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Proposed Rule

Milk in the Northeast Marketing Area; Notice of Hearing on Proposed Amendments to Tentative Marketing Agreement and Order

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Information about this document as published in the Federal Register.

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Start Preamble

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Proposed rule; Notice of public hearing on proposed rulemaking.

SUMMARY:

A public hearing is being held to consider proposals that would amend certain pooling and related provisions of the Northeast order. Proposals include establishing marketwide service payments to offset the costs of balancing the market's Class I needs and modifying the pooling standards of the order. Pooling proposals include establishing year-round shipping standards for supply plant pool qualification, adding a “touch-base” provision that would establish a standard that at least two-days' milk production of a dairy farmer be physically received at a pool plant in order to be eligible for diversion, establishing limits on the amount of milk that a pool plant may divert, eliminating the “split plant” provision, and revising certain reporting and payment date provisions. Testimony will be taken to determine if any of the proposals should be handled on an emergency basis.

DATES:

The hearing will convene at 8:30 a.m. on Tuesday, September 10, 2002.

ADDRESSES:

The hearing will be held at the Embassy Suites Hotel Alexandria, 1900 Diagonal Road, Alexandria, VA 22314 Telephone: 703-236-5900.

Persons requiring a sign language interpreter or other special accommodations should contact Erik F. Rasmussen, Market Administrator, at 617-542-8966; e-mail: maboston@fedmilk1.com prior to the hearing.

Start Further Info

FOR FURTHER INFORMATION CONTACT:

Gino Tosi, Marketing Specialist, Order Formulation and Enforcement Branch, USDA/AMS/Dairy Programs, Stop 0231—Room 2968, 1400 Independence Avenue, SW., Washington, DC 20250-0231, (202)690-1366, e-mail gino.tosi@usda.gov.

End Further Info End Preamble Start Supplemental Information

SUPPLEMENTARY INFORMATION:

This administrative action is governed by the provisions of sections 556 and 557 of Title 5 of the United States Code and, therefore, is excluded from the requirements of Executive Order 12866.

Notice is hereby given of a public hearing to be held at the Embassy Suites Hotel Alexandria, beginning at 8:30 a.m., on September 10, 2002, with respect to proposed amendments to the tentative marketing agreement and to the order regulating the handling of milk in the Northeast marketing area.

The hearing is called pursuant to the provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), and the applicable rules of practice and procedure governing the formulation of marketing agreements and marketing orders (7 CFR Part 900).

The purpose of the hearing is to receive evidence with respect to the economic and marketing conditions which relate to the proposed amendments, hereinafter set forth, and any appropriate modifications thereof, to the tentative marketing agreements and to the order.

Evidence also will be taken to determine whether emergency Start Printed Page 49888marketing conditions exist that would warrant omission of a recommended decision under the rules of practice and procedure (7 CFR 900.12(d)) with respect to Proposals No. 1 through 13.

Actions under the Federal milk order program are subject to the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). This Act seeks to ensure that, within the statutory authority of a program, the regulatory and informational requirements are tailored to the size and nature of small businesses. For the purpose of the Act, a dairy farm is a “small business” if it has an annual gross revenue of less than $750,000, and a dairy products manufacturer is a “small business” if it has fewer than 500 employees. Most parties subject to a milk order are considered as a small business. Accordingly, interested parties are invited to present evidence on the probable regulatory and informational impact of the hearing proposals on small businesses. Also, parties may suggest modifications of these proposals for the purpose of tailoring their applicability to small businesses.

The amendments to the rules proposed herein have been reviewed under Executive Order 12988, Civil Justice Reform. They are not intended to have a retroactive effect. If adopted, the proposed amendments would not preempt any state or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

The Agricultural Marketing Agreement Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 8c(15)(A) of the Act, any handler subject to an order may request modification or exemption from such order by filing a petition with the Department stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with the law. A handler is afforded the opportunity for a hearing on the petition. After a hearing, the Department would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has its principal place of business, has jurisdiction in equity to review the Department's ruling on the petition, provided a bill in equity is filed not later than 20 days after the date of the entry of the ruling.

Interested parties who wish to introduce exhibits should provide the Presiding Officer at the hearing with (4) copies of such exhibits for the Official Record. Also, it would be helpful if additional copies are available for the use of other participants at the hearing.

