from sources other pursuant to this paragraph, other milk than handlers described in § 1000.9(c); plant directly from a producer or a delivered by such producer as producer handler described in § 1000.9(c). All and milk during the month will not be (ii) Receipts of milk from handlers milk received pursuant to this subject to § 1124.12(b)(5); and described in § 1000.9(c); paragraph shall be priced at the location (2) Product pounds and pounds of of the plant where it is first physically (5) The applicable diversion limits in paragraph (e)(1) of this section may be butterfat contained in: received; (i) Receipts of fluid milk products and increased or decreased by the market (b) Received by a cooperative reserve bulk fluid cream products from other administrator if the market supply unit described in § 1124.11. All pool plants; milk received pursuant to this administrator finds that such revision is (ii) Receipts of other source milk; and paragraph shall be priced at the location necessary to assure orderly marketing (iii) Inventories at the beginning and of the plant where it is first physically and efficient handling of milk in the end of the month of fluid milk products received and shall not be subject to the marketing area. Before making such a and bulk fluid cream products; conditions specified in paragraph (e) of finding, the market administrator shall (3) The utilization or disposition of all this section; investigate the need for the revision milk and milk products required to be (c) Received by a handler described in either on the market administrator’s reported pursuant to this paragraph; and § 1000.9(c) in excess of the quantity own initiative or at the request of (4) Such other information with delivered to pool plants; interested persons if the request is made respect to the receipts and utilization of (d) Diverted by a pool plant operator at least 15 days prior to the month for skim milk, butterfat, milk protein, and to another pool plant. Milk so diverted which the requested revision is desired other nonfat solids, as the market shall be priced at the location of the effective. If the investigation shows that administrator may prescribe. plant to which diverted; or a revision might be appropriate, the (b) Each handler operating a partially (e) Diverted by the operator of a pool market administrator shall issue a notice regulated distributing plant shall report plant or a cooperative association stating that the revision is being with respect to such plant in the same described in § 1000.9(c), excluding a considered and inviting written data, manner as prescribed for reports cooperative reserve supply unit views, and arguments. Any decision to required by paragraph (a) of this section. described in § 1124.11, to a nonpool revise an applicable percentage must be Receipts of milk that would have been plant, subject to the following issued in writing at least one day before producer milk if the plant had been conditions: the effective date. fully regulated shall be reported in lieu (1) Of the quantity of producer milk of producer milk. The report shall show received during the month (including § 1124.14 Other source milk. also the quantity of any reconstituted diversions, but excluding the quantity of See § 1000.14. skim milk in route disposition in the producer milk received from a handler marketing area. described in § 1000.9(c)) the handler § 1124.15 Fluid milk product. (c) Each handler described in diverts to nonpool plants not more than § 1000.9(c) shall report: 80 percent during the months of See § 1000.15. (1) The product pounds, pounds of September through February, and not § 1124.16 Fluid cream product. butterfat, pounds of protein, and the more than 99 percent during the months pounds of solids-not-fat other than of March through August; See § 1000.16. protein (other solids) contained in (2) Two or more handlers described in receipts of milk from producers; and § 1000.9(c) may have their allowable § 1124.17 [Reserved] (2) The utilization or disposition of diversions computed on the basis of § 1124.18 Cooperative association. such receipts. their combined deliveries of producer (d) Each handler not specified in milk which they caused to be delivered See § 1000.18. paragraphs (a) through (c) of this section to pool plants or diverted during the shall report with respect to its receipts month if each has filed a request in § 1124.19 Commercial food processing and utilization of milk and milk establishment. writing with the market administrator products in such manner as the market before the first day of the month the See § 1000.19. administrator may prescribe.

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§ 1124.31 Payroll reports. § 1124.53 Announcement of class prices, (e) Multiply the pounds of skim milk (a) On or before the 20th day after the component prices, and advanced pricing and butterfat overage assigned to each end of each month, each handler that factors. class pursuant to § 1000.44(a)(11) and operates a pool plant pursuant to See § 1000.53. the corresponding steps of § 1000.44(b) § 1124.7 and each handler described in § 1124.54 Equivalent price. by the skim milk prices and butterfat prices applicable to each class. § 1000.9(c) shall report to the market See § 1000.54. administrator its producer payroll for (f) Multiply the difference between the month, in the detail prescribed by Producer Price Differential the current month’s Class I, II, or III the market administrator, showing for § 1124.60 Handler's value of milk. price, as the case may be, and the Class each producer the information For the purpose of computing a IV price for the preceding month by the described in § 1124.73(f). hundredweight of skim milk and (b) Each handler operating a partially handler’s obligation for producer milk, the market administrator shall butterfat subtracted from Class I, II, or regulated distributing plant who elects III, respectively, pursuant to to make payment pursuant to determine for each month the value of milk of each handler with respect to § 1000.44(a)(7) and the corresponding § 1000.76(b) shall report for each dairy step of § 1000.44(b); farmer who would have been a producer each of the handler’s pool plants and of if the plant had been fully regulated in each handler described in § 1000.9(c) (g) Multiply the difference between the same manner as prescribed for with respect to milk that was not the Class I price applicable at the reports required by paragraph (a) of this received at a pool plant by adding the location of the pool plant and the Class section. amounts computed in paragraphs (a) IV price by the hundredweight of skim through (h) of this section and milk and butterfat assigned to Class I § 1124.32 Other reports. subtracting from that total amount the pursuant to § 1000.43(d) and the In addition to the reports required value computed in paragraph (i) of this hundredweight of skim milk and pursuant to §§ 1124.30 and 1124.31, section. Unless otherwise specified, the butterfat subtracted from Class I each handler shall report any skim milk, butterfat, and the combined pursuant to § 1000.44(a)(3)(i) through information the market administrator pounds of skim milk and butterfat (vi) and the corresponding step of deems necessary to verify or establish referred to in this section shall result § 1000.44(b), excluding receipts of bulk each handler’s obligation under the from the steps set forth in § 1000.44(a), fluid cream products from plants order. (b), and (c), respectively, and the nonfat regulated under other Federal orders components of producer milk in each and bulk concentrated fluid milk Classification of Milk class shall be based upon the proportion products from pool plants, plants § 1124.40 Classes of utilization. of such components in producer skim regulated under other Federal orders, milk. Receipts of nonfluid milk and unregulated supply plants. See § 1000.40. products that are distributed as labeled (h) Multiply the difference between reconstituted milk for which payments § 1124.41 [Reserved] the Class I price applicable at the are made to the producer-settlement location of the nearest unregulated § 1124.42 Classification of transfers and fund of another Federal order under supply plants from which an equivalent diversions. § 1000.76(a)(4) or (d) shall be excluded volume was received and the Class III See § 1000.42. from pricing under this section. (a) Class I value. price by the pounds of skim milk and § 1124.43 General classification rules. (1) Multiply the hundredweight of butterfat in receipts of concentrated See § 1000.43. skim milk in Class I by the Class I skim fluid milk products assigned to Class I milk price; and pursuant to § 1000.43(d) and § 1124.44 Classification of producer milk. (2) Add an amount obtained by § 1000.44(a)(3)(i) and the corresponding In addition to the provisions provided multiplying the pounds of butterfat in step of § 1000.44(b) and the pounds of in § 1000.44, the words ‘‘, or acquired Class I by the Class I butterfat price. skim milk and butterfat subtracted from for distribution,’’ are inserted following (b) Class II value. Class I pursuant to § 1000.44(a)(8) and the word ‘‘received’’ in (1) Multiply the pounds of nonfat the corresponding step of § 1000.44(b), § 1000.44(a)(3)(iv). solids in Class II skim milk by the Class excluding such skim milk and butterfat II nonfat solids price; and in receipts of fluid milk products from § 1124.45 Market administrator's reports (2) Add an amount obtained by an unregulated supply plant to the and announcements concerning classification. multiplying the pounds of butterfat in extent that an equivalent amount of Class II times the Class II butterfat price. skim milk or butterfat disposed of to See § 1000.45. (c) Class III value. such plant by handlers fully regulated Class Prices (1) Multiply the pounds of protein in under any Federal milk order is Class III skim milk by the protein price; classified and priced as Class I milk and § 1124.50 Class prices, component prices, (2) Add an amount obtained by is not used as an offset for any other and advanced pricing factors. multiplying the pounds of other solids payment obligation under any order. See § 1000.50. in Class III skim milk by the other solids price; and (i) For reconstituted milk made from § 1124.51 Class I differential and price. (3) Add an amount obtained by receipts of nonfluid milk products, The Class I differential shall be the multiplying the pounds of butterfat in multiply $1.00 (but not more than the differential established for King County, Class III by the butterfat price. difference between the Class I price Washington, which is reported in (d) Class IV value. applicable at the location of the pool § 1000.52. The Class I price shall be the (1) Multiply the pounds of nonfat plant and the Class IV price) by the price computed pursuant to § 1000.50(a) solids in Class IV skim milk by the hundredweight of skim milk and for King County, Washington. nonfat solids price; and butterfat contained in receipts of (2) Add an amount obtained by nonfluid milk products that are § 1124.52 Adjusted Class I differentials. multiplying the pounds of butterfat in allocated to Class I use pursuant to See § 1000.52. Class IV by the butterfat price. § 1000.43(d).

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§ 1124.61 Computation of producer price Payments for Milk shipments as of the 18th day of the differential. month, partial payment shall be made For each month the market § 1124.70 Producer-settlement fund. so that it is received by each producer administrator shall compute a producer See § 1000.70. on or before the last day of the month price differential per hundredweight. § 1124.71 Payments to the producer- (except as provided in § 1000.90) for The report of any handler who has not settlement fund. milk received during the first 15 days of made payments required pursuant to Each handler shall make payment to the month from the producer at not less § 1124.71 for the preceding month shall the producer-settlement fund in a than the lowest announced class price not be included in the computation of manner that provides receipt of the for the preceding month, less proper the producer price differential, and such funds by the market administrator no deductions authorized in writing by the handler’s report shall not be included in later than the 16th day after the end of producer. the computation for succeeding months the month (except as provided in (2) Final payment. For milk received until the handler has made full payment during the month, payment shall be of outstanding monthly obligations. § 1000.90). Payment shall be the amount, if any, by which the amount made so that it is received by each Subject to the aforementioned producer no later than the 19th day after conditions, the market administrator specified in paragraph (a) of this section exceeds the amount specified in the end of the month (except as shall compute the producer price provided in § 1000.90) in an amount differential in the following manner: paragraph (b) of this section: (a) The total value of milk to the equal to not less than the sum of: (a) Combine into one total the values (i) The hundredweight of producer handler for the month as determined computed pursuant to § 1124.60 for all milk received times the producer price handlers required to file reports pursuant to § 1124.60. (b) The sum of: differential for the month as adjusted prescribed in § 1124.30; (1) An amount obtained by pursuant to § 1124.75; (b) Subtract the total values obtained multiplying the total hundredweight of (ii) The pounds of butterfat received by multiplying each handler’s total producer milk as determined pursuant times the butterfat price for the month; pounds of protein, other solids, and (iii) The pounds of protein received to § 1000.44(c) by the producer price butterfat contained in the milk for times the protein price for the month; differential as adjusted pursuant to which an obligation was computed (iv) The pounds of other solids § 1124.75; received times the other solids price for pursuant to § 1124.60 by the protein (2) An amount obtained by price, the other solids price, and the the month; multiplying the total pounds of protein, (v) Less any payment made pursuant butterfat price, respectively; other solids, and butterfat contained in (c) Add an amount equal to the sum to paragraph (a)(1) of this section; producer milk by the protein, other of the location adjustments computed (vi) Less proper deductions solids, and butterfat prices, respectively; pursuant to § 1124.75; authorized in writing by such producer (d) Add an amount equal to not less and and plus or minus adjustments for (3) An amount obtained by than one-half of the unobligated balance errors in previous payments to such multiplying the pounds of skim milk in the producer-settlement fund; producer subject to approval by the (e) Divide the resulting amount by the and butterfat for which a value was market administrator; and sum of the following for all handlers computed pursuant to § 1124.60(h) by (vii) Less deductions for marketing included in these computations: the producer price differential as services pursuant to § 1000.86. (1) The total hundredweight of adjusted pursuant to § 1124.75 for the (b) Payments for milk received from producer milk; and location of the plant from which cooperative association members. On or (2) The total hundredweight for which received. before the 2nd day prior to the dates a value is computed pursuant to § 1124.72 Payments from the producer- specified in paragraphs (a)(1) and (a)(2) § 1124.60(h); and settlement fund. of this section (except as provided in (f) Subtract not less than 4 cents nor No later than the 18th day after the § 1000.90), each handler shall pay to a more than 5 cents from the price end of each month (except as provided cooperative association for milk from computed pursuant to paragraph (e) of in § 1000.90), the market administrator producers who market their milk this section. The result shall be known shall pay to each handler the amount, if through the cooperative association and as the producer price differential for the any, by which the amount computed who have authorized the cooperative to month. pursuant to § 1124.71(b) exceeds the collect such payments on their behalf an § 1124.62 Announcement of producer amount computed pursuant to amount equal to the sum of the prices. § 1124.71(a). If, at such time, the balance individual payments otherwise payable for such producer milk pursuant to On or before the 14th day after the in the producer-settlement fund is paragraphs (a)(1) and (a)(2) of this end of each month, the market insufficient to make all payments section. administrator shall announce publicly pursuant to this section, the market administrator shall reduce uniformly (c) Payment for milk received from the following prices and information: cooperative association pool plants or (a) The producer price differential; such payments and shall complete the (b) The protein price; payments as soon as the funds are from cooperatives as handlers pursuant (c) The nonfat solids price; available. to § 1000.9(c). On or before the 2nd day (d) The other solids price; prior to the dates specified in (e) The butterfat price; § 1124.73 Payments to producers and to paragraphs (a)(1) and (a)(2) of this (f) The average butterfat, protein, cooperative associations. section (except as provided in nonfat solids, and other solids content (a) Each handler shall pay each § 1000.90), each handler who receives of producer milk; and producer for producer milk for which fluid milk products at its plant from a (g) The statistical uniform price for payment is not made to a cooperative cooperative association in its capacity as milk containing 3.5 percent butterfat, association pursuant to paragraph (b) of the operator of a pool plant or who computed by combining the Class III this section, as follows: receives milk from a cooperative price and the producer price (1) Partial payment. For each association in its capacity as a handler differential. producer who has not discontinued pursuant to § 1000.9(c), including the

