SUPPLEMENTARY INFORMATION:

This interim final rule adopts provisions that will: (1) Adjust the Class I pricing surface in each county within the geographical marketing areas of the Appalachian, Florida and Southeast marketing orders; (2) Make diversion limit standards identical for the Appalachian and Southeast orders: 25 percent of deliveries to pool plants during the months of January, February, July, August, September, October and November, and 35 percent in the months of March, April, May, June and December; (3) Reduce touch-base standards to one day each month for the Appalachian and Southeast orders; (4) Add January and February as months when transportation credits are paid for in the Appalachian and Southeast orders; (5) Provide for the payment of transportation credits in the Appalachian and Southeast orders for full loads of supplemental milk; (6) Provide more flexibility in the qualification requirements for supplemental milk producers to receive transportation credits for the Appalachian and Southeast orders; and (7) Increase the monthly transportation credit assessment from $0.20 per cwt to $0.30 per cwt in the Southeast order.

This administrative rule 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.

This interim rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have a retroactive effect. This rule will not preempt any state or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

The Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674) (Act), provides that ( printed page 14154) administrative proceedings must be exhausted before parties may file suit in court. Under Section 608c(15)(A) of the Act, any handler subject to an order may request modification or exemption from such order by filing with the Department of Agriculture (USDA) a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with the law. A handler is afforded the opportunity for a hearing on the petition. After a hearing, the 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.

Regulatory Flexibility Act and Paperwork Reduction Act

In accordance with the Regulatory Flexibility Act (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities and has certified that this interim rule will not have a significant economic impact on a substantial number of small entities. For the purpose of the Regulatory Flexibility Act, a dairy farm is considered a small business if it has an annual gross revenue of less than $750,000, and a dairy products manufacturer is a small business if it has fewer than 500 employees.

For the purposes of determining which dairy farms are small businesses, the $750,000 per year criterion was used to establish a marketing guideline of 500,000 pounds per month. Although this guideline does not factor in additional monies that may be received by dairy producers, it should be an inclusive standard for most “small” dairy farmers. For purposes of determining a handler's size, if the plant is part of a larger company operating multiple plants that collectively exceed the 500-employee limit, the plant will be considered a large business even if the local plant has fewer than 500 employees.

During May 2007, the time of the hearing, there were 2,744 dairy farmers pooled on the Appalachian order (Order 5). For the Southeast order (Order 7), 2,924 dairy farmers were pooled on the order. For the Florida order (Order 6), 283 dairy farmers were pooled on the order. Of these, 2,612 dairy farmers in Order 5 (or 95.2 percent), 2,739 dairy farmers in Order 7 (or 94 percent) and 153 dairy farmers in Order 6 (or 54 percent) were considered small businesses.

During May 2007, there were a total of 36 plants associated with the Appalachian order (22 fully regulated plants, 10 partially regulated plants, 2 producer-handlers and 2 exempt plants). A total of 55 plants were associated with the Southeast order (33 fully regulated plants, 9 partially regulated plants, 2 producer-handlers and 11 exempt plants). A total of 25 plants were associated with the Florida order (13 fully regulated plants, 9 partially regulated plants, 1 producer-handler and 2 exempt plants). The number of plants meeting small business criteria under the Appalachian, Southeast and Florida orders were 8 (or 22.2 percent), 18 (or 32.7 percent) and 11 (or 44 percent), respectively.

The amendments adopted in this interim rule provide for the increase in Class I prices in the Appalachian, Southeast and Florida orders. The minimum Class I prices of the three southeastern orders, as with all other Federal milk marketing orders, are set by using the higher of an advance Class III or Class IV price as determined by the Department and adding a location-specific differential, referred to as a Class I differential. Minimum Class I prices charged to regulated handlers are applied uniformly to both large and small entities. Class I price increases would generate higher marketwide pool values in all three southeastern orders by approximately $18-19 million for the Appalachian order, approximately $17.5 million for the Southeast order and approximately $38 million for the Florida order. In estimating the impact on minimum prices paid to dairy farmers, blend prices will increase by approximately $0.26 per cwt for the Appalachian order, approximately $0.64 per cwt higher for the Southeast order, and $1.19 per cwt to $1.22 per cwt higher for the Florida order.