Start List of Subjects

List of Subjects in 7 CFR Part 1001

End List of Subjects Start Part

PART 1001—[Amended]

The authority citation for 7 CFR Part 1001 continues to read as follows:

Start Authority

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

End Authority

The proposed amendments, as set forth below, have not received the approval of the Department.

Submitted by New York State Dairy Foods, Inc.:

Proposal No. 1:

1. Amend § 1001.30 by revising introductory text to read as follows:

Reports of receipts and utilization.

Each handler shall report monthly so that the market administrator's office receives the report on or before the 10th day after the end of the month, in the detail and on prescribed forms, as follows:

* * * * *

2. Amend § 1001.62 by revising the reference to the “13th day” in the introductory text to the “14th day” and by adding a new paragraph (h) to read as follows:

Announcement of producer prices.
* * * * *

(h) If the 14th falls on a Saturday, Sunday, or national holiday, the market administrator may have up to two additional days to announce the producer price differential and the statistical uniform price.

3. Amend § 1001.71 by revising the introductory text to read as follows:

Payments to the producer settlement fund.

Each handler shall make payment to the producer-settlement fund in a manner that provides receipt of the funds by the market administrator no later than two days after the announcement of the producer price differential and the statistical uniform price pursuant to § 1001.62 (except as provided for in § 1000.90). Payment shall be the amount, if any, by which the amount specified in paragraph (a) of this section exceeds the amount specified in paragraph (b) of this section:

* * * * *

4. Amend § 1001.73 by revising paragraphs (a)(1) and (a)(2) introductory text to read as follows:

Payments to producers and to cooperative associations.
* * * * *

(a) * * *

(1) Partial payment. For each producer who has not discontinued shipments as of the 23rd day of the month, payment shall be made so that it is received by the producer on or before the 30th day of the month (except as provided in § 1000.90) for milk received during the first 15 days of the month at not less than the lowest announced class price for the preceding month, less proper deductions authorized in writing by the producer.

(2) Final payment. For milk received during the month, payment shall be made so it is received by each producer no later than the day after the required date of payment by the market administrator the following month, pursuant to § 1001.72, in an amount computed as follows:

* * * * *

Proposal No. 2:

1. Amend § 1001.7 by removing paragraph (h)(7) and revising paragraphs (c)(1) and (c)(2) to read as follows:

Pool plant.
* * * * *

(1) In each of the months of August and December, such shipments must equal not less than 15 percent of the total quantity of milk that is received at the plant or diverted from it pursuant to § 1001.13 during the month;

(2) In each of the months of September through November, such shipments must equal not less than 25 percent of the total quantity of milk that is received at the plant or diverted from it pursuant to § 1001.13 during the month;

* * * * *

Proposal No. 3:

1. Amend § 1001.13 by adding new paragraphs (d)(3) through (d)(6) to read as follows:

Producer Milk.
* * * * *

(d) * * *

(3) The equivalent of at least two days' milk production of a dairy farmer is caused by the handler to be physically received at a pool plant in each of the months of August through December;

(4) Of the total quantity of producer receipts during the month (including diversions), the handler diverts to non-pool plants not more than 60 percent of such receipts in each of the months August through December and not more than 75 percent in each of the months January through July;

(5) Any milk diverted in excess of the limits set forth in paragraph (d)(4) of this section shall not be producer milk. The diverting handler shall designate Start Printed Page 49889the dairy farmer deliveries that shall not be producer milk. If the handler fails to designate the dairy farmer deliveries which are ineligible, producer milk status shall be forfeited with respect to all milk diverted to nonpool plants by such handler; and

(6) The delivery requirements and the diversion percentages in paragraphs (d)(3) and (d)(4) of this section may be increased or decreased by the market administrator if the administrator finds that such revision is necessary to assure orderly marketing and efficient handling of milk in the marketing area. Before making such a finding, the market administrator shall investigate the need for the revision either on the market administrator's own initiative or at the request of interested persons if the request is made in writing at least 15 days prior to the month for which the requested revision is to be effective. If the investigation shows that a revision might be appropriate, the market administrator shall issue a notice stating that the revision is being considered and inviting written data, views, and arguments. Any decision to revise an applicable percentage must be issued in writing at least one day before the effective date.

Submitted by the Market Administrator, New York State Dairy Foods, Inc.,and Association of Dairy Cooperatives in the Northeast (ADCNE):

Proposal No. 4:

1. Revise § 1001.72 to read as follows:

Payments from the producer-settlement fund.