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00249 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.253 pfrm08 PsN: 02APP2 16274 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules milk of producers who are not members (iv) The pounds of other solids (5) The rate used in making payment of such association and who the market received times the other solids price for if the rate is other than the applicable administrator determines have the month; and minimum rate; authorized the cooperative association (v) Add together the amounts (6) The amount, or rate per to collect payment for their milk, shall computed in paragraphs (c)(3)(i) hundredweight, or rate per pound of pay the cooperative for such milk as through (iv) of this section and from that component, and the nature of each follows: sum deduct any payment made deduction claimed by the handler; and (1) For bulk fluid milk products and pursuant to paragraph (c)(1) of this (7) The net amount of payment to the bulk fluid cream products received from section. producer or cooperative association. a cooperative association in its capacity (d) If a handler has not received full § 1124.74 [Reserved] as the operator of a pool plant and for payment from the market administrator milk received from a cooperative pursuant to § 1124.72 by the payment § 1124.75 Plant location adjustments for association in its capacity as a handler date specified in paragraph (a), (b) or (c) producer milk and nonpool milk. pursuant to § 1000.9(c) during the first of this section, the handler may reduce For purposes of making payments for 15 days of the month, at not less than pro rata its payments to producers or to producer milk and nonpool milk, a the lowest announced class price per the cooperative association (with plant location adjustment shall be hundredweight for the preceding respect to receipts described in determined by subtracting the Class I month. paragraph (b) of this section, prorating price specified in § 1124.51 from the (2) For the total quantity of bulk fluid the underpayment to the volume of milk Class I price at the plant’s location. The milk products and bulk fluid cream received from the cooperative difference, plus or minus as the case products received from a cooperative association in proportion to the total may be, shall be used to adjust the association in its capacity as the milk received from producers by the payments required pursuant to operator of a pool plant, at not less than handler), but not by more than the §§ 1124.73 and 1000.76. the total value of such products received amount of the underpayment. The § 1124.76 Payments by a handler from the association’s pool plants, as payments shall be completed on the operating a partially regulated distributing determined by multiplying the next scheduled payment date after plant. respective quantities assigned to each receipt of the balance due from the See § 1000.76. class under § 1000.44, as follows: market administrator. (i) The hundredweight of Class I skim (e) If a handler claims that a required § 1124.77 Adjustment of accounts. milk times the Class I skim milk price payment to a producer cannot be made See § 1000.77. for the month plus the pounds of Class because the producer is deceased or § 1124.78 Charges on overdue accounts. I butterfat times the Class I butterfat cannot be located, or because the See § 1000.78. price for the month. The Class I prices cooperative association or its lawful to be used shall be the prices effective successor or assignee is no longer in Administrative Assessment and at the location of the receiving plant; existence, the payment shall be made to Marketing Service Deduction (ii) The pounds of nonfat solids in the producer-settlement fund, and in the Class II skim milk by the Class II nonfat § 1124.85 Assessment for order event that the handler subsequently administration. solids price; locates and pays the producer or a (iii) The pounds of butterfat in Class lawful claimant, or in the event that the See § 1000.85. II times the Class II butterfat price; handler no longer exists and a lawful § 1124.86 Deduction for marketing (iv) The pounds of nonfat solids in claim is later established, the market services. Class IV times the nonfat solids price; administrator shall make the required See § 1000.86. (v) The pounds of butterfat in Class III payment from the producer-settlement and Class IV milk times the butterfat PART 1126ÐMILK IN THE SOUTHWEST fund to the handler or to the lawful MARKETING AREA price; claimant, as the case may be. (vi) The pounds of protein in Class III (f) In making payments to producers SubpartÐOrder Regulating Handling milk times the protein price; pursuant to this section, each handler General Provisions (vii) The pounds of other solids in shall furnish each producer, except a Class III milk times the other solids Sec. producer whose milk was received from 1126.1 General provisions. price; and a cooperative association handler DEFINITIONS (viii) Add together the amounts described in § 1000.9(a) or (c), a computed in paragraphs (c)(2)(i) supporting statement in a form that may 1126.2 Southwest marketing area. through (vii) of this section and from 1126.3 Route disposition. be retained by the recipient which shall 1126.4 Plant. that sum deduct any payment made show: pursuant to paragraph (c)(1) of this 1126.5 Distributing plant. section; and (1) The name, address, Grade A 1126.6 Supply plant. identifier assigned by a duly constituted 1126.7 Pool plant. (3) For the total quantity of milk 1126.8 Nonpool plant. received during the month from a regulatory agency, and payroll number of the producer; 1126.9 Handler. cooperative association in its capacity as 1126.10 Producer-handler. a handler under § 1000.9(c) as follows: (2) The daily and total pounds, and 1126.11 [Reserved] (i) The hundredweight of producer the month and dates such milk was 1126.12 Producer. milk received times the producer price received from that producer; 1126.13 Producer milk. differential as adjusted pursuant to (3) The total pounds of butterfat, 1126.14 Other source milk. § 1124.75; protein, and other solids contained in 1126.15 Fluid milk product. the producer’s milk; 1126.16 Fluid cream product. (ii) The pounds of butterfat received 1126.17 [Reserved] times the butterfat price for the month; (4) The minimum rate or rates at 1126.18 Cooperative association. (iii) The pounds of protein received which payment to the producer is 1126.19 Commercial food processing times the protein price for the month; required pursuant to this order; establishment.

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Handler Reports occupied by government (municipal, Concentrated milk transferred from the 1126.30 Reports of receipts and utilization. State or Federal) reservations, supply plant to a distributing plant for 1126.31 Payroll reports. installations, institutions, or other an agreed-upon use other than Class I 1126.32 Other reports. similar establishments if any part shall be excluded from the supply Classification of Milk thereof is within any of the listed states plant’s shipments in computing the or political subdivisions: plant’s shipping percentage. 1126.40 Classes of utilization. (d) A plant located within the 1126.41 [Reserved] New Mexico and Texas 1126.42 Classification of transfers and marketing area that is operated by a All of the States of New Mexico and Texas. diversions. cooperative association if pool plant 1126.43 General classification rules. Colorado Counties status under this paragraph is requested 1126.44 Classification of producer milk. Archuleta, LaPlata, and Montezuma. for such plant by the cooperative 1126.45 Market administrator’s reports and association and during the month at announcements concerning § 1126.3 Route disposition. least 30 percent of the producer milk of classification. See § 1000.3. members of such cooperative Class Prices association is delivered directly from § 1126.4 Plant. 1126.50 Class prices, component prices, farms to pool distributing plants or is and advanced pricing factors. See § 1000.4. transferred to such plants as a fluid milk 1126.51 Class I differential and price. product (excluding concentrated milk 1126.52 Adjusted Class I differentials. § 1126.5 Distributing plant. transferred to a distributing plant for an 1126.53 Announcement of class prices, See § 1000.5. agreed-upon use other than Class I) from component prices, and advanced pricing the cooperative’s plant. § 1126.6 Supply plant. factors. (e) Two or more plants operated by 1126.54 Equivalent price. See § 1000.6. the same handler and located within the Producer Price Differential § 1126.7 Pool plant. marketing area may qualify for pool status as a unit by meeting the total and 1126.60 Handler’s value of milk. Pool plant means a plant specified in 1126.61 Computation of producer price in-area route disposition requirements differential. paragraphs (a) through (d) of this specified in paragraph (a) of this section 1126.62 Announcement of producer prices. section, or a unit of plants as specified and the following additional in paragraph (e) of this section, but Payments for Milk requirements: excluding a plant specified in paragraph (1) At least one of the plants in the 1126.70 Producer-settlement fund. (g) of this section. The pooling unit must qualify as a pool plant 1126.71 Payments to the producer- standards described in paragraphs (c) pursuant to paragraph (a) of this section; settlement fund. and (d) of this section are subject to 1126.72 Payments from the producer- (2) Other plants in the unit must settlement fund. modification pursuant to paragraph (f) process only Class I or Class II products 1126.73 Payments to producers and to of this section: and must be located in a pricing zone cooperative associations. (a) A distributing plant, other than a providing the same or a lower Class I 1126.74 [Reserved] plant qualified as a pool plant pursuant price than the price applicable at the 1126.75 Plant location adjustments for to paragraph (b) of this section or distributing plant included in the unit producer milk and nonpool milk. section 7(b) of any other Federal milk pursuant to paragraph (e)(1) of this 1126.76 Payments by a handler operating a order, from which during the month 25 section; and partially regulated distributing plant. percent or more of the total quantity of (3) A written request to form a unit, 1126.77 Adjustment of accounts. 1126.78 Charges on overdue accounts. fluid milk products physically received or to add or remove plants from a unit, at the plant (excluding concentrated must be filed with the market Administrative Assessment and Marketing milk received from another plant by administrator prior to the first day of the Service Deduction agreement for other than Class I use) are month for which it is to be effective. 1126.85 Assessment for order disposed of as route disposition or are (f) The applicable shipping administration. transferred in the form of packaged fluid percentages of paragraphs (c) and (d) of 1126.86 Deduction for marketing services. milk products to other distributing this section may be increased or Authority: 7 U.S.C. 601–674. plants. At least 25 percent of such route decreased by the market administrator if disposition and transfers must be to the market administrator finds that such SubpartÐOrder Regulating Handling outlets in the marketing area. adjustment is necessary to encourage General Provisions (b) Any distributing plant located in needed shipments or to prevent the marketing area which during the uneconomic shipments. Before making § 1126.1 General provisions. month processed at least 25 percent of such a finding, the market administrator The terms, definitions, and provisions the total quantity of fluid milk products shall investigate the need for adjustment in part 1000 of this chapter apply to and physically received at the plant either on the market administrator’s are hereby made a part of this order. In (excluding concentrated milk received own initiative or at the request of this part, 1126, all references to sections from another plant by agreement for interested parties if the request is made in part 1000 refer to part 1000 of this other than Class I use) into ultra- in writing at least 15 days prior to the chapter. pasteurized or aseptically-processed month for which the requested revision Definitions fluid milk products. is desired effective. If the investigation (c) A supply plant from which 50 shows that an adjustment of the § 1126.2 Southwest marketing area. percent or more of the total quantity of shipping percentages might be The marketing area means all territory milk that is physically received during appropriate, the market administrator within the bounds of the following the month from dairy farmers and shall issue a notice stating that an states and political subdivisions, handlers described in § 1000.9(c), adjustment is being considered and including all piers, docks and wharves including milk that is diverted as invite data, views and arguments. Any connected therewith and all craft producer milk to other plants, is decision to revise an applicable moored thereat, and all territory transferred to pool distributing plants. shipping percentage must be issued in

VerDate 23-MAR-99 17:17 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00251 Fmt 4701 Sfmt 4702 E:\FR\FM\02APP2.XXX pfrm03 PsN: 02APP2 16276 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules writing at least one day before the (b) Receives fluid milk products from § 1126.13 Producer milk. effective date. own farm production or milk that is Producer milk means the skim milk (g) The term pool plant shall not fully subject to the pricing and pooling (or the skim equivalent of components apply to the following plants: provisions of this or another Federal of skim milk), including nonfat (1) A producer-handler plant; order; components, and butterfat contained in (2) An exempt plant as defined in (c) Receives no more than 150,000 milk of a producer that is: § 1000.8(e); pounds of fluid milk products from (a) Received by the operator of a pool (3) A plant qualified pursuant to handlers fully regulated under any plant directly from a producer or a paragraph (a) of this section that is Federal order, including such products handler described in § 1000.9(c). All located within the marketing area if the received at a location other than the milk received pursuant to this plant also meets the pooling producer-handler’s processing plant for paragraph shall be priced at the location requirements of another Federal order, of the plant where it is first physically and more than 50 percent of its route distribution on routes. This limitation shall not apply if the producer-handler’s received; distribution has been in such other (b) Received by a handler described in Federal order marketing area for 3 own farm production is less than 150,000 pounds during the month; § 1000.9(c) in excess of the quantity consecutive months; delivered to pool plants; (4) A plant qualified pursuant to (d) Disposes of no other source milk (c) Diverted by a pool plant operator paragraph (a) of this section which is as Class I milk except by increasing the for the account of the handler operating not located within any Federal order nonfat milk solids content of the fluid such plant to another pool plant. Milk marketing area that meets the pooling milk products; and so diverted shall be priced at the requirements of another Federal order (e) Provides proof satisfactory to the location of the plant to which diverted; and has had greater route disposition in market administrator that the care and or such other Federal order’s marketing management of the dairy animals and (d) Diverted by the operator of a pool area for 3 consecutive months; other resources necessary to produce all plant or a handler described in (5) A plant qualified pursuant to Class I milk handled (excluding receipts § 1000.9(c) to a nonpool plant, subject to paragraph (a) of this section that is from handlers fully regulated under any the following conditions: located in another Federal order Federal order) and the processing and (1) Milk of a dairy farmer shall not be marketing area if the plant meets the packaging operations are the producer- eligible for diversion unless a delivery pooling requirements of such other handler’s own enterprise and at its own of at least 40,000 pounds or one day’s Federal order and does not have a risk. milk production, whichever is less, of majority of its route distribution in this such dairy farmer has been physically § 1126.11 [Reserved] marketing area for 3 consecutive months received as producer milk at a pool or if the plant is required to be regulated § 1126.12 Producer. plant and the dairy farmer has under such other Federal order without continuously retained producer status (a) Except as provided in paragraph regard to its route disposition in any since that time; other Federal order marketing area; (b) of this section, producer means any (2) The total quantity of milk diverted (6) A plant qualified pursuant to person who produces milk approved by during the month by a cooperative paragraph (c) or (d) of this section a duly constituted regulatory agency for association shall not exceed 50 percent which also meets the pooling fluid consumption as Grade A milk and of the total quantity of producer milk requirements of another Federal order whose milk (or components of milk) is: that the cooperative association caused and from which greater qualifying (1) Received at a pool plant directly to be received at pool plants and shipments are made to plants regulated from the producer or diverted by the diverted; under the other Federal order than are plant operator in accordance with (3) The operator of a pool plant that made to plants regulated under this § 1126.13; or is not a cooperative association may order, or the plant has automatic (2) Received by a handler described in divert any milk that is not under the pooling status under the other Federal § 1000.9(c). control of a cooperative association that order; and (b) Producer shall not include: diverts milk during the month pursuant (7) That portion of a pool plant (1) A producer-handler as defined in to this paragraph. The total quantity of designated as a nonpool plant that is any Federal order; milk so diverted during the month shall physically separate and operated not exceed 50 percent of the total separately from the pool portion of such (2) A dairy farmer whose milk is received at an exempt plant, excluding quantity of the producer milk physically plant. The designation of a portion of a received at such plant (or such unit of regulated plant as a nonpool plant must producer milk diverted to the exempt plant pursuant to § 1126.13(d); plants in the case of plants that pool as be requested in writing by the handler a unit pursuant to § 1126.7(e)) and and must be approved by the market (3) A dairy farmer whose milk is diverted; administrator. received by diversion at a pool plant (4) Any milk diverted in excess of the from a handler regulated under another § 1126.8 Nonpool plant. limits prescribed in paragraphs (d)(2) Federal order if the other Federal order and (3) of this section shall not be See § 1000.8. designates the dairy farmer as a producer milk. If the diverting handler § 1126.9 Handler. producer under that order and the milk or cooperative association fails to is allocated by request to a utilization See § 1000.9. designate the dairy farmers’ deliveries other than Class I; and that will not be producer milk, no milk § 1126.10 Producer-handler. (4) A dairy farmer whose milk is diverted by the handler or cooperative Producer-handler means a person reported as diverted to a plant fully association shall be producer milk; who: regulated under another Federal order (5) Diverted milk shall be priced at (a) Operates a dairy farm and a with respect to that portion of the milk the location of the plant to which distributing plant from which there is so diverted that is assigned to Class I diverted; and route disposition in the marketing area under the provisions of such other (6) The delivery requirement in during the month; order. paragraph (d)(1) and the diversion

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00252 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.257 pfrm08 PsN: 02APP2 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules 16277 percentages in paragraphs (d)(2) and (3) (2) Product pounds and pounds of § 1126.32 Other reports. of this section may be increased or butterfat contained in: In addition to the reports required decreased by the market administrator if (i) Receipts of fluid milk products and pursuant to §§ 1126.30 and 1126.31, there is a finding that such revision is bulk fluid cream products from other each handler shall report any necessary to assure orderly marketing pool plants; information the market administrator and efficient handling of milk in the (ii) Receipts of other source milk; and deems necessary to verify or establish marketing area. Before making such a (iii) Inventories at the beginning and each handler’s obligation under the finding, the market administrator shall end of the month of fluid milk products order. investigate the need for the revision and bulk fluid cream products; Classification of Milk either on the market administrator’s (3) The utilization or disposition of all own initiative or at the request of milk and milk products required to be § 1126.40 Classes of utilization. interested persons if the request is made reported pursuant to this paragraph; and See § 1000.40. in writing at least 15 days prior to the (4) Such other information with month for which the requested revision respect to the receipts and utilization of § 1126.41 [Reserved] is desired effective. If the investigation skim milk, butterfat, milk protein, other § 1126.42 Classification of transfers and shows that a revision might be nonfat solids, and somatic cell diversions. appropriate, the market administrator information, as the market administrator See § 1000.42. shall issue a notice stating that the may prescribe. revision is being considered and (b) Each handler operating a partially § 1126.43 General classification rules. inviting written data, views, and regulated distributing plant shall report See § 1000.43. arguments. Any decision to revise the with respect to such plant in the same delivery day requirement or any manner as prescribed for reports § 1126.44 Classification of producer milk. diversion percentage must be issued in required by paragraph (a) of this section. See § 1000.44. writing at least one day before the Receipts of milk that would have been effective date. producer milk if the plant had been § 1126.45 Market administrator's reports and announcements concerning § 1126.14 Other source milk. fully regulated shall be reported in lieu classification. of producer milk. The report shall show See § 1000.14. also the quantity of any reconstituted See § 1000.45. § 1126.15 Fluid milk product. skim milk in route disposition in the Class Prices marketing area. See § 1000.15. (c) Each handler described in § 1126.50 Class prices, component prices, and advanced pricing factors. § 1126.16 Fluid cream product. § 1000.9(c) shall report: See § 1000.50. See § 1000.16. (1) The product pounds, pounds of butterfat, pounds of protein, pounds of § 1126.51 Class I differential and price. § 1126.17 [Reserved] solids-not-fat other than protein (other The Class I differential shall be the solids), and the value of the somatic cell § 1126.18 Cooperative association. differential established for Dallas adjustment pursuant to § 1000.50(p), County, Texas, which is reported in See § 1000.18. contained in receipts of milk from § 1000.52. The Class I price shall be the producers; and § 1126.19 Commercial food processing price computed pursuant to § 1000.50(a) establishment. (2) The utilization or disposition of for Dallas County, Texas. See § 1000.19. such receipts. (d) Each handler not specified in § 1126.52 Adjusted Class I differentials. Handler Reports paragraphs (a) through (c) of this section See § 1000.52. shall report with respect to its receipts § 1126.30 Reports of receipts and § 1126.53 Announcement of class prices, utilization. and utilization of milk and milk products in such manner as the market component prices, and advanced pricing Each handler shall report monthly so administrator may prescribe. factors. that the market administrator’s office See § 1000.53. receives the report on or before the 8th § 1126.31 Payroll reports. § 1126.54 Equivalent price. day after the end of the month, in the (a) On or before the 20th day after the detail and on prescribed forms, as end of each month, each handler that See § 1000.54. follows: operates a pool plant pursuant to Producer Price Differential (a) Each pool plant operator shall § 1126.7 and each handler described in report for each of its operations the § 1000.9(c) shall report to the market § 1126.60 Handler's value of milk. following information: administrator its producer payroll for For the purpose of computing a (1) Product pounds, pounds of the month, in the detail prescribed by handler’s obligation for producer milk, butterfat, pounds of protein, pounds of the market administrator, showing for the market administrator shall nonfat solids other than protein (other each producer the information specified determine for each month the value of solids), and the value of the somatic cell in § 1126.73(e). milk of each handler with respect to adjustment pursuant to § 1000.50(p) (b) Each handler operating a partially each of the handler’s pool plants and of contained in or represented by: regulated distributing plant who elects each handler described in § 1000.9(c) (i) Receipts of producer milk, to make payment pursuant to with respect to milk that was not including producer milk diverted by the § 1000.76(b) shall report for each dairy received at a pool plant by adding the reporting handler, from sources other farmer who would have been a producer amounts computed in paragraphs (a) than handlers described in § 1000.9(c); if the plant had been fully regulated in through (i) of this section and and the same manner as prescribed for subtracting from that total amount the (ii) Receipts of milk from handlers reports required by paragraph (a) of this value computed in paragraph (j) of this described in § 1000.9(c); section. section. Unless otherwise specified, the