The adopted amendments revise the Appalachian and Southeast orders by making the diversion limit standards for the orders identical—not to exceed 25 percent for the months of January, February, and July through November, and 35 percent for the months of March through June and for the month of December. Currently, the diversion limit standards of the Appalachian order for pool plants and cooperatives acting as handlers are not to exceed 25 percent for the months of July through November, and January and February; and 40 percent for the months of December and March through June. For the Southeast order, the current diversion limit standards for pool plants and cooperatives acting as handlers are not to exceed 33 percent during the months of July through December, and 50 percent in the months of January through June.

In addition, the amendments adopt identical daily touch-base standards of at least one-days' milk production each month of a dairy farmer in the Appalachian and Southeast orders. Currently, the Appalachian order has a touch-base standard of 6 days' production in any month of July through December and not less than 2 days' production for the months of January through June. Currently, the Southeast order has a touch-base standard of not less than 10 days' production for the months of July through December and not less than 4 day's production for the months of January through June.

The adopted changes to the pooling standards serve to revise established criteria that determine those producers, producer milk and plants that have a reasonable association with and are consistently serving the fluid needs of the Appalachian and Southeast marketing areas. Criteria for pooling are established on the basis of performance levels that are considered adequate to meet the Class I needs and determine those producers who are eligible to share in the revenue that arises from the classified pricing of milk. The criteria for pooling are established without regard to the size of any dairy industry or entity. The criteria established are applied in an identical fashion to both large and small businesses and do not have any different economic impact on small entities as opposed to large entities.

The adopted amendments add January and February to the months of July though December as months when transportation credits may be paid for the Appalachian and Southeast orders to those handlers who incur the costs of providing supplemental milk. The amendments also expand the payment of transportation credits for supplemental milk to include the full load of milk rather than the calculated Class I portion and provide more flexibility in the qualification requirements for supplemental milk producers to receive transportation credits for the Appalachian and Southeast orders. In addition, only the monthly transportation credit assessment for the Southeast order is increased from the current $0.20 per cwt to $0.30 per cwt on all milk assigned to Class I use. The transportation credit provisions are applicable only to the Appalachian and Southeast orders and are applied in an identical fashion to both large and small businesses and will ( printed page 14155) not have any different impact on those businesses producing manufactured milk products. The changes will not have a significant economic impact on a substantial number of small entities.

The Agricultural Marketing Service (AMS) is committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

This notice does not require additional information collection that needs clearance by the Office of Management and Budget (OMB) beyond currently approved information collection. The primary sources of data used to complete the forms are routinely used in most business transactions. Forms require only a minimal amount of information that can be supplied without data processing equipment or a trained statistical staff. Thus, the information collection and reporting burden is relatively small. Requiring the same reports for all handlers does not significantly disadvantage any handler that is smaller than the industry average.

Prior Documents in This Proceeding

Notice of Hearing: Issued May 3, 2007; published May 8, 2007 (72 FR 25986).

Partial Tentative Decision: Issued February 21, 2008; published February 25, 2008 (73 FR 11194).

Findings and Determinations

The findings and determinations hereinafter set forth supplement those that were made when the Appalachian, Florida and Southeast orders were first issued and when they were amended. The previous findings and determinations are hereby ratified and confirmed, except where they may conflict with those set forth herein.

The following findings are hereby made with respect to the Appalachian and Southeast marketing orders:

(a) Findings upon the basis of the hearing record.

A public hearing was held upon certain proposed amendments to the tentative marketing agreements and to the orders regulating the handling of milk in the Appalachian, Florida and Southeast marketing areas. The hearing was held pursuant to the provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674) (Act), and the applicable rules of practice and procedure (7 CFR Part 900).

Upon the basis of the evidence introduced at such hearing and the record thereof, it is found that:

(1) The said orders as hereby amended, and all of the terms and conditions thereof, will tend to effectuate the declared policy of the Act;

(2) The parity prices of milk, as determined pursuant to section 2 of the Act, are not reasonable in view of the price of feeds, available supplies of feeds, and other economic conditions which affect market supply and demand for milk in the aforesaid marketing areas. The minimum prices specified in the orders as hereby amended on an interim basis, are such prices as will reflect the aforesaid factors, insure a sufficient quantity of pure and wholesome milk, and be in the public interest; and

(3) The said orders, as hereby amended on an interim basis, regulates the handling of milk in the same manner as, and is applicable only to persons in the respective classes of industrial or commercial activity specified in, a marketing agreement upon which a hearing has been held.