No later than the day after the due date required for payment to the Market Administrator pursuant to § 1001.71 (except as provided in § 1000.90), the market administrator shall pay to each handler the amount, if any, by which the amount computed pursuant to § 1001.71(b) exceeds the amount computed pursuant to § 1001.71(a). If, at such time, the balance in the producer-settlement fund is insufficient to make all payments pursuant to this section, the market administrator shall reduce uniformly such payments and shall complete the payments as soon as the funds are available.

Submitted by Association of Dairy Cooperatives in the Northeast (ADCNE):

Proposal No. 5:

1. Amend § 1001.7 by revising paragraphs (c)(1) and (g), removing paragraphs (c)(3) and (h)(7), and redesignating paragraphs (c)(4) and (c)(5) as paragraphs (c)(3) and (c)(4) to read as follows:

Pool plant.
* * * * *

(c) * * *

(1) In each of the months of January through August and December, such shipments must equal not less than 10 percent of the total quantity of milk that is received at the plant or diverted from it pursuant to § 1001.13 during the month;

* * * * *

(g) The applicable shipping percentages of paragraphs (c) and (f) of this section may be increased or decreased by the market administrator if the market administrator finds that such adjustment is necessary to encourage needed shipments or to prevent uneconomic shipments. Before making such a finding, the market administrator shall investigate the need for adjustment either on the market administrator's own initiative or at the request of interested parties if the request is made in writing at least 15 days prior to the month for which the requested revision is to be effective. If the investigation shows that an adjustment of shipping percentages might be appropriate, the market administrator shall issue a notice stating that an adjustment is being considered and invite data, views, and arguments. Any decision to revise an applicable shipping percentage must be issued in writing at least one day before the effective date. The market administrator may limit the applicability of any revisions hereunder to handlers receiving marketwide service payments pursuant to § 1001.74.

* * * * *

Proposal No. 6:

1. Amend § 1001.13 by revising paragraph (d)(1), redesignating paragraph (d)(2) as paragraph (d)(3), and adding new paragraphs (d)(2), (d)(4), (d)(5) and (e) to read as follows:

Producer milk.
* * * * *

(d) * * *

(1) Milk of a dairy farmer shall not be eligible for diversion unless milk of such dairy farmer was physically received as producer milk at a pool plant during the month and the dairy farmer has continuously retained producer status since that time. If a dairy farmer loses producer status under the order in this part (except as a result of a temporary loss of Grade A approval), the dairy farmer's milk shall not be eligible for diversion unless milk of the dairy farmer has been physically received as producer milk at a pool plant during this month;

(2) Of the total quantity of producer milk received during the month (including diversion but excluding the quantity of producer milk received from a handler described in § 1000.9(c) or which is diverted to another pool plant), the handler diverted to nonpool plants not more than 80 percent during the months of September through November and 90 percent during the months of January through August and December;

(3) * * *

(4) Any milk diverted in excess of the limits set forth in paragraph (d)(2) of this section shall not be producer milk. The diverting handler shall designate the dairy farmer deliveries that shall not be producer milk. If the handler fails to designate the dairy farmer deliveries which are ineligible, producer milk status shall be forfeited with respect to all milk diverted to nonpool plants by such handler; and

(5) The diversion percentages in paragraph (d)(2) of this section may be increased or decreased by the market administrator if the market administrator finds that such revision is necessary to assure orderly marketing and efficient handling of milk in the marketing area. Before making such a finding, the market administrator shall investigate the need for the revision either on the market administrator's own initiative or at the request of interested persons if the request is made in writing at least 15 days prior to the month for which the requested revision is to be effective. If the investigation shows that a revision might be appropriate, the market administrator shall issue a notice stating that the revision is being considered and inviting written data, views, and arguments. Any decision to revise an applicable percentage must be issued in writing at least one day before the effective date. The market administrator may limit the applicability of any revision hereunder to handlers receiving marketwide service payments pursuant to § 1001.74.

(e) Milk that is pooled under a state marketing order that has classified pricing and marketwide pooling provisions, other than provisions pertaining to marketwide pooling of premiums, is ineligible to be pooled under the Order unless such milk is physically received at a distributing plant under this order.

Proposal No. 7:

1. Establish a marketwide service payment to provide compensation from a marketwide pool to those who perform a service in balancing the Class I market by adding a new § 1001.74 to read as follows:

Start Printed Page 49890
Marketwide service payments.

Payments shall be made to qualifying handlers as set forth hereafter for their performance of marketwide services which benefit all producers:

(a) Qualification for payments. Each handler shall qualify for marketwide service payments if during the month the handler:

(1) Pools a quantity of milk equal to 3 percent of the total volume of milk pooled on the order for the month or pools 1,000,000 pounds of milk per day and either operates a plant which manufactures Class III or Class IV products which is located in the states of the marketing area or operates a pool distributing plant as defined in § 1001.7(a); and

(2) Transfers or diverts to pool distributing plants (as defined in § 1001.7(a)) not more than 65 percent of the total quantity of producer milk which such handler pools. In determining whether the handler has met this percentage requirement, the market administrator shall make the percentage calculations after applying the following procedures:

(i) Deduct from transfers or diversions any quantities of shipments received by the handler from the operator of a distributing plant to which qualifying deliveries have been made; and

(ii) If the handler is the operator of a distributing plant, all milk pooled by the handler shall be assumed to have been delivered to the handler's distributing plant, up to the quantity of such plant's full receipts.

(b) Additional performance required. In making any adjustments upward in the shipping requirements pursuant to § 1001.7(g), the market administrator may impose such additional shipping requirements only upon handlers qualified for and receiving marketwide service payments pursuant to this Section.

(c) Rate and timing of payments. The market administrator, on the same date as payments from the producer settlement fund are due, shall make payment out of the producer settlement fund, or issue equivalent credit therefore, to each handler that qualifies for the month. Such payment or credit shall be at the rate of 6 cents per hundredweight of producer milk pooled by the handler, except that there shall be no payments made to cooperative associations with respect to milk of producers who are not members of any qualified cooperative association and no payment made to non-cooperative handlers with respect to milk of any producer who is a member of a qualified cooperative association.

(d) Reports. The handler shall make such reports to the market administrator as may be reasonably requested for the administration of the provisions of this section.

Submitted by Friendship Dairies:

Proposal 8:

1. Amend § 1001.7 by revising paragraphs (c)(1) through (c)(3) to read as follows:

Pool plant.
* * * * *

(c) * * *

(1) In each of the months of August and December, such shipments must equal not less than 10 percent of the total quantity of milk that is received at the plant from dairy farmers (except dairy farmers described in § 1001.12(b) and handlers described in § 1000.9(c)), including milk diverted pursuant to § 1001.13 during the month;

(2) In each of the months of September through November, such shipments must equal not less than 20 percent of the total quantity of milk that is received at the plant from dairy farmers (except dairy farmers described in § 1001.12(b) and handlers described in § 1000.9(c)), including milk diverted pursuant to § 1001.13 during the month;

(3) A plant which meets the shipping requirements of this paragraph in each of the months of August through December shall be a pool plant in each of the following months of January through July unless the milk received at the plant fails to meet the requirements of a duly constituted regulatory agency, the plant fails to meet a shipping requirement instituted pursuant to paragraph (f) of this section, or the plant operator requests nonpool status for the plant. The shipping requirement for any plant which has not met the requirements of paragraphs (c)(1) and (c)(2) of this section must equal not less than 10 percent of the total quantity of milk that is received at the plant from dairy farmers (except dairy farmers described in § 1001.12(b) and handlers described in § 1000.9(c)), including milk diverted pursuant to § 1001.13, in each of the months of January through July in order for the plant to be a pool plant in each of these months;

* * * * *

Proposal No. 9:

1. Amend § 1001.7 by revising paragraphs (c)(1) through (c)(3) to read as follows:

Pool plant.
* * * * *

(c) * * *

(1) In each of the months of August and December, such shipments, plus the amount of route distribution from the plant pursuant to § 1000.3 and transfers in the form of packaged fluid milk products to distributing plants, must equal not less than 10 percent of the total quantity of milk that is received at the plant or diverted from it pursuant to § 1001.13 during the month;

(2) In each of the months of September through November, such shipments, plus the amount of route distribution from the plant pursuant to § 1000.3 and transfers in the form of packaged fluid milk products to distributing plants, must equal not less than 20 percent of the total quantity of milk that is received at the plant or diverted from it pursuant to § 1001.13 during the month;