VerDate 23-MAR-99 11:04 Apr 01, 1999 Jkt 183247 PO 00000 Frm 00253 Fmt 4701 Sfmt 4702 E:\FR\FM\A02AP2.259 pfrm08 PsN: 02APP2 16278 Federal Register / Vol. 64, No. 63 / Friday, April 2, 1999 / Proposed Rules skim milk, butterfat, and the combined location of the pool plant and the Class (a) Combine into one total the values pounds of skim milk and butterfat IV price by the hundredweight of skim computed pursuant to § 1126.60 for all referred to in this section shall result milk and butterfat assigned to Class I handlers required to file reports from the steps set forth in § 1000.44(a), pursuant to § 1000.43(d) and the prescribed in § 1126.30; (b), and (c), respectively, and the nonfat hundredweight of skim milk and (b) Subtract the total of the values components of producer milk in each butterfat subtracted from Class I obtained by multiplying each handler’s class shall be based upon the proportion pursuant to § 1000.44(a)(3)(i) through total pounds of protein, other solids, of such components in producer skim (vi) and the corresponding step of and butterfat contained in the milk for milk. Receipts of nonfluid milk § 1000.44(b), excluding receipts of bulk which an obligation was computed products that are distributed as labeled fluid cream products from plants pursuant to § 1126.60 by the protein reconstituted milk for which payments regulated under other Federal orders price, other solids price, and the are made to the producer-settlement and bulk concentrated fluid milk butterfat price, respectively, and the fund of another Federal order under products from pool plants, plants total value of the somatic cell § 1000.76(a)(4) or (d) shall be excluded regulated under other Federal orders, adjustment pursuant to § 1126.30(a)(1) from pricing under this section. and unregulated supply plants. and (c)(1); (a) Class I value. (i) Multiply the difference between (c) Add an amount equal to the sum (1) Multiply the pounds of skim milk the Class I price applicable at the of the location adjustments computed in Class I by the Class I skim milk price; location of the nearest unregulated pursuant to § 1126.75; and supply plants from which an equivalent (d) Add an amount equal to not less (2) Add an amount obtained by volume was received and the Class III than one-half of the unobligated balance multiplying the pounds of butterfat in price by the pounds of skim milk and in the producer-settlement fund; Class I by the Class I butterfat price. butterfat in receipts of concentrated (e) Divide the resulting amount by the (b) Class II value. fluid milk products assigned to Class I sum of the following for all handlers (1) Multiply the pounds of nonfat pursuant to § 1000.43(d) and included in these computations: solids in Class II skim milk by the Class § 1000.44(a)(3)(i) and the corresponding (1) The total hundredweight of II nonfat solids price; and step of § 1000.44(b) and the pounds of producer milk; and (2) Add an amount obtained by skim milk and butterfat subtracted from (2) The total hundredweight for which multiplying the pounds of butterfat in Class I pursuant to § 1000.44(a)(8) and a value is computed pursuant to Class II times the Class II butterfat price. the corresponding step of § 1000.44(b), (c) Class III value. § 1126.60(i); and excluding such skim milk and butterfat (1) Multiply the pounds of protein in (f) Subtract not less than 4 cents nor in receipts of fluid milk products from Class III skim milk by the protein price; more than 5 cents from the price (2) Add an amount obtained by an unregulated supply plant to the computed pursuant to paragraph (e) of multiplying the pounds of other solids extent that an equivalent amount of this section. The result shall be known in Class III skim milk by the other solids skim milk or butterfat disposed of to as the producer price differential for the price; and such plant by handlers fully regulated month. (3) Add an amount obtained by under any Federal milk order is classified and priced as Class I milk and § 1126.62 Announcement of producer multiplying the pounds of butterfat in prices. Class III by the butterfat price. is not used as an offset for any other (d) Class IV value. payment obligation under any order. On or before the 13th day after the (1) Multiply the pounds of nonfat (j) For reconstituted milk made from end of each month, the market solids in Class IV skim milk by the receipts of nonfluid milk products, administrator shall announce the nonfat solids price; and multiply $1.00 (but not more than the following prices and information: (2) Add an amount obtained by difference between the Class I price (a) The producer price differential; multiplying the pounds of butterfat in applicable at the location of the pool (b) The protein price; Class IV by the butterfat price. plant and the Class IV price) by the (c) The nonfat solids price; (e) Compute an adjustment for the hundredweight of skim milk and (d) The other solids price; somatic cell content of producer milk by butterfat contained in receipts of (e) The butterfat price; multiplying the values reported nonfluid milk products that are (f) The somatic cell adjustment rate; pursuant to § 1126.30(a)(1) and (c)(1) by allocated to Class I use pursuant to (g) The average butterfat, protein, the percentage of total producer milk § 1000.43(d). nonfat solids, and other solids content allocated to Class II, Class III, and Class of producer milk; and IV pursuant to § 1000.44(c); § 1126.61 Computation of producer price (h) The statistical uniform price for (f) Multiply the pounds of skim milk differential. milk containing 3.5 percent butterfat, and butterfat overage assigned to each For each month the market computed by combining the Class III class pursuant to § 1000.44(a)(11) and administrator shall compute a producer price and the producer price the corresponding step of § 1000.44(b) price differential per hundredweight. differential. The report of any handler who has not by the skim milk prices and butterfat Payments for Milk prices applicable to each class. made payments required pursuant to (g) Multiply the difference between § 1126.71 for the preceding month shall § 1126.70 Producer-settlement fund. the current month’s Class I, II, or III not be included in the computation of See § 1000.70. price, as the case may be, and the Class the producer price differential, and such IV price for the preceding month by the handler’s report shall not be included in § 1126.71 Payments to the producer- hundredweight of skim milk and the computation for succeeding months settlement fund. butterfat subtracted from Class I, II, or until the handler has made full payment Each handler shall make payment to III, respectively, pursuant to of outstanding monthly obligations. the producer-settlement fund in a § 1000.44(a)(7) and the corresponding Subject to the aforementioned manner that provides receipt of the step of § 1000.44(b); conditions, the market administrator funds by the market administrator no (h) Multiply the difference between shall compute the producer price later than the 16th day after the end of the Class I price applicable at the differential in the following manner: the month (except as provided in

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§ 1000.90). Payment shall be the made so that it is received by each milk using the most recent class prices amount, if any, by which the amount producer no later than the 18th day after available at the receiving plant’s specified in paragraph (a) of this section the end of the month (except as location. exceeds the amount specified in provided in § 1000.90) in an amount (3) Final payment to a cooperative paragraph (b) of this section: computed as follows: association for milk transferred from its (a) The total value of milk to the (i) Multiply the hundredweight of pool plant. Following the classification handler for the month as determined producer milk received times the of bulk fluid milk products and bulk pursuant to § 1126.60. producer price differential for the fluid cream products received during (b) The sum of: month as adjusted pursuant to the month from a cooperative (1) An amount obtained by § 1126.75; association in its capacity as the multiplying the total hundredweight of (ii) Multiply the pounds of butterfat operator of a pool plant, the final producer milk as determined pursuant received times the butterfat price for the payment for such receipts shall be to § 1000.44(c) by the producer price month; determined as follows: differential as adjusted pursuant to (iii) Multiply the pounds of protein (i) The hundredweight of Class I skim § 1126.75; received times the protein price for the milk times the Class I skim milk price (2) An amount obtained by month; for the month plus the pounds of Class multiplying the total pounds of protein, (iv) Multiply the pounds of other I butterfat times the Class I butterfat other solids, and butterfat contained in solids received times the other solids price for the month. The Class I prices producer milk by the protein, other price for the month; to be used shall be the prices effective solids, and butterfat prices respectively; (v) Multiply the hundredweight of at the location of the receiving plant; (3) The total value of the somatic cell milk received times the somatic cell (ii) The pounds of nonfat solids in adjustment to producer milk; and adjustment for the month; Class II skim milk by the Class II nonfat (4) An amount obtained by (vi) Add the amounts computed in solids price; multiplying the pounds of skim milk paragraphs (a)(2)(i) through (v) of this (iii) The pounds of butterfat in Class and butterfat for which a value was section, and from that sum: II times the Class II butterfat price; computed pursuant to § 1126.60(i) by (A) Subtract the partial payment made (iv) The pounds of nonfat solids in the producer price differential as pursuant to paragraph (a)(1) of this Class IV times the nonfat solids price; adjusted pursuant to § 1126.75 for the section; (v) The pounds of butterfat in Class III location of the plant from which (B) Subtract the deduction for and Class IV milk times the butterfat received. marketing services pursuant to price; § 1126.72 Payments from the producer- § 1000.86; (vi) The pounds of protein in Class III settlement fund. (C) Add or subtract for errors made in milk times the protein price; No later than the 17th day after the previous payments to the producer (vii) The pounds of other solids in end of each month (except as provided subject to approval by the market Class III milk times the other solids in § 1000.90), the market administrator administrator; and price; (D) Subtract proper deductions (viii) The hundredweight of Class II, shall pay to each handler the amount, if authorized in writing by the producer. Class III, and Class IV milk times the any, by which the amount computed (b) On or before the day prior to the somatic cell adjustment; and pursuant to § 1126.71(b) exceeds the dates specified for partial and final (ix) Add together the amounts amount computed pursuant to payments pursuant to paragraph (a) of computed in paragraphs (b)(3)(i) § 1126.71(a). If, at such time, the balance this section (except as provided in through (viii) of this section and from in the producer-settlement fund is § 1000.90), each pool plant operator that sum deduct any payments made insufficient to make all payments shall pay a cooperative association for pursuant to paragraph (b)(2) of this pursuant to this section, the market milk received as follows: section. administrator shall reduce uniformly (1) Partial payment to a cooperative (4) Final payment to a cooperative such payments and shall complete the association for bulk milk received association for bulk milk received payments as soon as the funds are directly from producers’ farms. For bulk directly from producers’ farms. For bulk available. milk (including the milk of producers milk received from a cooperative § 1126.73 Payments to producers and to who are not members of such association during the month, including cooperative associations. association and who the market the milk of producers who are not (a) Each handler shall pay each administrator determines have members of such association and who producer for producer milk for which authorized the cooperative association the market administrator determines payment is not made to a cooperative to collect payment for their milk) have authorized the cooperative association pursuant to paragraph (b) of received during the first 15 days of the association to collect payment for their this section, as follows: month from a cooperative association in milk, the final payment for such milk (1) Partial payment. For each any capacity, except as the operator of shall be an amount equal to the sum of producer who has not discontinued a pool plant, the payment shall be equal the individual payments otherwise shipments as of the 23rd day of the to the hundredweight of milk received payable for such milk pursuant to month, payment shall be made so that multiplied by the lowest announced paragraph (a)(2) of this section. it is received by the producer on or class price for the preceding month. (c) If a handler has not received full before the 26th day of the month (except (2) Partial payment to a cooperative payment from the market administrator as provided in § 1000.90) for milk association for milk transferred from its pursuant to § 1126.72 by the payment received during the first 15 days of the pool plant. For bulk milk/skimmed milk date specified in paragraph (a) or (b) of month at not less than the lowest products received during the first 15 this section, the handler may reduce pro announced class price for the preceding days of the month from a cooperative rata its payments to producers or to month, less proper deductions association in its capacity as the cooperative associations pursuant to authorized in writing by the producer. operator of a pool plant, the partial paragraphs (a) and (b) of this section, (2) Final payment. For milk received payment shall be at the pool plant but by not more than the amount of the during the month, payment shall be operator’s estimated use value of the underpayment. The payments shall be

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Payments for Milk cooperative association or its lawful § 1126.78 Charges on overdue accounts. 1131.70 Producer-settlement fund. successor or assignee is no longer in 1131.71 Payments to the producer- See § 1000.78. existence, the payment shall be made to settlement fund. the producer-settlement fund, and in the Administrative Assessment and 1131.72 Payments from the producer- Marketing Service Deduction settlement fund. event that the handler subsequently 1131.73 Payments to producers and to locates and pays the producer or a § 1126.85 Assessment for order cooperative associations. lawful claimant, or in the event that the administration. 1131.74 [Reserved] handler no longer exists and a lawful 1131.75 Plant location adjustments for claim is later established, the market See § 1000.85. producers and nonpool milk. administrator shall make the required § 1126.86 Deduction for marketing 1131.76 Payments by a handler operating a payment from the producer-settlement services. partially regulated distributing plant. 1131.77 Adjustment of accounts. fund to the handler or to the lawful See § 1000.86. claimant as the case may be. 1131.78 Charges on overdue accounts. (e) In making payments to producers PART 1131ÐMILK IN ARIZONA-LAS Administrative Assessment and Marketing pursuant to this section, each pool plant VEGAS MARKETING AREA Service Deduction operator shall furnish each producer, 1131.85 Assessment for order except a producer whose milk was SubpartÐOrder Regulating Handling administration. received from a cooperative association General Provisions 1131.86 Deduction for marketing services. handler described in § 1000.9(a) or (c), Sec. Authority: 7 U.S.C. 601—674. a supporting statement in a form that 1131.1 General provisions. may be retained by the recipient which SubpartÐOrder Regulating Handling Definitions shall show: General Provisions (1) The name, address, Grade A 1131.2 Arizona-Las Vegas marketing area. identifier assigned by a duly constituted 1131.3 Route disposition. § 1131.1 General provisions. regulatory agency, and the payroll 1131.4 Plant. The terms, definitions, and provisions number of the producer; 1131.5 Distributing plant. 1131.6 Supply plant. in part 1000 of this chapter apply to and (2) The month and dates that milk 1131.7 Pool plant. are hereby made a part of this order. In was received from the producer, 1131.8 Nonpool plant. this part, 1131, all references to sections including the daily and total pounds of 1131.9 Handler. in part 1000 refer to part 1000 of this milk received; 1131.10 Producer-handler. chapter. (3) The total pounds of butterfat, 1131.11 [Reserved] protein, and other solids contained in 1131.12 Producer. Definitions the producer’s milk; 1131.13 Producer milk. (4) The somatic cell count of the 1131.14 Other source milk. § 1131.2 Arizona-Las Vegas marketing area. producer’s milk; 1131.15 Fluid milk product. 1131.16 Fluid cream product. (5) The minimum rate or rates at 1131.17 [Reserved] The marketing area means all territory which payment to the producer is 1131.18 Cooperative association. within the bounds of the following required pursuant to this order; 1131.19 Commercial food processing states and political subdivisions, (6) The rate used in making payment establishment. including all piers, docks and wharves if the rate is other than the applicable connected therewith and all craft Handler Reports minimum rate; moored thereat, and all territory (7) The amount, or rate per 1131.30 Reports of receipts and utilization. occupied by government (municipal, hundredweight, or rate per pound of 1131.31 Payroll reports. State or Federal) reservations, 1131.32 Other reports. component, and the nature of each installations, institutions, or other deduction claimed by the handler; and Classification of Milk similar establishments if any part (8) The net amount of payment to the 1131.40 Classes of utilization. thereof is within any of the listed states producer or cooperative association. 1131.41 [Reserved] or political subdivisions: 1131.42 Classification of transfers and Arizona § 1126.74 [Reserved] diversions. 1131.43 General classification rules. All of the State of Arizona. § 1126.75 Plant location adjustments for 1131.44 Classification of producer milk. producer milk and nonpool milk. Nevada Counties 1131.45 Market administrator’s reports and For purposes of making payments for announcements concerning Clark. producer milk and nonpool milk, a classification. § 1131.3 Route disposition. plant location adjustment shall be Class Prices determined by subtracting the Class I See § 1000.3. price specified in § 1126.51 from the 1131.50 Class prices, component prices, and advanced pricing factors. § 1131.4 Plant. Class I price at the plant’s location. The 1131.51 Class I differential and price. difference, plus or minus as the case 1131.52 Adjusted Class I differentials. See § 1000.4. may be, shall be used to adjust the 1131.53 Announcement of class prices, § 1131.5 Distributing plant. payments required pursuant to component prices, and advanced pricing §§ 1126.73 and 1000.76. factors. See § 1000.5.