(b) Additional Findings. It is necessary and in the public interest to make these interim amendments to the Appalachian, Florida and Southeast orders effective one day following publication of this rule in the Federal Register , except for all Class I pricing adjustments which are effective May 1, 2008. This date will assure industry participants have appropriate time to be informed of changes and make orderly marketing adjustments. Any delay beyond that date would tend to disrupt the orderly marketing of milk in the aforesaid marketing areas.

The interim amendments to this order are known to handlers. The tentative partial decision containing the proposed amendments to this order was issued on February 21, 2008.

The changes that result from these interim amendments will not require extensive preparation or substantial alteration in the method of operation for handlers. In view of the foregoing, it is hereby found and determined that good cause exists for making these interim amendments effective one day following publication of this rule in the Federal Register . It would be contrary to the public interest to delay the effective date of these amendments for 30 days after publication in the Federal Register . (Sec. 553(d), Administrative Procedures Act, 5 U.S.C. 551-559.)

(c) Determinations. It is hereby determined that:

(1) The refusal or failure of handlers (excluding cooperative associations specified in Section 8c(9) of the Act) of more than 50 percent of the milk, which is marketed within the specified marketing areas, to sign a proposed marketing agreement, tends to prevent the effectuation of the declared policy of the Act;

(2) The issuance of this interim order amending the Appalachian, Florida and Southeast orders is the only practical means pursuant to the declared policy of the Act of advancing the interests of producers as defined in the orders as hereby amended;

(3) The issuance of the interim orders amending the Appalachian, Florida and Southeast orders is favored by at least two-thirds of the producers who were engaged in the production of milk for sale in the respective marketing areas.

Order Relative to Handling

It is therefore ordered, that on and after the effective date hereof, the handling of milk in the Appalachian, Florida and Southeast marketing areas shall be in conformity to and in compliance with the terms and conditions of the orders, as amended, and as hereby amended, as follows:

Accordingly, the Agricultural Marketing Service amends 7 CFR parts 1000, 1005, 1006, and 1007 as follows:

1. The authority citation for 7 CFR parts 1000, 1005, 1006, and 1007 continues to read as follows:

Authority: 7 U.S.C. 601-674, and 7253.

2. In § 1000.50, paragraphs (b) and (c) are revised to read as follows:

3. In § 1005.13, paragraphs (d)(1) through (4) are revised to read as follows:

4. Section 1005.51 is revised to read as follows:

( printed page 14161)

5. In § 1005.81, paragraph (a) is revised to read as follows:

6. Section 1005.82 is amended by:

a. Revising paragraph (a)(1);

b. Revising paragraph (b);

c. Revising paragraph (c)(1);

d. Removing paragraph (c)(2)(i);

e. Redesignating paragraph (c)(2)(ii) as (c)(2)(i) and revise;

f. Redesignating paragraph (c)(2)(iii) as (c)(2)(ii);

g. Redesignating paragraph (c)(2)(iv) as (c)(2)(iii) and revising;

h. Revising paragraph (d)(2) (iii); and

i. Revising paragraph (d)(3)(v);

The revisions read as follows:

7. Section 1006.51 is revised to read as follows:

8. In § 1007.13, paragraphs (d)(1) through (4) are revised to read as follows:

9. Section 1007.51 is revised to read as follows:

10. In § 1007.81 paragraph (a) is revised to read as follows:

11. Section 1007.82 is amended by:

a. Revising paragraph (a)(1);

b. Revising paragraph (b);

c. Revising paragraph (c)(1);

d. Removing paragraph (c)(2)(i);

e. Redesignating paragraph (c)(2)(ii) as (c)(2)(i) and revising;

f. Redesignating paragraph (c)(2)(iii) as (c)(2)(ii); and

g. Redesignating paragraph (c)(2)(iv) as (c)(2)(iii) and revising;

h. Revising paragraph (d)(2) (iii); and

i. Revising paragraph (d)(3)(v);

The revisions read as follows: