[Federal Register Volume 69, Number 185 (Friday, September 24, 2004)]
[Proposed Rules]
[Pages 57233-57241]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-21416]


========================================================================
Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 69, No. 185 / Friday, September 24, 2004 / 
Proposed Rules

[[Page 57233]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1000, 1001, 1005, 1006, 1007, 1030, 1032, 1033, 1124, 
1126, and 1131

[Docket No. AO-14-A72, et al.; DA-03-08]


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

------------------------------------------------------------------------
          7 CFR part            Marketing area           AO Nos.
------------------------------------------------------------------------
1001.........................  Northeast.......  AO-14-A72
1005.........................  Appalachian.....  AO-388-A13
1006.........................  Florida.........  AO-356-A36
1007.........................  Southeast.......  AO-366-A42
1030.........................  Upper Midwest...  AO-361-A37
1032.........................  Central.........  AO-313-A46
1033.........................  Mideast.........  AO-166-A70
1124.........................  Pacific           AO-368-A33
                                Northwest.
1126.........................  Southwest.......  AO-231-A66
1131.........................  Arizona-Las       AO-271-A38
                                Vegas.
------------------------------------------------------------------------

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule; final decision.

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

SUMMARY: This document proposes to adopt as a final rule, order 
language contained in the interim final rule published in the Federal 
Register on April 23, 2004, concerning classification of milk use 
provisions in all Federal milk marketing orders. This document sets 
forth the final decision of the Department and is subject to approval 
by producers. Specifically, this final decision would reclassify milk 
used to produce evaporated milk in consumer-type packages or sweetened 
condensed milk in consumer-type packages from Class III to Class IV.

FOR FURTHER INFORMATION CONTACT: Antoinette M. Carter, Marketing 
Specialist, USDA/AMS/Dairy Programs, Order Formulation and Enforcement 
Branch, STOP 0231--Room 2971, 1400 Independence Avenue, SW., 
Washington, DC 20250-0231, (202) 690-3465, e-mail address: 
<a href="/cdn-cgi/l/email-protection#3958574d5650575c4d4d5c175a584b4d5c4b794c4a5d58175e564f"><span class="__cf_email__" data-cfemail="f0919e849f999e95848495de939182849582b085839491de979f86">[email protected]</span></a>.

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.
    These proposed amendments have been reviewed under Executive Order 
12988, Civil Justice Reform. This rule is not intended to have a 
retroactive effect. If adopted, this proposed rule will not preempt any 
State or local laws, regulations, or policies, unless they present an 
irreconcilable conflict with this rule.
    The Agricultural Marketing Agreement Act of 1937, as amended (7 
U.S.C. 601-674), provides that administrative proceedings must be 
exhausted before parties may file suit in court. Under section 
608c(15)(A) of the Act, any handler subject to an order may request 
modification or exemption from such order by filing with the Secretary 
a petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with the law. A handler is afforded the opportunity for a hearing on 
the petition. After a hearing, the Secretary would rule on the 
petition. The Act provides that the district court of the United States 
in any district in which the handler is an inhabitant, or has its 
principal place of business, has jurisdiction in equity to review the 
Secretary's ruling on the petition, provided a bill in equity is filed 
not later than 20 days after the date of the entry of the ruling.

Regulatory Flexibility Act and Paperwork Reduction Act

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.), the Agricultural Marketing Service has considered the economic 
impact of this action on small entities and has certified that this 
proposed rule will not have a significant economic impact on a 
substantial number of small entities. For

[[Page 57234]]