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§ 1131.6 Supply plant. of this section either directly from farms adjustment is being considered and See § 1000.6. or by transfer from supply plants invite data, views and arguments. Any operated by the cooperative association decision to revise an applicable § 1131.7 Pool plant. and from plants of the cooperative shipping percentage must be issued in Pool Plant means a plant or unit of association for which pool plant status writing at least one day before the plants specified in paragraphs (a) has been requested under this paragraph effective date. through (e) of this section, but excluding subject to the following conditions: (g) The term pool plant shall not a plant specified in paragraph (g) of this (1) The plant does not qualify as a apply to the following plants: section. The pooling standards pool plant under paragraph (a), (b) or (c) (1) A producer-handler as defined described in paragraphs (c) and (d) of of this section or under comparable under any Federal order; this section are subject to modification provisions of another Federal order; and (2) An exempt plant as defined in pursuant to paragraph (f) of this section. (2) The plant is approved by a duly § 1000.8(e); (a) A distributing plant, other than a constituted regulatory agency for the (3) A plant located within the plant qualified as a pool plant pursuant handling of milk approved for fluid marketing area and qualified pursuant to paragraph (b) of this section or consumption in the marketing area. to paragraph (a) of this section which section 7(b) of any other Federal milk (e) Two or more plants operated by meets the pooling requirements of order, from which during the month 25 the same handler and located in the another Federal order, and from which percent or more of the total quantity of marketing area may qualify for pool more than 50 percent of its route fluid milk products physically received plant status as a unit by together disposition has been in the other at the plant (excluding concentrated meeting the requirements specified in Federal order marketing area for 3 milk received from another plant by paragraph (a) of this section and subject consecutive months; agreement for other than Class I use) are to all of the following additional (4) A plant located outside any disposed of as route disposition or are requirements: Federal order marketing area and transferred in the form of packaged fluid (1) At least one of the plants in the qualified pursuant to paragraph (a) of milk products to other distributing unit must qualify as a pool plant this section that meets the pooling plants. At least 25 percent of such route pursuant to paragraph (a) of this section; requirements of another Federal order disposition and transfers must be to (2) Other plants in the unit must and has had greater route disposition in outlets in the marketing area. process Class I or Class II products, such other Federal order’s marketing (b) Any distributing plant located in using 50 percent or more of the total area for 3 consecutive months; the marketing area which during the Grade A fluid milk products received in (5) A plant located in another Federal month processed at least 25 percent of bulk form at such plant or diverted order marketing area and qualified the total quantity of fluid milk products therefrom by the plant operator in Class pursuant to paragraph (a) of this section physically received at the plant I or Class II products, and must be that meets the pooling requirements of (excluding concentrated milk received located in a pricing zone providing the such other Federal order and does not from another plant by agreement for same or lower Class I price than the have a majority of its route distribution other than Class I use) into ultra- price applicable at the distributing plant in this marketing area for 3 consecutive pasteurized or aseptically-processed included in the unit pursuant to months or if the plant is required to be fluid milk products. paragraph (e)(1) of this section; and regulated under such other Federal (c) A supply plant from which 50 (3) A written request to form a unit order without regard to its route percent or more of the total quantity of must be filed by the handler with the disposition in any other Federal order milk that is physically received at such market administrator prior to the first marketing area; plant from dairy farmers and handlers day of the month for which such status (6) A plant qualified pursuant to described in § 1000.9(c), including milk is desired to be effective. The unit shall paragraph (c) of this section which also that is diverted as producer milk to continue from month to month meets the pooling requirements of other plants, is transferred to pool thereafter without further notification. another Federal order and from which distributing plants. Concentrated milk The handler shall notify the market greater qualifying shipments are made transferred from the supply plant to a administrator in writing prior to the first to plants regulated under the other distributing plant for an agreed-upon day of any month for which termination Federal order than are made to plants use other than Class I shall be excluded or any change of the unit is desired. regulated under this order, or the plant from the supply plant’s shipments in (f) The applicable shipping has automatic pooling status under the computing the plant’s shipping percentages of paragraphs (c) and (d) of other Federal order; and percentage. this section may be increased or (7) That portion of a regulated plant (d) A plant located within the decreased by the market administrator if designated as a nonpool plant that is marketing area and operated by a the market administrator finds that such physically separate and operated cooperative association if, during the adjustment is necessary to encourage separately from the pool portion of such month, or the immediately preceding needed shipments or to prevent plant. The designation of a portion of a 12-month period ending with the uneconomic shipments. Before making regulated plant as a nonpool plant must current month, 35 percent or more of such a finding, the market administrator be requested in advance and in writing the producer milk of members of the shall investigate the need for adjustment by the handler and must be approved by association (and any producer milk of either on the market administrator’s the market administrator. nonmembers and members of another own initiative or at the request of § 1131.8 Nonpool plant. cooperative association which may be interested parties if the request is made marketed by the cooperative in writing at least 15 days prior to the See § 1000.8. association) is physically received in the month for which the requested revision § 1131.9 Handler. form of bulk fluid milk products is desired effective. If the investigation See § 1000.9. (excluding concentrated milk shows that an adjustment of the transferred to a distributing plant for an shipping percentages might be § 1131.10 Producer-handler. agreed-upon use other than Class I) at appropriate, the market administrator Producer-handler means a person plants specified in paragraph (a) or (b) shall issue a notice stating that an who:

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(a) Operates a dairy farm and a producer under that order and that milk some of the milk of any producer is distributing plant from which there is is allocated by request to a utilization determined not to be producer milk route disposition in the marketing area other than Class I; pursuant to this paragraph, other milk during the month; (4) A dairy farmer whose milk is delivered by such producer as producer (b) Receives fluid milk products from reported as diverted to a plant fully milk during the month will not be own farm production or milk that is regulated under another Federal order subject to § 1131.12(b)(5); and fully subject to the pricing and pooling with respect to that portion of the milk (5) The delivery day requirement in provisions of this or another Federal so diverted that is assigned to Class I paragraph (d)(1) of this section and order; under the provisions of such other diversion percentage in paragraph (d)(2) (c) Receives at its plant or acquires for order; and of this section may be increased or route disposition no more than 150,000 (5) A dairy farmer whose milk is decreased by the market administrator if pounds of fluid milk products from received at a pool plant if during the the market administrator finds that such handlers fully regulated under any month milk from the same farm is revision is necessary to assure orderly Federal order. This limitation shall not received at a nonpool plant (except a marketing and efficient handling of milk apply if the producer-handler’s own nonpool plant that has no utilization of in the marketing area. Before making farm production is less than 150,000 milk products in any class other than such a finding, the market administrator pounds during the month; Class III or Class IV) other than as shall investigate the need for the (d) Disposes of no other source milk producer milk under this or some other revision either on the market as Class I milk except by increasing the Federal order. Such a dairy farmer shall administrator’s own initiative or at the nonfat milk solids content of the fluid be known as a dairy farmer for other request of interested persons if the milk products; markets. request is made in writing at least 15 (e) Does not distribute fluid milk days prior to the month for which the § 1131.13 Producer milk. products to a wholesale customer who requested revision is desired effective. If also is serviced by a plant described in Producer milk means the skim milk the investigation shows that a revision § 1131.7(a), (b), or (e), or a handler (or the skim equivalent of components might be appropriate, the market described in § 1000.8(c) that supplied of skim milk) and butterfat in milk of a administrator shall issue a notice stating the same product in the same-sized producer that is: that the revision is being considered and package with a similar label to the (a) Received by the operator of a pool inviting written data, views, and wholesale customer during the month; plant directly from a producer or a arguments. Any decision to revise the and handler described in § 1000.9(c). All delivery day requirement or the (f) Provides proof satisfactory to the milk received pursuant to this diversion percentage must be issued in market administrator that the care and paragraph shall be priced at the location writing at least one day before the management of the dairy animals and of the plant where it is first physically effective date. other resources necessary to produce all received; Class I milk handled (excluding receipts (b) Received by a handler described in § 1131.14 Other source milk. from handlers fully regulated under any § 1000.9(c) in excess of the quantity See § 1000.14. delivered to pool plants; Federal order) and the operation of the § 1131.15 Fluid milk product. distributing plant are the personal (c) Diverted by a pool plant operator enterprise of, and at the personal risk of, to another pool plant. Milk so diverted See § 1000.15. shall be priced at the location of the such person in his/her capacity as a § 1131.16 Fluid cream product. producer-handler. plant to which diverted; or (d) Diverted by the operator of a pool See § 1000.16. § 1131.11 [Reserved] plant or a cooperative association § 1131.17 [Reserved] described in § 1000.9(c) to a nonpool § 1131.12 Producer. plant, subject to the following § 1131.18 Cooperative association. (a) Except as provided in paragraph conditions: See § 1000.18. (b) of this section, producer means any (1) Milk of a dairy farmer shall not be person who produces milk approved by eligible for diversion unless at least one § 1131.19 Commercial food processing a duly constituted regulatory agency for day’s production of such dairy farmer is establishment. fluid consumption as Grade A milk and physically received at a pool plant See § 1000.19. whose milk (or components of milk) is: during the month; Handler Reports (1) Received at a pool plant directly (2) The total quantity of milk diverted from the producer or diverted by the by a handler in any month shall not § 1131.30 Reports of receipts and plant operator in accordance with exceed 50 percent of the total producer utilization. § 1131.13; or milk caused by the handler to be Each handler shall report monthly so (2) Received by a handler described in received at pool plants and diverted; that the market administrator’s office § 1000.9(c). (3) Diverted milk shall be priced at receives the report on or before the 7th (b) Producer shall not include: the location of the plant to which day after the end of the month, in the (1) A producer-handler as defined in diverted; detail and on the forms prescribed by any Federal order; (4) Any milk diverted in excess of the the market administrator, as follows: (2) A dairy farmer whose milk is limits prescribed in paragraph (d)(2) of (a) With respect to each of its pool received at an exempt plant, excluding this section shall not be producer milk. plants, the quantities of skim milk and producer milk diverted to the exempt If the diverting handler or cooperative butterfat contained in or represented by: plant pursuant to § 1131.13(d); association fails to designate the dairy (1) Receipts of producer milk, (3) A dairy farmer whose milk is farmers’ deliveries that are not to be including producer milk diverted by the received by diversion at a pool plant producer milk, no milk diverted by the reporting handler, from sources other from a handler regulated under another handler or cooperative association than handlers described in § 1000.9(c); Federal order if the other Federal order during the month to a nonpool plant (2) Receipts of milk from handlers designates the dairy farmer as a shall be producer milk. In the event described in § 1000.9(c);

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(3) Receipts of fluid milk products (2) The producer’s name and address; Uniform Prices and bulk fluid cream products from (3) The daily and total pounds of milk other pool plants; received from the producer; § 1131.60 Handler's value of milk. (4) Receipts of other source milk; (4) The total butterfat content of such For the purpose of computing a (5) Inventories at the beginning and milk; and handler’s obligation for producer milk, end of the month of fluid milk products (5) The price per hundredweight, the the market administrator shall and bulk fluid cream products; and (6) gross amount due, the amount and determine for each month the value of The utilization or disposition of all milk nature of any deductions, and the net milk of each handler with respect to and milk products required to be amount paid. each of the handler’s pool plants and of reported pursuant to this paragraph. (b) Each handler operating a partially each handler described in § 1000.9(c) (b) Each handler operating a partially regulated distributing plant who elects with respect to milk that was not regulated distributing plant shall report to make payment pursuant to received at a pool plant by adding the with respect to such plant in the same § 1000.76(b) shall report for each dairy amounts computed in paragraphs (a) manner as prescribed for reports farmer who would have been a producer through (e) of this section and required by paragraph (a) of this section. if the plant had been fully regulated in subtracting from that total amount the Receipts of milk that would have been the same manner as prescribed for value computed in paragraph (f) of this producer milk if the plant had been reports required by paragraph (a) of this section. Receipts of nonfluid milk fully regulated shall be reported in lieu section. products that are distributed as labeled reconstituted milk for which payments of producer milk. Such report shall § 1131.32 Other reports. are made to the producer-settlement show also the quantity of any In addition to the reports required reconstituted skim milk in route fund of another Federal order under pursuant to § 1131.30 and § 1131.31, § 1000.76(a)(4) or (d) shall be excluded disposition in the marketing area. each handler shall report any (c) Each handler described in from pricing under this section. information the market administrator § 1000.9(c) shall report: (a) Multiply the pounds of skim milk deems necessary to verify or establish (1) The quantities of all skim milk and and butterfat in producer milk that were each handler’s obligation under the butterfat contained in receipts of milk classified in each class pursuant to order. from producers; and § 1000.44(c) by the applicable skim milk (2) The utilization or disposition of all Classification of Milk and butterfat prices, and add the such receipts. resulting amounts; (d) Each handler described in § 1131.40 Classes of utilization. (b) Multiply the pounds of skim milk § 1131.10 shall report: See § 1000.40. and butterfat overage assigned to each class pursuant to § 1000.44(a)(11) and (1) The pounds of milk received from § 1131.41 [Reserved] each of the handler’s own-farm the corresponding steps of § 1000.44(b) production units, showing separately § 1131.42 Classification of transfers and by the respective skim milk and the production of each farm unit and the diversions. butterfat prices applicable at the number of dairy cows in production at See § 1000.42. location of the pool plant; each farm unit; (c) Multiply the difference between (2) Fluid milk products and bulk fluid § 1131.43 General classification rules. the current month’s Class I, II, or III cream products received at its plant or See § 1000.43. price, as the case may be, and the Class IV price for the preceding month by the acquired for route disposition from pool § 1131.44 Classification of producer milk. hundredweight of skim milk and plants, other order plants, and handlers See § 1000.44. described in § 1000.9(c); butterfat subtracted from Class I, II, or (3) Receipts of other source milk not § 1131.45 Market administrator's reports III, respectively, pursuant to reported pursuant to paragraph (d)(2) of and announcements concerning § 1000.44(a)(7) and the corresponding this section; classification. step of § 1000.44(b); (4) Inventories at the beginning and See § 1000.45. (d) Multiply the difference between end of the month of fluid milk products the Class I price applicable at the Class Prices and fluid cream products; and (5) The location of the pool plant and the Class utilization or disposition of all milk and § 1131.50 Class prices, component prices, IV price by the hundredweight of skim milk products required to be reported and advanced pricing factors. milk and butterfat assigned to Class I pursuant to this paragraph. See § 1000.50. pursuant to § 1000.43(d) and the (e) Each handler not specified in hundredweight of skim milk and paragraphs (a) through (d) of this section § 1131.51 Class I differential and price. butterfat subtracted from Class I shall report with respect to its receipts The Class I differential shall be the pursuant to § 1000.44(a)(3)(i) through and utilization of milk and milk differential established for Maricopa (vi) and the corresponding step of products in such manner as the market County, Arizona, which is reported in § 1000.44(b), excluding receipts of bulk administrator may prescribe. § 1000.52. The Class I price shall be the fluid cream products from plants price computed pursuant to § 1000.50(a) regulated under other Federal orders § 1131.31 Payroll reports. for Maricopa County, Arizona. and bulk concentrated fluid milk (a) On or before the 20th day after the products from pool plants, plants end of each month, each handler that § 1131.52 Adjusted Class I differentials. regulated under other Federal orders, operates a pool plant pursuant to See § 1000.52. and unregulated supply plants; § 1131.7 and each handler described in § 1131.53 Announcement of class prices, (e) Multiply the Class I price § 1000.9(c) shall report to the market component prices, and advanced pricing applicable at the location of the nearest administrator its producer payroll for factors. unregulated supply plants from which such month, in the detail prescribed by See § 1000.53. an equivalent volume was received by the market administrator, showing for the pounds of skim milk and butterfat each producer: § 1131.54 Equivalent price. in receipts of concentrated fluid milk (1) The month; See § 1000.54. products assigned to Class I pursuant to

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§ 1000.43(d) and § 1000.44(a)(3)(i) and (4) Subtract the value of the total applicable at the location of the plant the corresponding steps of § 1000.44(b) pounds of butterfat for all handlers. The from which received of other source and the pounds of skim milk and butterfat value shall be computed by milk for which a value is computed butterfat subtracted from Class I multiplying the pounds of butterfat by pursuant to § 1131.60(e). pursuant to § 1000.44(a)(8) and the the butterfat price computed in corresponding step of § 1000.44(b), paragraph (a) of this section; § 1131.72 Payments from the producer- settlement fund. excluding such skim milk and butterfat (5) Divide the resulting amount by the in receipts of fluid milk products from sum of the following for all handlers No later than the 14th day after the an unregulated supply plant to the included in these computations: end of each month (except as provided extent that an equivalent amount of (i) The total skim pounds of producer in § 1000.90), the market administrator skim milk or butterfat disposed of to milk; and shall pay to each handler the amount, if such plant by handlers fully regulated (ii) The total skim pounds for which any, by which the amount computed under any Federal milk order is a value is computed pursuant to pursuant to § 1131.71(b) exceeds the classified and priced as Class I milk and § 1131.60(e); and amount computed pursuant to is not used as an offset for any other (6) Subtract not less than 4 cents and § 1131.71(a). If, at such time, the balance payment obligation under any order; not more than 5 cents. in the producer-settlement fund is and (c) Uniform price. The uniform price insufficient to make all payments (f) For reconstituted milk made from per hundredweight, rounded to the pursuant to this section, the market receipts of nonfluid milk products, nearest cent, shall be the sum of the administrator shall reduce uniformly multiply $1.00 (but not more than the following: such payments and shall complete the difference between the Class I price (1) Multiply the uniform butterfat payments as soon as the funds are applicable at the location of the pool price for the month pursuant to available. paragraph (a) of this section times 3.5 plant and the Class IV price) by the § 1131.73 Payments to producers and to hundredweight of skim milk and pounds of butterfat; and cooperative associations. (2) Multiply the uniform skim milk butterfat contained in receipts of (a) Except as provided in paragraphs nonfluid milk products that are price for the month pursuant to paragraph (b) of this section times .965. (b) and (c) of this section, each handler allocated to Class I use pursuant to shall make payment to each producer § 1000.43(d). § 1131.62 Announcement of uniform from whom milk is received during the prices. § 1131.61 Computation of uniform prices. month as follows: On or before the 11th day after the (1) Partial payment. For each On or before the 11th day of each end of the month, the market producer who has not discontinued month, the market administrator shall administrator shall announce the shipments as of the 25th day of the compute a uniform butterfat price, a uniform prices for the month computed month, payment shall be made so that uniform skim milk price, and a uniform pursuant to § 1131.61. it is received by the producer on or price for producer milk receipts before the 27th day of each month Payments for Milk reported for the prior month. The report (except as provided in § 1000.90) for of any handler who has not made § 1131.70 Producer-settlement fund. milk received from such producer payments required pursuant to See § 1000.70. during the first 15 days of the month at § 1131.71 for the preceding month shall not less than 1.3 times the lowest class not be included in the computation of § 1131.71 Payments to the producer- price for the preceding month less these prices, and such handler’s report settlement fund. proper deductions authorized in writing shall not be included in the Each handler shall make payment to by the producer. computation for succeeding months the producer-settlement fund in a (2) Final payment. For milk received until the handler has made full payment manner that provides receipt of the during the month, a payment computed of outstanding monthly obligations. funds by the market administrator no as follows shall be made so that it is (a) Uniform butterfat price. The later than the 13th day after the end of received by each producer one day after uniform butterfat price per pound, the month (except as provided in the payment date required in § 1131.72: rounded to the nearest one-hundredth § 1000.90). Payments due the market (i) Multiply the hundredweight of cent, shall be computed by multiplying administrator shall be deemed not to producer skim milk received times the the pounds of butterfat in producer milk have been made until the money owed uniform skim milk price for the month; allocated to each class pursuant to has been received at the market (ii) Multiply the pounds of producer § 1000.44(b) by the respective class administrator’s office, or deposited into butterfat received times the uniform butterfat prices and dividing the sum of the market administrator’s bank butterfat price for the month; such values by the total pounds of such account. Payment shall be the amount, (iii) Multiply the hundredweight of butterfat. if any, by which the amount specified producer milk received times the plant (b) Uniform skim milk price. The in paragraph (a) of this section exceeds location adjustment pursuant to uniform skim milk price per the amount specified in paragraph (b) of § 1131.75; and hundredweight, rounded to the nearest this section: (iv) Add the amounts computed in cent, shall be computed as follows: (a) The total value of milk to the paragraph (a)(2)(i), (ii), and (iii) of this (1) Combine into one total the values handler for the month as determined section, and from that sum: computed pursuant to § 1131.60 for all pursuant to § 1131.60. (A) Subtract the partial payment made handlers; (b) The sum of: pursuant to paragraph (a)(1) of this (2) Add an amount equal to the sum (1) The value at the uniform prices for section; of the location adjustments computed skim milk and butterfat, adjusted for (B) Subtract the deduction for pursuant to § 1131.75; plant location, of the handler’s receipts marketing services pursuant to (3) Add an amount equal to not less of producer milk; and § 1000.86; than one-half of the unobligated balance (2) The value at the uniform price as (C) Add or subtract for errors made in in the producer-settlement fund; adjusted pursuant to § 1131.75 previous payments to the producer,

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(b) Two days prior to the dates on pursuant to § 1131.72 by the payment which partial and final payments are date specified in paragraph (a) or (b) of See § 1000.76. due pursuant to paragraph (a) of this this section, the handler may reduce pro § 1131.77 Adjustment of accounts. section, each pool plant operator shall rata his payments pursuant to such pay a cooperative association for milk paragraphs, but by not more than the See § 1000.77. received as follows: amount of such underpayment. § 1131.78 Charges on overdue accounts. (1) Partial payment to a cooperative Payments to producers shall be association for bulk milk received completed on the next scheduled See § 1000.78. directly from producers’ farms. For bulk payment date after receipt of the balance milk (including the milk of producers Administrative Assessment and due from the market administrator. Marketing Service Deduction who are not members of such (d) If a handler claims that a required association and who the market payment to a producer cannot be made § 1131.85 Assessment for order administrator determines have because the producer is deceased or administration. authorized the cooperative association cannot be located, or because the See § 1000.85. to collect payment for their milk) cooperative association or its lawful received during the first 15 days of the successor or assignee is no longer in § 1131.86 Deduction for marketing month from a cooperative association in existence, the payment shall be made to services. any capacity except as the operator of a the producer-settlement fund. In the See § 1000.86. pool plant, the payment shall be an event the handler subsequently locates amount not less than 1.3 times the and pays the producer or a lawful PART 1135ÐMILK IN THE WESTERN lowest class price for the preceding claimant, or in the event that the MARKETING AREA month multiplied by the hundredweight handler no longer exists and a lawful SubpartÐOrder Regulating Handling of milk. claim is later established, the market (2) Partial payment to a cooperative administrator shall make the required General Provisions association for milk transferred from its payment from the producer-settlement Sec. pool plant. For bulk fluid milk products 1135.1 General provisions. and bulk fluid cream products received fund to the handler or the lawful during the first 15 days of the month claimant, as the case may be. Definitions from a cooperative association in its (e) In making payments to producers pursuant to this section, each pool plant 1135.2 Western marketing area. capacity as the operator of a pool plant, 1135.3 Route disposition. the partial payment shall be at the pool operator shall furnish each producer, 1135.4 Plant. plant operator’s estimated use value of except a producer whose milk was 1135.5 Distributing plant. the milk using the most recent class received from a cooperative association 1135.6 Supply plant. prices available for skim milk and described in § 1000.9(a) or (c), a 1135.7 Pool plant. butterfat at the receiving plant’s supporting statement in such form that 1135.8 Nonpool plant. 1135.9 Handler. location. it may be retained by the recipient which shall show: 1135.10 Producer-handler. (3) Final payment to a cooperative 1135.11 Proprietary bulk tank handler. association for milk transferred from its (1) The month, and identity of the producer; 1135.12 Producer. pool plant. For bulk fluid milk products 1135.13 Producer milk. and bulk fluid cream products received (2) The daily and total pounds and the 1135.14 Other source milk. during the month from a cooperative total pounds of butterfat content of 1135.15 Fluid milk product. association in its capacity as the producer milk; 1135.16 Fluid cream product. operator of a pool plant, the final (3) The minimum rate at which 1135.17 [Reserved] payment shall be the classified value of payment to the producer is required 1135.18 Cooperative association. pursuant to this order; 1135.19 Commercial food processing such milk as determined by multiplying establishment. the pounds of skim milk and butterfat (4) The rate used in making payments assigned to each class pursuant to if the rate is other than the applicable Handler Reports § 1000.44 by the class prices for the minimum rate; 1135.30 Reports of receipts and utilization. month at the receiving plant’s location, (5) The amount, rate per 1135.31 Payroll reports. and subtracting from this sum the hundredweight, and nature of each 1135.32 Other reports. deduction claimed by the handler; and partial payment made pursuant to Classification of Milk paragraph (b)(2) of this section. (6) The net amount of payment to the producer or cooperative association. 1135.40 Classes of utilization. (4) Final payment to a cooperative 1135.41 [Reserved] association for bulk milk received § 1131.74 [Reserved] 1135.42 Classification of transfers and directly from producers’ farms. For bulk diversions. milk received from a cooperative § 1131.75 Plant location adjustments for 1135.43 General classification rules. association during the month, including producers and on nonpool milk. 1135.44 Classification of producer milk. the milk of producers who are not For purposes of making payments for 1135.45 Market administrator’s reports and members of such association and who producer milk and nonpool milk, a announcements concerning the market administrator determines plant location adjustment shall be classification. have authorized the cooperative determined by subtracting the Class I Class Prices association to collect payment for their price specified in § 1131.51 from the 1135.50 Class prices, component prices, milk, the final payment for such milk Class I price at the plant’s location. The and advanced pricing factors. shall be an amount equal to the sum of difference, plus or minus as the case 1135.51 Class I differential and price. the individual payments otherwise may be, shall be used to adjust the 1135.52 Adjusted Class I differentials.

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1135.53 Announcement of class prices, Nevada Counties immediately preceding months of component prices, and advanced pricing Elko, Lincoln, and White Pine. September through February shall factors. continue to so qualify in each of the Oregon Counties 1135.54 Equivalent price. following months of March through Producer Price Differential Baker, Grant, Harney, Malheur, and Union. August unless the plant operator files a 1135.60 Handler’s value of milk. Wyoming Counties written request with the market 1135.61 Computation of producer price Lincoln and Uinta. administrator that such plant not be a differential. pool plant, such nonpool status to be 1135.62 Announcement of producer prices. § 1135.3 Route disposition. effective the first month following such request. A plant withdrawn from pool Payments for Milk See § 1000.3. supply plant status may not be 1135.70 Producer-settlement fund. § 1135.4 Plant. reinstated for any subsequent month of 1135.71 Payments to the producer- See § 1000.4. the March through July period unless it settlement fund. qualifies as a pool plant on the basis of 1135.72 Payments from the producer- § 1135.5 Distributing plant. milk shipments; settlement fund. See § 1000.5. 1135.73 Payments to producers and to (2) A pool plant operator may include cooperative associations. § 1135.6 Supply plant. as qualifying shipments milk diverted to 1135.74 [Reserved] See § 1000.6. pool distributing plants pursuant to 1135.75 Plant location adjustments for § 1135.13(c); producer milk and nonpool milk. § 1135.7 Pool plant. (3) Concentrated milk transferred 1135.76 Payments by a handler operating a Pool Plant means a plant or unit of from the supply plant to a distributing partially regulated distributing plant. plants specified in paragraphs (a) plant for an agreed-upon use other than 1135.77 Adjustment of accounts. Class I shall be excluded from the 1135.78 Charges on overdue accounts. through (e) of this section, but excluding a plant specified in paragraph (g) of this supply plant’s shipments in computing Administrative Assessment and Marketing section. The pooling standards the plant’s shipping percentage; and Service Deduction described in paragraphs (c) and (d) of (4) No plant may qualify as a pool 1135.85 Assessment for order this section are subject to modification plant due to a reduction in the shipping administration. pursuant to paragraph (f) of this section. percentage pursuant to paragraph (f) of 1135.86 Deduction for marketing services. (a) A distributing plant, other than a this section unless it has been a pool Authority: 7 U.S.C. 601–674. plant qualified as a pool plant pursuant supply plant during each of the to paragraph (b) of this section or immediately preceding 3 months. SubpartÐOrder Regulating Handling section 7(b) of any other Federal milk (d) A milk manufacturing plant located within the marketing area that is General Provisions order, from which during the month 25 percent or more of the total quantity of operated by a cooperative association if, § 1135.1 General provisions. fluid milk products physically received during the month or the immediately at the plant (excluding concentrated preceding 12-month period ending with The terms, definitions, and provisions milk received from another plant by the current month, 35% or more of such in part 1000 of this chapter apply to and agreement for other than Class I use) are cooperative’s member producer milk are hereby made a part of this order. In disposed of as route disposition or are (and any producer milk of nonmembers this part 1135, all references to sections transferred in the form of packaged fluid and members of another cooperative in part 1000 refer to part 1000 of this milk products to other distributing association which may be marketed by chapter. plants. At least 25 percent of such route the cooperative association) is Definitions disposition and transfers must be to physically received in the form of bulk outlets in the marketing area. fluid milk products (excluding § 1135.2 Western marketing area. (b) Any distributing plant located in concentrated milk transferred to a The marketing area means all territory the marketing area which during the distributing plant for an agreed-upon within the bounds of the following month processed at least 25 percent of use other than Class I) at plants states and political subdivisions, the total quantity of fluid milk products specified in paragraph (a) or (b) of this including all piers, docks and wharves physically received at the plant section either directly from farms or by connected therewith and all craft (excluding concentrated milk received transfer from supply plants operated by moored thereat, and all territory from another plant by agreement for the cooperative association and from occupied by government (municipal, other than Class I use) into ultra- plants of the cooperative association for State or Federal) reservations, pasteurized or aseptically-processed which pool plant status has been installations, institutions, or other fluid milk products. requested under this paragraph subject similar establishments if any part (c) A supply plant from which during to the following conditions: thereof is within any of the listed states the month the quantity of bulk fluid (1) The plant does not qualify as a or political subdivisions: milk products transferred or diverted to pool plant under paragraph (a), (b) or (c) plants described in paragraph (a) or (b) of this section or under comparable Utah of this section is 35 percent or more of provisions of another Federal order; and All of the State of Utah. the total Grade A milk received at the (2) The plant is approved by a duly Idaho Counties plant from dairy farmers (except dairy constituted regulatory agency for the farmers described in § 1135.12(b)) and handling of milk approved for fluid Ada, Adams, Bannock, Bear Lake, Bingham, Blaine, Boise, Bonneville, Camas, handlers described in § 1000.9(c) and consumption in the marketing area. Canyon, Caribou, Cassia, Elmore, Franklin, § 1135.11, including milk diverted by (e) Two or more plants located in the Gem, Gooding, Jefferson, Jerome, Lincoln, the plant operator, subject to the marketing area and operated by the Madison, Minidoka, Oneida, Owyhee, following conditions: same handler may qualify for pool plant Payette, Power, Twin Falls, Valley, and (1) A supply plant that has qualified status as a unit by together meeting the Washington. as a pool plant during each of the requirements specified in paragraph (a)

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The unit shall (6) A plant qualified pursuant to such person and which is delivered continue from month to month paragraph (c) of this section which also during the month for the account of thereafter without further notification. meets the pooling requirements of such person to the pool plant of another The handler shall notify the market another Federal order and from which handler or diverted pursuant to administrator in writing prior to the first greater qualifying shipments are made § 1135.13, subject to the following day of any month for which termination to plants regulated under the other conditions: or any change of the unit is desired. Federal order than are made to plants (a) Such person must operate a plant (f) The applicable shipping regulated under this order, or the plant located in the marketing area at which percentages of paragraphs (c) and (d) of has automatic pooling status under the milk is processed only into Class II, this section may be increased or other Federal order; and Class III, or Class IV products; and decreased by the market administrator if (7) That portion of a regulated plant (b) Prior to operating as a handler the market administrator finds that such designated as a nonpool plant that is pursuant to this paragraph, such person adjustment is necessary to encourage physically separate and operated must submit to the marker administrator needed shipments or to prevent separately from the pool portion of such a statement signed by the applicant and uneconomic shipments. Before making plant. The designation of a portion of a the operator of the pool plant to which such a finding, the market administrator regulated plant as a nonpool plant must the milk will be delivered specifying shall investigate the need for adjustment be requested in advance and in writing that the applicant will be the either on the market administrator’s by the handler and must be approved by responsible handler for the milk. own initiative or at the request of the market administrator. § 1135.12 Producer. interested parties if the request is made § 1135.8 Nonpool plant. in writing at least 15 days prior to the (a) Except as provided in paragraph month for which the requested revision See § 1000.8. (b) of this section, producer means any person who produces milk approved by is desired effective. If the investigation § 1135.9 Handler. shows that an adjustment of the a duly constituted regulatory agency for In addition to the handlers defined in fluid consumption as Grade A milk and shipping percentages might be § 1000.9, handler shall include a person appropriate, the market administrator whose milk (or components of milk) is: meeting the standards set forth in (1) Received at a pool plant directly shall issue a notice stating that an § 1135.11. from the producer or diverted by the adjustment is being considered and plant operator in accordance with invite data, views and arguments. Any § 1135.10 Producer-handler. § 1135.13; or decision to revise an applicable Producer-handler means a person (2) Received by a handler described in shipping percentage must be issued in who: § 1000.9(c) or § 1135.11. writing at least one day before the (a) Operates a dairy farm and a (b) Producer shall not include: effective date. distributing plant from which there is (1) A producer-handler as defined in (g) The term pool plant shall not route disposition in the marketing area any Federal order; apply to the following plants: during the month; (2) A dairy farmer whose milk is (1) A producer-handler as defined (b) Receives fluid milk products from delivered to an exempt plant, excluding under any Federal order; own farm production or milk that is producer milk diverted to the exempt (2) An exempt plant as defined in fully subject to the pricing and pooling plant pursuant to § 1135.13(d); 1000.8(e); provisions of this or another Federal (3) A dairy farmer whose milk is (3) A plant located within the order; diverted to a pool plant by a handler marketing area and qualified pursuant (c) Receives at its plant or acquires for regulated under another Federal order if to paragraph (a) of this section which route disposition no more than 150,000 the other Federal order designates the meets the pooling requirements of pounds of fluid milk products from dairy farmer as a producer under that another Federal order, and from which handlers fully regulated under any order and that milk is allocated by more than 50 percent of its route Federal order. This limitation shall not request to a utilization other than Class disposition has been in the other apply if the producer-handler’s own I;

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(4) A dairy farmer whose milk is to pool plants or diverted during the § 1135.17 [Reserved] reported as diverted to a plant fully month if each has filed a request in § 1135.18 Cooperative association. regulated under another Federal order writing with the market administrator See § 1000.18. with respect to that portion of the milk before the first day of the month the so diverted that is assigned to Class I agreement is to be effective. The request § 1135.19 Commercial food processing under the provisions of such other shall specify the basis for assigning establishment. order; and overdiverted milk to the producer See § 1000.19 (5) A dairy farmer whose milk was deliveries of each according to a method Handler Reports received at a nonpool plant during the approved by the market administrator. month from the same farm (except a (4) Diverted milk shall be priced at § 1135.30 Reports of receipts and nonpool plant that has no utilization of utilization. milk products in any Class other than the location of the plant to which diverted; Each handler shall report monthly so Class III or Class IV) as other than that the market administrator receives producer milk under this or any other (5) Any milk diverted in excess of the the report on or before the 7th day after Federal order. Such a dairy farmer shall limits prescribed in paragraph (d)(2) of the end of each month, in the detail and be known as a dairy farmer for other this section shall not be producer milk. on the forms prescribed by the market markets. If the diverting handler, cooperative administrator, as follows: association, or proprietary bulk tank § 1135.13 Producer milk. (a) Each handler that operates a pool handler fails to designate the dairy plant pursuant to § 1135.7 shall report Producer milk means the skim milk farmers’ deliveries that are not to be for each of its operations the following (or the skim equivalent of components producer milk, no milk diverted by the information: of skim milk), including nonfat handler, cooperative association, or (1) Product pounds, pounds of components, and butterfat in milk of a proprietary bulk tank handler during the butterfat, pounds of protein, and pounds producer that is: month to a nonpool plant shall be of solids-not-fat other than protein (a) Received by the operator of a pool producer milk. In the event some of the (other solids), contained in or plant directly from a producer, a milk of any producer is determined not represented by: handler described in § 1000.9(c), or a to be producer milk pursuant to this (i) Receipts of producer milk, handler described in § 1135.11. All milk paragraph, other milk delivered by such including producer milk diverted by the received pursuant to this paragraph producer as producer milk during the reporting handler, from sources other shall be priced at the location of the month will not be subject to than handlers described in § 1000.9(c) plant where it is first physically § 1135.12(b)(5); and and § 1135.11; and received; (ii) Receipts of milk from handlers (b) Received by a handler described in (6) The delivery day requirement in paragraph (d)(1) of this section and the described in § 1000.9(c) and § 1135.11; § 1000.9(c) or in § 1135.11 in excess of (2) Product pounds and pounds of diversion percentage in paragraph (d)(2) the quantity delivered to pool plants; butterfat contained in: (c) Diverted by a pool plant operator of this section may be increased or (i) Receipts of fluid milk products and to another pool plant. Milk so diverted decreased by the market administrator if bulk fluid cream products from other shall be priced at the location of the the market administrator finds that such pool plants; plant to which diverted; or revision is necessary to assure orderly (ii) Receipts of other source milk; and (d) Diverted by the operator of a pool marketing and efficient handling of milk (iii) Inventories at the beginning and plant, a cooperative association in the marketing area. Before making end of the month of fluid milk products described in § 1000.9(c), or a proprietary such a finding, the market administrator and bulk fluid cream products; bulk tank handler described in shall investigate the need for the (3) The utilization or disposition of all § 1135.11, to a nonpool plant, subject to revision either on the market milk and milk products required to be the following conditions: administrator’s own initiative or at the reported pursuant to this paragraph; and (1) Milk of a dairy farmer shall not be request of interested persons if the (4) Such other information with eligible for diversion unless at least one request is made in writing at least 15 respect to the receipts and utilization of day’s milk production of such dairy days prior to the month for which the skim milk, butterfat, milk protein, and farmer has been physically received as requested revision is desired effective. If other nonfat solids, as the market producer milk at a pool plant and the the investigation shows that a revision administrator may prescribe. dairy farmer has continuously retained might be appropriate, the market (b) Each handler operating a partially producer status since that time. If a administrator shall issue a notice stating regulated distributing plant shall report dairy farmer loses producer status under that the revision is being considered and with respect to such plant in the same this order (except as a result of a inviting written data, views, and manner as prescribed for reports temporary loss of Grade A approval), the arguments. Any decision to revise the required by paragraph (a) of this section. dairy farmer’s milk shall not be eligible delivery day requirement or the Receipts of milk that would have been for diversion until one day’s milk diversion percentage must be issued in producer milk if the plant had been production has been physically received writing at least one day before the fully regulated shall be reported in lieu as producer milk at a pool plant; effective date. of producer milk. The report shall show (2) Of the quantity of producer milk also the quantity of any reconstituted received during the month (including § 1135.14 Other source milk. skim milk in route disposition in the diversions) the handler diverts to See § 1000.14. marketing area. nonpool plants not more than 90 (c) Each handler described in percent; § 1135.15 Fluid milk product. §§ 1000.9(c) or 1135.11 shall report: (3) Two or more handlers described in (1) The product pounds, pounds of § 1000.9(c) may have their allowable See § 1000.15. butterfat, pounds of protein, and the diversions computed on the basis of pounds of solids-not-fat other than § 1135.16 Fluid cream product. their combined deliveries of producer protein (other solids) contained in milk which they caused to be delivered See § 1000.16. receipts of milk from producers; and

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(2) The utilization or disposition of price computed pursuant to § 1000.50(a) (d) Class IV value. such receipts. for Salt Lake County, Utah. (1) Multiply the pounds of nonfat (d) Each handler not specified in solids in Class IV skim milk by the paragraphs (a) through (c) of this section § 1135.52 Adjusted Class I differentials. nonfat solids price; and shall report with respect to its receipts See § 1000.52. (2) Add an amount obtained by and utilization of milk and milk § 1135.53 Announcement of class prices, multiplying the pounds of butterfat in products in such manner as the market component prices, and advanced pricing Class IV by the butterfat price. administrator may prescribe. factors. (e) Multiply the pounds of skim milk and butterfat overage assigned to each See § 1000.53. § 1135.31 Payroll reports. class pursuant to § 1000.44(a)(11) and (a) On or before the 21st day after the § 1135.54 Equivalent price. the corresponding step of § 1000.44(b) end of each month, each handler that See § 1000.54. by the skim milk prices and butterfat operates a pool plant pursuant to prices applicable to each class. § 1135.7 and each handler described in Producer Price Differential (f) Multiply the difference between § 1000.9(c) and in § 1135.11 shall report § 1135.60 Handler's value of milk. the current month’s Class I, II, or III price, as the case may be, and the Class to the market administrator its producer For the purpose of computing a IV price for the preceding month by the payroll for the month, in the detail handler’s obligation for producer milk, hundredweight of skim milk and prescribed by the market administrator, the market administrator shall butterfat subtracted from Class I, II, or showing for each producer the determine for each month the value of III, respectively, pursuant to information described in § 1135.73(e). milk of each handler with respect to § 1000.44(a)(7) and the corresponding (b) Each handler operating a partially each of the handler’s pool plants, and of step of § 1000.44(b); regulated distributing plant who elects each handler described in § 1000.9(c) to make payment pursuant to (g) Multiply the difference between and each handler described in the Class I price applicable at the § 1000.76(b) shall report for each dairy § 1135.11, with respect to milk that was farmer who would have been a producer location of the pool plant and the Class not received at a pool plant, by adding IV price by the hundredweight of skim if the plant had been fully regulated in the amounts computed in paragraphs (a) the same manner as prescribed for milk and butterfat assigned to Class I through (h) of this section and pursuant to § 1000.43(d) and the reports required by paragraph (a) of this subtracting from that total amount the section. hundredweight of skim milk and value computed in paragraph (i) of this butterfat subtracted from Class I § 1135.32 Other reports. section. Unless otherwise specified, the pursuant to § 1000.44(a)(3)(i) through skim milk, butterfat, and the combined In addition to the reports required (vi) and the corresponding step of pounds of skim milk and butterfat pursuant to §§ 1135.30 and 1135.31, § 1000.44(b), excluding receipts of bulk referred to in this section shall result each handler shall report any fluid cream products from plants from the steps set forth in § 1000.44(a), information the market administrator regulated under other Federal orders (b), and (c), respectively, and the nonfat deems necessary to verify or establish and bulk concentrated fluid milk components of producer milk in each each handler’s obligation under the products from pool plants, plants class shall be based upon the proportion order. regulated under other Federal orders, of such nonfat components in producer and unregulated supply plants. Classification of Milk skim milk. Receipts of nonfluid milk (h) Multiply the difference between products that are distributed as labeled § 1135.40 Classes of utilization. the Class I price applicable at the reconstituted milk for which payments location of the nearest unregulated See § 1000.40. are made to the producer-settlement supply plants from which an equivalent § 1135.41 [Reserved] fund of another Federal order under volume was received and the Class III § 1000.76(a)(4) or (d) shall be excluded price by the pounds of skim milk and § 1135.42 Classification of transfers and from pricing under this section. butterfat in receipts of concentrated diversions. (a) Class I value. fluid milk products assigned to Class I See § 1000.42. (1) Multiply the hundredweight of pursuant to § 1000.43(d) and skim milk in Class I by the Class I skim § 1135.43 General classification rules. § 1000.44(a)(3)(i) and the pounds of milk price; and skim milk and butterfat subtracted from (2) Add an amount obtained by See § 1000.43. Class I pursuant to § 1000.44(a)(8) and multiplying the pounds of butterfat in the corresponding step of § 1000.44(b), § 1135.44 Classification of producer milk. Class I by the Class I butterfat price. See § 1000.44. (b) Class II value. excluding such skim milk and butterfat (1) Multiply the pounds of nonfat in receipts of fluid milk products from § 1135.45 Market administrator's reports solids in Class II skim milk by the Class an unregulated supply plant to the and announcements concerning extent that an equivalent amount of classification. II nonfat solids price; and (2) Add an amount obtained by skim milk or butterfat disposed of to See § 1000.45. multiplying the pounds of butterfat in such plant by handlers fully regulated Class Prices Class II times the Class II butterfat price. under any Federal milk order is (c) Class III value. classified and priced as Class I milk and § 1135.50 Class prices, component prices, (1) Multiply the pounds of protein in is not used as an offset for any other and advanced pricing factors. Class III skim milk by the protein price; payment obligation under any order. See § 1000.50. (2) Add an amount obtained by (i) For reconstituted milk made from multiplying the pounds of other solids receipts of nonfluid milk products, § 1135.51 Class I differential and price. in Class III skim milk by the other solids multiply $1.00 (but not more than the The Class I differential shall be the price; and difference between the Class I price differential established at Salt Lake (3) Add an amount obtained by applicable at the location of the pool County, Utah, which is reported in multiplying the pounds of butterfat in plant and the Class IV price) by the § 1000.52. The Class I price shall be the Class III by the butterfat price. hundredweight of skim milk and

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On or before the administrator shall compute a producer 25th day of each month (except as price differential per hundredweight. Payments for Milk provided in § 1000.90) to each producer The report of any handler who has not § 1135.70 Producer-settlement fund. an amount not less than 1.2 times the made payments required pursuant to lowest class price for the preceding See § 1000.70. § 1135.71 for the preceding month shall month multiplied by the hundredweight not be included in the computation of § 1135.71 Payments to the producer- of milk received from such producer the producer price differential, and such settlement fund. during the first 15 days of the month, handler’s report shall not be included in Each handler shall make payment to less proper deductions authorized in the computation for succeeding months the producer-settlement fund in a writing by such producer to be made until the handler has made full payment manner that provides receipt of the from payments due pursuant to this of outstanding monthly obligations. funds by the market administrator no paragraph. Subject to the aforementioned later than the 14th day after the end of (2) Final Payment. On or before the conditions, the market administrator the month (except as provided in 17th day of the following month (except shall compute the producer price § 1000.90). Payment shall be the as provided in § 1000.90), not less than differential in the following manner: amount, if any, by which the amount an amount computed by the sum of the (a) Combine into one total the values specified in paragraph (a) of this section following: computed pursuant to § 1135.60 for all exceeds the amount specified in (i) The hundredweight of producer handlers required to file reports paragraph (b) of this section: milk received times the producer price differential for the month as adjusted prescribed in § 1135.30; (a) The total value of milk to the pursuant to § 1135.75; (b) Subtract the total values obtained handler for the month as determined (ii) The pounds of butterfat in by multiplying each handler’s total pursuant to § 1135.60. producer milk received times the pounds of protein, other solids, and (b) The sum of: butterfat contained in the milk for butterfat price for the month; (1) An amount obtained by which an obligation was computed (iii) The pounds of protein in multiplying the total hundredweight of pursuant to § 1135.60 by the protein producer milk received times the producer milk as determined pursuant price, the other solids price, and the protein price for the month; to § 1000.44(c) by the producer price butterfat price, respectively; (iv) The pounds of other solids in differential as adjusted pursuant to producer milk received times the other (c) Add an amount equal to the sum § 1135.75; of the location adjustments computed solids price for the month; (2) An amount obtained by pursuant to § 1135.75; (v) [Reserved] multiplying the total pounds of protein, (vi) Less any payments made pursuant (d) Add an amount equal to not less other solids, and butterfat contained in to paragraph (a)(1) of this section; than one-half of the unobligated balance producer milk by the protein, other (vii) Less proper deductions in the producer-settlement fund; solids, and butterfat prices respectively; authorized in writing by such producer (e) Divide the resulting amount by the (3) [Reserved] and plus or minus adjustments for sum of the following for all handlers (4) An amount obtained by errors in previous payments to such included in these computations: multiplying the pounds of skim milk producer subject to approval by the (1) The total hundredweight of and butterfat for which a value was market administrator; and producer milk; and computed pursuant to § 1135.60(h) by (viii) Less deductions made for (2) The total hundredweight for which the producer price differential as marketing service pursuant to § 1000.86. a value is computed pursuant to adjusted pursuant to § 1135.75 for the (b) One day prior to the dates on § 1135.60(h); and location of the plant from which which partial and final payments are (f) Subtract not less than 4 cents nor received. due pursuant to paragraph (a) of this more than 5 cents from the price section, each pool plant operator shall computed pursuant to paragraph (e) of § 1135.72 Payments from the producer- pay a cooperative association for milk this section. The result shall be known settlement fund. received as follows: as the producer price differential for the No later than the 15th day after the (1) Partial payment to a cooperative month. end of each month (except as provided association for bulk milk received in § 1000.90), the market administrator directly from producers’ farms. For bulk § 1135.62 Announcement of producer prices. shall pay to each handler the amount, if milk (including the milk of producers any, by which the amount computed who are not members of such On or before the 12th day after the pursuant to § 1135.71(b) exceeds the association and who the market end of each month, the market amount computed pursuant to administrator determines have administrator shall announce publicly § 1135.71(a). If, at such time, the balance authorized the cooperative association the following prices and information: in the producer-settlement fund is to collect payment for their milk) (a) The producer price differential; insufficient to make all payments received during the first 15 days of the (b) The protein price; pursuant to this section, the market month from a cooperative association in (c) The nonfat solids price; administrator shall reduce uniformly any capacity, except as the operator of (d) The other solids price; such payments and shall complete the a pool plant, the payment shall be an (e) The butterfat price; payments as soon as the funds are amount not less than 1.2 times the (f) [Reserved] available. lowest class price for the preceding