(3) A plant which meets the shipping requirements of this paragraph in each of the months of August through December shall be a pool plant in each of the following months of January through July unless the milk received at the plant fails to meet the requirements of a duly constituted regulatory agency, the plant fails to meet a shipping requirement instituted pursuant to paragraph (f) of this section, or the plant operator requests nonpool status for the plant. The shipping requirement, plus the amount of route distribution from the plant pursuant § 1000.3 and transfers in the form of packaged fluid milk products to distributing plants, for any plant which has not met the requirements of paragraphs (c)(1) and (c)(2) of this section, must equal not less than 10 percent of the total quantity of milk that is received at the plant during the month, or diverted from it pursuant to § 1001.13 during each of the months of January through July, in order for the plant to be a pool plant in each of these months;

* * * * *

Proposal No. 10:

1. Amend § 1001.7 by revising paragraphs (c)(1) through (c)(3) to read as follows:

Pool plant.
* * * * *

(c) * * *

(1) In each of the months of August and December, such shipments must equal not less than 5 percent of the total quantity of milk that is received at the plant during the month or diverted from it pursuant to § 1001.13;

(2) In each of the months of September through November, such shipments must equal not less than 10 percent of the total quantity of milk that is received at the plant during the month or diverted from it pursuant to § 1001.13; Start Printed Page 49891

(3) A plant which meets the shipping requirements of this paragraph in each of the months of August through December shall be a pool plant in each of the following months of January through July unless the milk received at the plant fails to meet the requirements of a duly constituted regulatory agency, the plant fails to meet a shipping requirement instituted pursuant to paragraph (f) of this section, or the plant operator requests nonpool status for the plant. The shipping requirements for any plant which has not met the requirements of paragraphs (c)(1) and (c)(2) of this section must equal not less than 5 percent of the total quantity of milk that is received at the plant during the month or diverted from it pursuant to § 1001.13;

* * * * *

Proposal No. 11:

1. Amend § 1001.12 by revising paragraphs (b)(5) and (b)(6) to read as follows:

Producer.
* * * * *

(b) * * *

(5) For any month of January through July, any dairy farmer whose milk is received at a pool plant or by a cooperative association handler described in § 1000.9(c) if the pool plant operator or the cooperative association caused milk from the same farm to be delivered to any plant as other than producer milk, as defined under this order or any other Federal milk order, during the same month or during any of the preceding months of August through December; and

(6) For any month of August through December, any dairy farmer whose milk is received at a pool plant or by a cooperative association handler described in § 1000.9(c) if the pool plant operator or the cooperative association caused milk from the same farm to be delivered to any plant as other than producer milk under this order or any other Federal milk order during the same month.

Proposed by Northeast Market Administrator:

Proposal No. 12:

1. Amend § 1001.73 by revising the introductory text of paragraph (e) to read as follows:

Payments to producers and cooperative associations.
* * * * *

(e) In making payments to producers pursuant to this section, each handler shall furnish each producer, except for a producer whose milk was received from a cooperative association handler described in § 1000.9(a) or (c)), a supporting statement in such form that it may be retained by the recipient which shall show:

* * * * *

Proposed by Dairy Programs, Agricultural Marketing Service:

Proposal No. 13:

Make such changes as may be necessary to make the entire marketing agreements and the orders conform with any amendments thereto that may result from this hearing.

Copies of this notice of hearing and the order may be procured from the Market Administrator for the Northeast Marketing Area, or from the Hearing Clerk, Room 1083, South Building, United States Department of Agriculture, Washington, DC 20250, or may be inspected there.

Copies of the transcript of testimony taken at the hearing will not be available for distribution through the Hearing Clerk's Office. If you wish to purchase a copy, arrangements may be made with the reporter at the hearing.

From the time that a hearing notice is issued and until the issuance of a final decision in a proceeding, Department employees involved in the decision-making process are prohibited from discussing the merits of the hearing issues on an ex parte basis with any person having an interest in the proceeding. For this particular proceeding, the prohibition applies to employees in the following organizational units:

Office of the Secretary of Agriculture

Office of the Administrator, Agricultural Marketing Service

Office of the General Counsel

Dairy Programs, Agricultural Marketing Service (Washington office) and the Office of the Northeast Market Administrator.

Procedural matters are not subject to the above prohibition and may be discussed at any time.

Start Signature

Dated: July 26, 2002.

A. J. Yates,

Administrator, Agricultural Marketing Service.

End Signature End Part End Supplemental Information

[FR Doc. 02-19390 Filed 7-31-02; 8:45 am]

BILLING CODE 3410-02-P