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 production 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 June 2003--the most recent representative period at the time 
of the hearing--there were a total of 60,096 dairy producers whose milk 
was pooled under Federal milk orders. Of the total, 56,818 dairy 
producers--or about 95 percent--were considered small businesses based 
on the above criteria. During this same period, there were about 1,622 
plants associated with Federal milk orders. Specifically, there were 
approximately 387 fully regulated plants (of which 143 were small 
businesses), 92 partially regulated plants (of which 41 were small 
businesses), 44 producer-handlers (of which 23 were considered small 
businesses), and 108 exempt plants (of which 98 were considered small 
businesses). Consequently, 950 of the 1,622 plants meet the definition 
of a small business.
    Total pounds of milk pooled under all Federal milk orders was 
10.498 billion for June 2003 which represented 73.5 percent of the milk 
marketed in the United States during June 2003. Of the 10.498 billion 
pounds of milk pooled under Federal milk orders during June 2003, 1.78 
million pounds--or 1.7 percent--was used to produce evaporated milk and 
sweetened condensed milk products in consumer-type packages. 
Additionally, during this same period, total pounds of Class I milk 
pooled under Federal milk orders was 3.475 billion pounds, which 
represents 82.3 percent of the milk used in Class I products (mainly 
fluid milk products) that were sold in the United States.
    This final decision adopts proposals that would reclassify milk 
used to produce evaporated milk or sweetened condensed milk in 
consumer-type packages from Class III to Class IV in all Federal milk 
orders. This decision is consistent with the Agricultural Agreement Act 
of 1937 (Act), which authorizes Federal milk marketing orders. The Act 
specifies that Federal milk orders classify milk ``in accordance with 
the form for which or purpose for which it is used.''
    Currently, the Federal milk order system provides for the uniform 
classification of milk in provisions that define four classes of use 
for milk (Class I, Class II, Class III, and Class IV). Each Federal 
milk order sets minimum prices that processors must pay for milk based 
on how it is used and computes weighted average or uniform prices that 
dairy producers receive.
    Under the milk classification provisions of all Federal milk 
orders, Class I consists of those products that are used as beverages 
(whole milk, low fat milk, skim milk, flavored milk products like 
chocolate milk, etc.)\1\ Class II includes soft or spoonable products 
such as cottage cheese, sour cream, ice cream, yogurt, and milk that is 
used in the manufacture of other food products. Class III includes all 
skim milk and butterfat used to make hard cheeses--types that may be 
grated, shredded, or crumbled; cream cheese; other spreadable cheeses; 
plastic cream; anhydrous milkfat; and butteroil. Class III also 
consists of evaporated milk and sweetened condensed milk in consumer-
type packages. Class IV includes, among other things, butter and any 
milk product in dried form such as nonfat dry milk.
---------------------------------------------------------------------------

    \1\ Federal milk orders do not classify products but instead 
classify the milk (skim milk and butterfat) disposed of in the form 
of a product or used to produce a product. This decision references 
``Class I products,'' ``Class II products,'' ``Class III products,'' 
and ``Class IV products'' to simplify the findings and conclusions.
---------------------------------------------------------------------------

    Evaporated milk and sweetened condensed milk in consumer-type 
packages should be classified as Class IV because their product 
characteristics and yields are tied directly to the solids content of 
the raw milk used to make these products as opposed to the protein 
content as for Class III products. Like other Class IV products, 
evaporated milk and sweetened condensed milk in consumer-type packages 
have a relatively long shelf-life (i.e., the products can be stored for 
more than one year without refrigeration). These products also may be 
substituted for other Class IV products (e.g., dry whole milk or nonfat 
dry milk) and compete over a wide geographic area with products made 
from non-federally regulated milk. Additionally, like other Class IV 
products, evaporated milk and sweetened condensed milk in consumer-type 
packages are competitive outlets for milk surplus to the Class I needs 
of the market.
    The amendments adopted in the tentative final decision and this 
final decision should not have a significant economic impact on dairy 
producers or handlers associated with Federal milk orders. Since the 
reclassification of evaporated milk and sweetened condensed milk in 
consumer-type packages will be uniform in all Federal milk orders, 
dairy producers and handlers associated with the orders will be subject 
to the same provisions. The classification change should have only a 
minimal impact on the price dairy producers receive for their milk due 
to the small quantity of milk pooled under Federal milk orders that is 
used to produce evaporated milk or sweetened condensed milk in 
consumer-type packages. For example, using the Department's production 
data provided in the hearing record for milk, skim milk, and cream used 
to produce evaporated milk and sweetened condensed milk in consumer-
type packages by handlers regulated under Federal milk orders for the 
three years of 2000 through 2002, the reclassification of the milk used 
to produce these products from Class III to Class IV would have 
affected the statistical uniform price for all Federal milk orders 
combined by only $0.0117 per hundredweight.
    A review of reporting requirements was completed under the 
Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35). It was 
determined that these proposed amendments would have no impact on 
reporting, recordkeeping, or other compliance requirements because they 
would remain identical to the current requirements. No new forms are 
proposed and no additional reporting requirements would be necessary.
    This action does not require additional information collection that 
requires 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 which 
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.

[[Page 57235]]

Prior Documents in This Proceeding

    Notice of Hearing: Issued September 2, 2003; published September 8, 
2003 (68 FR 52860).
    Correction of Notice of Hearing: Issued October 9, 2003; published 
October 16, 2003 (68 FR 59554).
    Tentative Final Decision: Issued February 27, 2004; published March 
2, 2004 (69 FR 9763).
    Interim Final Rule: Issued April 19, 2004; published April 23, 2004 
(69 FR 21950).
    Since this proceeding commenced, the Western order was terminated, 
effective April 1, 2004, as published in the Federal Register on 
February 24, 2004 (69 FR 8327). The termination, which removed all 
operating provisions of the order, was based on producers' disapproval 
of the issuance of the Western order as amended by a tentative final 
decision issued in August 2003 and published in the Federal Register on 
August 18, 2003 (68 FR 49375), and comments received in response to the 
proposed termination--published January 13, 2004 (69 FR 1957). The 
remaining administrative provisions of the order will be terminated at 
a later date.

Preliminary Statement

    A public hearing was held upon proposed amendments to the marketing 
agreements and the orders regulating the handling of milk in the 
Northeast and other 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), and the applicable rules of practice (7 CFR 
part 900), in Alexandria, Virginia, on October 21, 2003. Notice of such 
hearing was issued September 2, 2003, and published September 8, 2003 
(68 FR 52860), and a Correction of Notice of Hearing was issued October 
9, 2003, and published October 16, 2003 (68 FR 59554).
    Upon the basis of the evidence introduced at the hearing and the 
record thereof, the Administrator, on February 27, 2004, issued a 
Tentative Final Decision containing a notice of the opportunity to file 
written exceptions thereto.
    The material issues, findings, conclusions, rulings, and general 
findings of the tentative final decision are hereby approved and 
adopted and are set forth herein.
    The material issues on the record of the hearing relate to:
    1. Classification of evaporated milk and sweetened condensed milk 
in consumer-type packages;
    2. Classification of monthly bulk milk ending inventory; and
    3. Determination as to whether emergency marketing conditions exist 
that would warrant the omission of a recommended decision and the 
opportunity to file written exceptions.