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For bulk fluid milk products this section, the handler may reduce pro may be, shall be used to adjust the and bulk fluid cream products received rata its payments to producers or to the payments required pursuant to during the first 15 days of the month cooperative association by not more §§ 1135.73 and 1000.76. from a cooperative association in its than the amount of such underpayment. capacity as the operator of a pool plant, The payments shall be completed on the § 1135.76 Payments by a handler the partial payment shall be at the pool operating a partially regulated distributing next scheduled payment date after plant. plant operator’s estimated use value of receipt of the balance due from the the milk using the most recent class market administrator. See § 1000.76. prices available at the receiving plant’s (d) If a handler claims that a required § 1135.77 Adjustment of accounts. location. payment to a producer cannot be made See § 1000.77. (3) Final payment to a cooperative because the producer is deceased or association for milk transferred from its cannot be located, or because the § 1135.78 Charges on overdue accounts. pool plant. For the total quantity of bulk cooperative association or its lawful See § 1000.78. fluid milk products and bulk fluid successor or assignee is no longer in cream products received from a existence, the payment shall be made to Administrative Assessment and cooperative association in its capacity as the producer settlement fund, and in the Marketing Service Deduction the operator of a pool plant, the final event the handler subsequently locates payment shall be at not less than the § 1135.85 Assessment for order and pays the producer or a lawful administration. total value of such products received claimant, or in the event that the from the association’s pool plants, as handler no longer exists and a lawful See § 1000.85. determined by multiplying the claim is later established, the market § 1135.86 Deduction for marketing respective quantities assigned to each administrator shall make the required services. class under § 1000.44, as follows: payment from the producer-settlement See § 1000.86. (i) The hundredweight of Class I skim fund to the handler or to the lawful milk times the Class I skim milk price claimant, as the case may be. Note: Appendices A through F are to the for the month plus the pounds of Class (e) In making payments to producers Preamble and will not be condified in Title 7 of the Code of Federal Regulations. I butterfat times the Class I butterfat pursuant to this section, each handler price for the month. The Class I prices shall furnish each producer, except a Appendix A: Summary of Preliminary to be used shall be the prices effective producer whose milk was received from Suggested Order Consolidation Report at the location of the receiving plant; a cooperative association handler Ten marketing areas are suggested in the (ii) The pounds of nonfat solids in described in § 1000.9 (a) or (c), a preliminary consolidation report. As a means Class II skim milk by the Class II nonfat supporting statement in a form that may of determining where interrelationships solids price; be retained by the recipient which shall among the current marketing areas are (iii) The pounds of butterfat in Class show: strongest, data relating to the receipts and II times the Class II butterfat price; (1) The name, address, Grade A distribution of fluid milk products by (iv) The pounds of nonfat solids in distributing plants were gathered for all identifier assigned by a duly constituted known distributing plants located in the 47 Class IV times the nonfat solids price; regulatory agency, and payroll number (v) The pounds of butterfat in Class III contiguous States, not including the State of of the producer; and Class IV milk times the butterfat California, for the month of October 1995. At (2) The daily and total pounds, and price; this time, California is not included as a (vi) The pounds of protein in Class III the month and dates such milk was suggested order area. The 1996 Farm Bill allows for the inclusion of a California milk times the protein price; received from that producer; (3) The total pounds of butterfat, Federal milk order if California producers (vii) The pounds of other solids in petition for and approve an order. If a Class III milk times the other solids protein, and other solids contained in the producer’s milk; California order were included in the price; and (viii) Add together the suggested Federal order structure at a later amounts computed in paragraphs (b)(3) (4) [Reserved] time, it would encompass the entire State (i) through (vii) of this section and from (5) The minimum rate or rates at and would include no area outside the State that sum deduct any payment made which payment to the producer is of California. Although interest in a Federal pursuant to paragraph (b)(1) of this required pursuant to this order; order has been expressed by some California section. (6) The rate used in making payment producer groups, no definite action has been (4) Final payment to a cooperative if the rate is other than the applicable taken. minimum rate; An analysis of the distribution and association for bulk milk received procurement patterns of the fluid processing directly from producers’ farms. For bulk (7) The amount, or rate per hundredweight, or rate per pounds of plants, along with other factors, was used to milk received from a cooperative determine which order areas were most association during the month, including component, and the nature of each closely related. Proposals submitted by the the milk of producers who are not deduction claimed by the handler; and public were also taken into account. The members of such association and who (8) The net amount of payment to the primary criteria used in determining which the market administrator determines producer or cooperative association. markets exhibit a sufficient degree of association in terms of sales, procurement, have authorized the cooperative § 1135.74 [Reserved] association to collect payment for their and structural relationships to warrant consolidation were: milk, the final payment for such milk § 1135.75 Plant location adjustments for producer milk and nonpool milk. 1. Overlapping route disposition. shall be an amount equal to the sum of 2. Overlapping areas of milk supply. the individual payments otherwise For purposes of making payments for 3. Number of handlers within a market. payable for such milk pursuant to producer milk and nonpool milk, a 4. Natural boundaries. paragraph (a)(2) of this section. plant location adjustment shall be 5. Cooperative association service areas.

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6. Features common to existing orders, association evidenced by cooperative 7. CENTRAL—current marketing areas of such as similar multiple component pricing association proposals to consolidate these the Southern Illinois-Eastern Missouri (less payment plans. three marketing areas. Further, the 12 counties included in the suggested 7. Milk utilization in common dairy cooperative associations in this area have Mideast marketing area), Central Illinois, products. worked together for a number of years to Greater Kansas City, Nebraska-Western Iowa The requirement to consolidate existing accommodate needed movements of milk (less 11 currently-regulated counties marketing areas does not specify expansion between the three Florida Federal orders. suggested to be unregulated), Eastern South of regulation to previously nonfederally 4. SOUTHEAST—current marketing area Dakota, Iowa, Southwest Plains, and Eastern of the Southeast Federal milk order, plus 1 regulated areas where such expansion would Colorado Federal milk orders, plus 63 county from the Louisville-Lexington- have the effect of regulating handlers not currently-unregulated counties in seven of currently regulated. However, a number of Evansville Federal milk order marketing area, the states. Major criteria suggesting this the current marketing areas enclose 15 currently unregulated Kentucky counties, consolidation include the overlapping unregulated areas. These ‘‘pockets’’ are and 2 currently unregulated northeast Texas procurement and route disposition between included in the suggested merged marketing counties. Major reasons for this consolidation areas only if their inclusion does not change include sales and procurement area overlaps the current orders. The suggested the current regulatory status of a plant. In the between the Southeast order and the consolidation would result in a concentration process of consolidating marketing areas, Kentucky and Texas counties suggested for of both the sales and supplies of milk within some handlers who currently are partially inclusion. There is minimal sales area the consolidated marketing area. The regulated may become fully regulated overlap with handlers regulated under other suggested consolidation would combine because their sales in a combined marketing Federal orders. several relatively small orders and provide area will likely meet the pooling standards of 5. MIDEAST—current marketing areas of for the release of market data without a suggested consolidated order. Further the Ohio Valley, Eastern Ohio-Western revealing proprietary information. In expansion of the marketing areas, which Pennsylvania, Southern Michigan, and addition, most of the producers in these areas would result in regulating additional Indiana Federal milk orders, plus most of the share membership in several common handlers, is an issue that should be current marketing area of the Louisville- cooperatives. addressed by the industry. Proposals to take Lexington-Evansville Federal milk order, 8. SOUTHWEST—current marketing areas such action should be accompanied by Zone 2 of the Michigan Upper Peninsula of the Texas, New Mexico-West Texas, and Federal milk order, and 12 counties of the supporting data, views, and arguments Central Arizona Federal milk orders. Major Southern Illinois-Eastern Missouri Federal concerning the need and basis for any such criteria suggesting consolidation include expansion. milk order. Major criteria suggesting this consolidation include the overlap of fluid sales and procurement area overlaps and The 10 suggested consolidated marketing common cooperative association membership areas and the major reasons for consolidation sales in the Ohio Valley marketing area by handlers from the other areas suggested to be between the Texas and New Mexico-West are: Texas marketing areas, and similar marketing 1. NORTHEAST—current marketing areas consolidated. With the consolidation, most route disposition by handlers located within concerns with respect to trade with Mexico of the New England, New York-New Jersey, for all three orders. In addition, there is some and Middle Atlantic Federal milk orders. the suggested Mideast order would be within the marketing area. Also, nearly all milk route disposition by Central Arizona Reasons for consolidation include the produced within the area would be pooled handlers into the New Mexico-West Texas existence of overlapping sales and under the consolidated order. The portion of marketing area, and the Central Arizona procurement areas between New England the Michigan Upper Peninsula marketing market contains a small number of handlers. and New York-New Jersey and between New area suggested to be included in the Mideast 9. WESTERN—current marketing areas of York-New Jersey and Middle Atlantic. The consolidated area has sales and milk the Western Colorado, Southwestern Idaho- orders are also surrounded by nonfederally procurement areas in common with the Eastern Oregon, and Great Basin Federal regulated territory. A further measure of Southern Michigan area and has minimal association is evident by industry efforts to milk orders. Major criteria suggesting association with the western end of the consolidation include overlapping sales study and pursue consolidation of the three current Michigan Upper Peninsula marketing Federal orders, as well as some of the between Southwestern Idaho-Eastern Oregon area. and Great Basin, as well as a significant nonfederally regulated territory, prior to the 6. UPPER MIDWEST—current marketing 1996 Farm Bill. overlap in procurement for the two orders in areas of the Chicago Regional and Upper five Idaho counties. The two orders also 2. APPALACHIAN—current marketing Midwest Federal milk orders, plus Zones I share a similar multiple component pricing areas of the Carolina and Tennessee Valley and I(a) of the Michigan Upper Peninsula plan. The Western Colorado order is Federal milk orders, and a portion of the Federal milk order and seven unregulated or Louisville-Lexington-Evansville Federal milk partly unregulated Wisconsin counties. Major included because it is a small market where order. Overlapping sales and procurement consolidation criteria include an overlapping data cannot be released without revealing areas between these marketing areas are procurement area between the Chicago confidential information unless combined major factors for supporting such a Regional and Upper Midwest orders, with the adjacent Great Basin order. consolidation. overlapping procurement and route 10. PACIFIC NORTHWEST—current 3. FLORIDA—current marketing areas of disposition area between the western end of marketing area of the Pacific Northwest the Upper Florida, Tampa Bay, and the Michigan Upper Peninsula order and the Federal milk order plus 1 currently- Southeastern Florida Federal milk orders. Chicago Regional order, natural boundary unregulated county in Oregon. The degree of Natural boundary limitations and limitations, and the prevalence of cheese as association with other marketing areas is overlapping sales and procurement areas a major manufactured product for the insufficient to warrant consolidation. among the three orders are major reasons for substantial reserve milk supplies that exceed Following is a table summarizing relevant consolidation, as well as a measure of fluid milk needs. data for the consolidated markets:

CONSOLIDATED MARKET SUMMARY [Based on October 1995 data]

Number of Combined Total producer fully regulated class I utiliza- Consolidated order milk distributing tion (1,000 lbs.) plants (percent)

Northeast ...... 1,934,833 85 46.7 Appalachian ...... 320,198 25 82.5 Florida ...... 200,397 18 88.3 Southeast ...... 443,921 38 84.3

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CONSOLIDATED MARKET SUMMARYÐContinued [Based on October 1995 data]

Number of Combined Total producer fully regulated class I utiliza- Consolidated order milk distributing tion (1,000 lbs.) plants (percent)

Mideast ...... 11,140,952 68 57.8 Upper Midwest ...... 2 1,046,539 27 4 34.2 Central ...... 932,929 42 50.6 Southwest ...... 861,307 31 48.3 Western ...... 304,793 14 5 31.7 Pacific Northwest ...... 501,257 23 36.3 Total ...... 7,687,126 371 n/a

1 Producer milk for F.O. 44 is included. Producer milk for a F.O. 32 handler who would be pooled under the suggested Mideast market is in- cluded in the Central consolidated market. 2 Producer milk for F.O. 30 and F.O. 68 only. 3 Producer milk for a F.O. 32 handler that would be in the Mideast consolidated market is included. 4 A significant amount of producer milk was not pooled in October 1995. Estimated total producer milk would result in a 15.3% combined Class I utilization. 5 A significant amount of producer milk was not pooled in October 1995. Estimated total producer milk would result in a 21.8% combined Class I utilization.

Appendix B: Summary of Pricing Options annual basis and a differential equal to $2.00 • Eggnog would be reclassified from Class Several options for modifying Class I + $0.075(Class I use %—70%) in markets II to Class I. • pricing under the Federal milk market order where the Class I utilization is equal to or Any fluid beverage having less than 6.5 program, representing a spectrum of views, exceeds 70 percent. percent nonfat milk solids would be are discussed in this summary report. The Option 4: Demand-Based Differential— reclassified from Class II to Class I. • accompanying technical report summarizes $1.00 per hundredweight fixed differential Cream cheese would be reclassified from all of the comments and proposals received plus a transportation credit based on location Class III to Class II. by the Department related to Class I pricing of reserve milk supplies. The technical report recommends changing under Federal orders. Estimated Class I differentials are the classification of milk used in nonfat dry Most Class I pricing concepts that were presented for each option to provide a milk from Class III–A to Class III. The report suggested would continue to employ a preliminary basis for determining impacts recommends that if Class III–A pricing is not market-driven basic formula price (BFP) with that may occur. The report provides eliminated, the following four alternatives be an added differential. Differentials are a estimated differentials for the suggested 10 considered: composite of one or more of the following consolidated orders and for the current 32 • Place a floor beneath the Class III–A elements: (1) A fixed component, (2) a Federal milk marketing orders. price; location adjustment, (3) an adjustor relating The report concludes by soliciting • Restrict III–A pricing to certain months to utilization, or (4) the cost of balancing the comments on the options presented and or to certain markets; market. Based on the pricing concepts poses a series of questions for the public to • Provide an up-charge for nonfat dry milk received, the following options were address when submitting comments back to used in higher-valued products; or developed: the Department on the issue of Class I • Provide for a combination of these Option 1A: Location-Specific Differential— pricing. options. $1.60 per hundredweight fixed differential Maintaining the classification of milk used Appendix C: Summary of Classification for three surplus regions (Upper Midwest, to make nonfat dry milk in Class III–A is also Report West, and Southwest) within a nine-zone an option, although not discussed in the national price surface, plus for the other six The Agricultural Marketing Agreement Act technical report. zones an added component that reflects of 1937 provides that all milk should be The technical report addresses Class III–A regional differences in the value of fluid and classified ‘‘in accordance with the form in pricing because of industry concerns about manufacturing milk. which or the purpose for which it is used.’’ the substitution of nonfat dry milk for fluid Option 1B: Modified Location-Specific This has resulted in a system of uniform milk in Class II and III uses when the Class Differential Option—$1.00 per classification provisions that places milk III–A price is substantially below the Class III hundredweight fixed differential plus an used for fluid purposes in the highest use price. added component that reflects the cost of class, Class I, and other manufactured moving bulk milk to deficit markets. products in lower classes, Classes II, III, and Appendix D: Summary of Identical Option 2: Relative Use Differential—$1.60 III–A. Provisions Report per hundredweight fixed differential plus a Currently products packaged for fluid Federal milk marketing orders contain formula-based differential driven by the ratio consumption such as whole milk, skim milk, numerous provisions that establish the of Class I milk to all other uses of milk. buttermilk, and flavored milk drinks are regulations for the operation of the orders. Option 3A: Flat Differential Option—$1.60 classified as Class I products. Class II Over the years, the orders have been per hundredweight flat differential, products include ice cream, yogurt, cottage individualized to account for specific uniformly applied across all orders to cheese, and cream. Class III and Class III–A situations associated with a given marketing generate an identical minimum Class I price. products include cheese, butter, and nonfat area. However, there are several provisions Option 3B: Flat Differential Modified by dry milk. within the orders that are similar or that Class I Use—$2.00 per hundredweight Among the changes in classification could be similar and still provide for efficient differential in markets where Class I recommended in the technical report are the and orderly marketing of milk. utilization is less than 70 percent on an following: The technical report does the following:

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• Suggests a model for establishing the and analysis of its own. The BFP Committee regions, and a new Arizona-Las Vegas area consolidated orders and provides suggestions evaluated alternatives to the BFP against the was added. on the order language that can be adopted criteria of stability, predictability, simplicity, An analysis of the distribution and uniformly throughout all orders. uniformity, transparency, sound economics procurement patterns of the fluid processing • Reviewed, simplified, modified, and and reduced regulation. Options identified plants, along with other factors, was used to eliminated differences in order provisions by the Committee were grouped into the determine which order areas were most that: following categories: closely related. Proposals submitted by the • Define various terms used in the orders. Options Considered: Economic formulas public were also taken into account. The • Establish regulatory standards for plants Product price and component formulas primary criteria used in determining which and handlers. Futures markets markets exhibit a sufficient degree of • Provide for uniform reporting dates of California pricing association in terms of sales, procurement, milk receipts and utilization. Cost of production and structural relationships to warrant • Provide for uniform dates for payment of Informal rulemaking consolidation continued to be: milk. Competitive pay price 1. Overlapping route disposition. • Provide for computation of a uniform Pooling differentials only 2. Overlapping areas of milk supply. 3. Number of handlers within a market. price. At this time, the Committee has identified • Reduces performance standards to make 4. Natural boundaries. four options for further discussion and 5. Cooperative association service areas. it easier for producers to associate with a debate: market. • 6. Features common to existing orders, A four-class, multiple component pricing such as similar multiple component pricing At this time, it is impossible to determine plan to price butterfat, protein and lactose if there would be any financial impact on plans. used in cheese (Class III), and butterfat and 7. Milk utilization in common dairy producers, handlers, or consumers as a result nonfat solids used in butter/powder (Class of any of these suggested provision revisions. products. IV). In the initial preliminary report, it was It is projected that there will be little impact • A three-class, multiple component observed that the Farm Bill requirement to on the overall program because the changes pricing plan to price protein used in cheese, primarily provide for uniformity. There may consolidate existing marketing areas does not butterfat used in butter, and other nonfat specify expansion of regulation to previously be minimal impact on selected individual solids used in powder (Class III—one non-Federally regulated areas where such producers, handlers, or consumers, but this manufacturing class). expansion would have the effect of regulating cannot be determined until more specific • A product price formula computed from handlers not currently regulated. This information is developed regarding the the butter, powder and cheese shares of U.S. revised preliminary report suggests that some orders (i.e., marketing area and pricing). The production, using seasonal product yields currently non-Federally regulated area be suggested identical provisions will be and a California cost-based make allowance; added on the basis of comments supported applied to each of the suggested consolidated and by data, views and arguments filed by orders and determinations will be based on • A competitive pay price series using a interested persons. Specifically, unregulated the marketing conditions of the given region. national weighted average price paid for areas contiguous to the initial suggested One suggested change in the report that Grade A milk used in manufactured consolidated Northeast and Mideast may stimulate some debate is the definition products, updated by a product price marketing areas are suggested for inclusion in of a producer-handler. The technical report formula. The price series would contain an those suggested order areas. Some handlers suggests applying the most liberal standard to adjuster to attempt to remove the effect of currently not subject to full Federal order the producer-handler definition to prevent current regulation and to reduce it to a level regulation would become pool plants if the any producer-handler from becoming more comparable to the current BFP. suggested areas are added. Handlers who regulated as a result of milk order reform. As a basis for Class I prices, the BFP could would be affected will be notified of the Producer-handlers have been exempt from be made more stable by using an economic possible change in their status, and full regulation because they assume the full formula or using a moving average of a encouraged to comment. risks associated with being a producer and a manufacturing price. Class II prices could be As in the initial preliminary report, distributor of milk produced with only based on components or continue to include ‘‘pockets’’ of unregulated areas enclosed in occasional and small volumes of milk being a differential from the manufacturing price the current marketing areas are included in purchased from other dairy farmers. level. the suggested consolidated marketing areas if The BFP Committee is continuing to study Appendix E: Summary of Basic Formula their inclusion does not change the current and analyze alternatives in response to Price Report regulatory status of a plant. However, in the public comments. process of consolidating marketing areas, The basic formula price (BFP) is used to Appendix F: Summary of Revised some handlers who currently are partially determine Federal order prices for milk used regulated may become fully regulated in manufactured products and, with the Preliminary Suggested Order Consolidation Report because their sales in a combined marketing addition of differentials, to determine area will meet the pooling standards of a minimum Class I and II prices for milk The ten marketing areas suggested in the suggested consolidated order area. As a pooled under the Federal orders. The current initial preliminary consolidation report have result, this report suggests that some BFP is based on a survey of prices paid for increased to eleven and been modified to unregulated areas contiguous to currently- manufacturing grade (Grade B) milk by plants some extent in this revised preliminary regulated areas be added to Federal order in Minnesota and Wisconsin, updated by report. Several of the initially suggested areas where additional handlers would be month-to-month changes in commodity marketing areas were the subjects of affected. prices (especially cheese). The continuing numerous comments containing information The 11 modified suggested marketing areas decline in the volume of Grade B milk that indicated that the boundaries of those (with those modified from the initial produced in the upper Midwest and areas should be re-evaluated. In addition, preliminary report, and the modifications, nationally is an indication that, in the near shifts in regulation and distributing plant marked by *) and the major reasons for future, the M–W price series may not be distribution areas were known to have consolidation are: statistically reliable as an indicator of the occurred. As a result, more detailed and *1. NORTHEAST—current marketing areas value of milk used in manufactured products. updated (January 1997) data was obtained of the New England, New York-New Jersey, The BFP Committee has received input relating to the receipts of producer milk and and Middle Atlantic Federal milk orders, provided during a public BFP Forum held in distribution of fluid milk products by *with the addition of: contiguous unregulated Madison, Wisconsin, and from over 200 distributing plants in a number of the areas of New Hampshire, Vermont and New written public comments, and conducted a initially-suggested order marketing areas. As York; the western non-Federally regulated survey of transaction prices for manufactured a result, changes were made in the suggested portion of Massachusetts, the Western New dairy products. The Committee also has marketing areas of the Northeast, York State order area, and Pennsylvania Milk sponsored analysis by a group of university Appalachian, Southeast, Mideast, Upper Marketing Board Areas 2 and 3 in researchers, and conducted extensive study Midwest, Central, Southwest, and Western northeastern Pennsylvania.

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Reasons for consolidation include the counties in New York, and *minus the Central order in the initial Preliminary existence of overlapping sales and Louisville-Lexington-Evansville order area, Report would be pooled under a consolidated procurement areas between New England 12 counties in Illinois, and unregulated Upper Midwest order under this revised and New York-New Jersey and between New counties in Indiana and Kentucky that are report. York-New Jersey and Middle Atlantic. In being suggested for inclusion in the *7. CENTRAL—current marketing areas of several cases, handlers who would become Appalachian area. the Southern Illinois-Eastern Missouri, regulated because their total sales in the Major criteria suggesting this consolidation Central Illinois, Greater Kansas City, combined areas would meet pooling include the overlap of fluid sales in the Ohio Southwest Plains, and Eastern Colorado standards are located in areas where they Valley marketing area by handlers from the Federal milk orders, 10 counties currently in compete with handlers who would not be other areas suggested to be consolidated. the Nebraska-Western Iowa Federal order similarly regulated. Handler equity suggests With the consolidation, most route area, plus 55 currently-unregulated counties that these handlers, too, should become disposition by handlers located within the in Kansas, Missouri, Illinois, Nebraska and regulated. Another important measure of suggested Mideast order would be within the Colorado, *plus the 12 counties in the association is evidenced by industry efforts marketing area. Also, nearly all milk current Southern Illinois-Eastern Missouri to study and pursue consolidation of the produced within the area would be pooled area that initially were suggested as part of three Federal orders, as well as some of the under the consolidated order. The portion of the consolidated Mideast area, *minus the nonfederally regulated territory, prior to the the Michigan Upper Peninsula marketing Eastern South Dakota, Iowa and most of the 1996 Farm Bill. area suggested to be included in the Mideast Nebraska-Western Iowa Federal order Sixteen additional distributing plants consolidated area has sales and milk marketing areas. would be pooled as a result of the expansion procurement areas in common with the Major criteria suggesting this consolidation of the consolidated area. Nine of these plants Southern Michigan area and has minimal include the overlapping procurement and currently are partially regulated. association with the western end of the route disposition between the current orders. *2. APPALACHIAN—current marketing current Michigan Upper Peninsula marketing The suggested consolidation would result in areas of the Carolina and Tennessee Valley area. a concentration of both the sales and supplies Federal milk orders, *with the addition of: all Collection of additional data and recent of milk within the consolidated marketing of the Louisville-Lexington-Evansville changes in marketing patterns indicate that area. The suggested consolidation would Federal order area (except one county—in the the relationship between the Louisville- combine several relatively small orders and suggested Southeast area) and 26 currently- Lexington-Evansville (L–L–E) area and the provide for the release of market data without unregulated counties in Indiana and order areas initially included in the revealing proprietary information. In Kentucky. suggested Appalachian area is closer than addition, most of the producers in these areas relationship between L–L–E and the Mideast More detailed and updated data showing share membership in several common area. overlapping sales and procurement areas cooperatives. Seven distributing plants that would not between these marketing areas are major *8. SOUTHWEST—current marketing areas have been pool plants as a result of the factors for supporting such a consolidation. of Texas and New Mexico-West Texas initially-suggested consolidation would 3. FLORIDA—current marketing areas of Federal milk orders, *with the addition of: become pool plants due to the suggested the Upper Florida, Tampa Bay, and expansion of the consolidated area into two northeast Texas counties previously Southeastern Florida Federal milk orders. Pennsylvania and New York. The number of suggested to be added to the Southeast Natural boundary limitations and pool plants also is affected by a shift of pool marketing area, and 47 currently-unregulated overlapping sales and procurement areas plants from one consolidated area to another counties in southwest Texas, and *minus the among the three orders are major reasons for because of the shift of territory from the Central Arizona marketing area. consolidation, as well as a measure of initially-suggested Mideast area to the Major criteria suggesting consolidation association evidenced by cooperative revised suggested Appalachian area. include sales and procurement area overlaps association proposals to consolidate these *6. UPPER MIDWEST—current marketing and common cooperative association three marketing areas. Further, the areas of the Chicago Regional, Upper membership between the Texas and New cooperative associations in this area have Midwest, Zones I and I(a) of the Michigan Mexico-West Texas marketing areas, and worked together for a number of years to Upper Peninsula Federal milk orders, and similar marketing concerns with respect to accommodate needed movements of milk unregulated portions of Wisconsin, *with the trade with Mexico for both orders. Addition between the three Florida Federal orders. addition of: the Iowa, Eastern South Dakota, of the currently-unregulated Texas counties *4. SOUTHEAST—current marketing area and most of the Nebraska-Western Iowa will result in the regulation of no additional of the Southeast Federal milk order, plus 1 Federal order areas, plus currently- handlers, and will reduce handlers’ county from the Louisville-Lexington- unregulated counties in Iowa and Nebraska. recordkeeping and reporting burden and the Evansville Federal milk order marketing area, Major consolidation criteria include an market administrator’s administrative costs. plus 15 currently-unregulated Kentucky overlapping procurement area between the In the initial consolidation report, the Central counties, *minus 2 currently-unregulated Chicago Regional and Upper Midwest orders Arizona area was found to have a minimal counties in northeast Texas (in the suggested and overlapping procurement and route association with the New Mexico-West Texas Southwest area). disposition area between the western end of and Texas order areas. Further analysis Major reasons for this consolidation the Michigan Upper Peninsula order and the showed that it has a much more significant include sales and procurement area overlaps Chicago Regional order. More-detailed and degree of association with the Clark County, between the Southeast order and this county. updated information revealed more Nevada, portion of the current Great Basin There is minimal sales area overlap with significant overlapping procurement and order area. handlers regulated under other Federal route disposition areas between the Iowa, The revised suggested consolidated orders. Collection of additional data showed Eastern South Dakota and Nebraska-Western Southwest area would include 4 fewer fully greater disposition in the two Texas counties orders and Chicago Regional and Upper regulated pool plants as a result of the from Texas handlers than from Southeast Midwest orders than had been observed in removal of the Central Arizona area. handlers. There are no handlers in these two the initial study. In addition, a common *9. ARIZONA-LAS VEGAS—*an eleventh counties that would be affected. pricing plan for producers, natural boundary marketing area composed of the current *5. MIDEAST—current marketing areas of limitations, and the prevalence of cheese as marketing area of the Central Arizona order the Ohio Valley, Eastern Ohio-Western a major manufactured product for the and the Clark County, Nevada, portion of the Pennsylvania, Southern Michigan, and substantial reserve milk supplies that exceed current Great Basin marketing area, plus Indiana Federal milk orders, plus Zone 2 of fluid milk needs exist in these orders. Some eight currently-unregulated Arizona counties. the Michigan Upper Peninsula Federal milk of the western Nebraska area is more closely The major criterion suggesting order, and currently-unregulated counties in associated with the Eastern Colorado area, consolidation is sales overlap between the Michigan, Indiana, and Ohio *with the however, and is suggested to remain with the sole Las Vegas, Nevada, handler and handlers addition of: Pennsylvania Milk Marketing Central consolidated area. regulated under the Central Arizona order in Board Area 6 (in western/central Eleven additional handlers that would both Clark County, Nevada, and unregulated Pennsylvania) and 2 currently-unregulated have been pooled under the consolidated portions of northern Arizona. In addition,

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CONSOLIDATED MARKET SUMMARY [Based on October 1995 Data]

Number of fully regulated Total producer milk Combined class I use Weighted average utiliza- distributing plants (1000 lbs.) (percent) tion value Consolidated order Revised Revised Initial report Revised Initial report Revised Initial report Initial report report report 1 report report

Northeast ...... 85 92 1,934,833 2,102,620 46.7 49.0 $13.44 $13.49 Appalachian ...... 25 29 320,198 2 412,813 82.5 81.5 14.11 13.94 Florida ...... 18 16 3 200,397 204,541 88.3 88.3 15.05 15.05 Southeast ...... 38 40 4 443,921 442,705 84.3 84.3 14.26 14.25 Mideast ...... 68 68 5 1,140,952 1,103,366 57.8 57.2 12.96 12.94 Upper Midwest ...... 27 39 6 1,046,539 1,354,209 7 34.2 8 37.6 12.59 12.62 Central ...... 42 30 9 932,929 599,334 50.6 53.5 13.15 13.21 Southwest ...... 31 26 861,307 680,232 48.3 48.1 13.36 13.39 Arizona-Las Vegas ...... N/A 7 N/A 10 181,075 N/A 48.9 N/A 13.26 Western ...... 14 11 304,793 293,714 11 31.7 12 29.6 12.79 12.78 Pacific Northwest ...... 23 21 501,257 493,207 36.3 35.6 12.45 12.44

Total ...... 371 379 7,687,126 7,867,816 N/A N/A N/A N/A Consolidated Market Summary Table Footnotes 1 Initial report producer deliveries, adjusted to include only those handlers who would be fully regulated (i.e. Status = 1) in the revised sug- gested marketing area, unless otherwise noted. When applicable, producer deliveries for currently non-Federally regulated plants which would be fully regulated in a revised suggested consolidated order are included in the appropriate suggested consolidated order. 2 Includes producer milk for one currently fully regulated plant which would be exempt (i.e. Status = 3B) in the Appalachian market in the re- vised preliminary report. 3 Excludes producer milk for one currently fully regulated F.O. 7 plant which would be regulated in the Florida market in the initial preliminary report. 4 Includes producer milk for one currently fully regulated F.O. 7 plant which would be regulated in the Florida market in the initial preliminary re- port. 5 Producer milk for F.O. 44 is included. Producer milk for a F.O. 32 handler who would be pooled under the initially-suggested Mideast market is included in the initially-suggested Central market. 6 Producer milk for F.O. 30 and F.O. 68 only. 7 A significant amount of producer milk was not pooled in October 1995. Estimated total producer milk would result in a 15.3% combined Class I utilization. 8 A significant amount of producer milk was not pooled in October 1995. Estimated total producer milk would result in a 19.7% combined Class I utilization. 9 Includes producer milk for a F.O. 32 handler that would be in the initially-suggested Mideast market. 10 Excludes producer milk for one currently fully regulated F.O. 139 plant and one currently unregulated plant which would be regulated in the Arizona-Las Vegas market in the revised preliminary report. 11 A significant amount of producer milk was not pooled in October 1995. Estimated total producer milk would result in a 21.8% combined Class I utilization. 12 A significant amount of producer milk was not pooled in October 1995. Estimated total producer milk would result in a 21.6% combined Class I utilization.

[FR Doc. 99–6547 Filed 4–1–99; 8:45 am] BILLING CODE 3410±02±P

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