Findings and Conclusions

    The following findings and conclusions on the material issues are 
based on evidence presented at the hearing and the official record 
thereof:
    1. Classification of evaporated milk and sweetened condensed milk 
in consumer-type packages. Proposals that would amend all 10 Federal 
milk marketing orders to reclassify milk used to produce evaporated 
milk or sweetened condensed milk in consumer-type packages from Class 
III to Class IV were adopted in the tentative final decision and are 
adopted in this final decision. The proposed amendments are consistent 
with the statutory authority for Federal milk orders which specifies 
that milk should be classified ``in accordance with the form in which 
or purpose for which it is used.''
    A proposal by O-AT-KA Milk Products Cooperative, Inc. (O-AT-KA), 
published in the hearing notice as Proposal 1, seeks to reclassify 
evaporated milk in consumer-type packages (canned evaporated milk) from 
Class III to Class IV. Proposal 2, published in the hearing notice as 
proposed by Diehl, Inc., and Milnot Holding Corporation, would 
reclassify sweetened condensed milk in consumer-type packages (canned 
sweetened condensed milk) from Class III to Class IV. The proponents 
for Proposals 1 and 2 ask that the proposals be considered on an 
emergency basis and, in this regard, that a recommended decision be 
omitted.
    A witness appearing on behalf of O-AT-KA testified in support of 
the reclassification of evaporated milk from Class III to Class IV and 
supported the reclassification of sweetened condensed milk from Class 
III to Class IV. The witness stated that O-AT-KA is owned by over 2,000 
dairy producers who are members of Upstate Farms Cooperative, Inc., 
Niagara Milk Cooperative, Inc., and Dairylea Cooperative Inc. In 2002, 
the witness noted that over 700 million pounds of milk was processed by 
O-AT-KA.
    The witness estimated that O-AT-KA is the second largest 
manufacturer of canned evaporated milk products in the United States. 
According to the witness, the largest manufacturer of canned evaporated 
milk is Nestle Foods Company, which produces its product in California 
from milk likely pooled on the California State order. Other Federal 
order manufacturers of canned evaporated milk, the witness indicated, 
include Diehl, Inc., based in Ohio and Milnot Holding Corporation, 
located in Missouri.
    The O-AT-KA witness also provided a historical background on the 
classification of canned evaporated milk. The O-AT-KA witness explained 
that milk used to produce canned evaporated milk products had 
traditionally been classified in the lowest use class of Federal milk 
orders. The witness cited the uniform classification decision of 1974 
in which USDA stated (referencing a 3-class system): ``A Class II 
classification should not apply to evaporated or condensed milk or skim 
milk in consumer-type containers as the cooperatives proposed. Such 
storable products should remain in the lowest price class. A Class III 
classification for milk in these products will permit such uses to 
remain as a competitive outlet for milk surplus to the needs of the 
Class I market. Such products made from milk regulated under these 
orders must compete over wide areas with the same products processed 
from ungraded milk or other graded milk that is often priced at no more 
than the Minnesota-Wisconsin price. Comparable pricing should prevail 
under these 32 orders.'' published March 5, 1974 [39 FR 8461-8462]. The 
witness noted that the Class III classification determination of canned 
evaporated milk was left unchanged when the national uniform 
classification of Federal milk marketing orders was reviewed in 1993.
    The O-AT-KA witness explained that the reform of Federal milk 
marketing orders, effective in January 2000, continued to classify milk 
used to produce canned evaporated milk as Class III even though the 
lowest use manufacturing class was definitively split into Class III 
and Class IV. He stated that Class III became a cheese use class based 
on a cheese yield and cheese pricing formula. According to the witness, 
the reclassification of canned evaporated milk to a more appropriate 
Class IV milk use was simply overlooked.
    The O-AT-KA witness testified that the characteristics and 
composition of canned evaporated milk--including the yields, nonfat 
solids content, and shelf life--all support a Class IV classification 
of the product. The witness explained that evaporated milk products are 
made by the evaporation of water resulting in a milk solids content of 
a minimum of 6.5 percent butterfat and 23 percent total solids. Like 
nonfat dry milk, the witness stressed, the yields of evaporated milk 
products are impacted

[[Page 57236]]

by the nonfat solids content of the raw milk used to produce the 
products. Thus, the witness asserted, the higher the nonfat solids 
content of the raw milk used to produce the product the less water 
needs to be evaporated and the more cans of the product can be made. In 
addition, the witness stated that evaporated milk products are packaged 
in steel cans so that the products are sterile with a shelf life that 
can exceed 12 months. Accordingly, the witness contended that canned 
evaporated milk products are more appropriately classified as a Class 
IV rather than Class III milk use.
    The O-AT-KA witness testified that the current Class III 
classification contributes to improper pricing and potential raw milk 
product cost inequity because the yields of evaporated milk products 
are nonfat-solids based rather than protein-based. Also, the witness 
stated, evaporated milk products are not a substitute for cheese 
products but may be substituted for nonfat dry milk. Additionally, the 
witness stressed evaporated milk products can be and are produced from 
reconstituted nonfat dry milk, stressing that these products cannot be 
produced from cheese.
    The O-AT-KA witness provided actual price data from January 1998 
through September 2003 and forecasted price data from October 2003 
through December 2004. According to the witness, the higher raw milk 
costs dictated by the higher minimum Class III prices of late cannot be 
competitively recovered in the marketplace for canned evaporated milk 
products. The witness also speculated that the disadvantageous price 
relationship was likely to continue into the foreseeable future and 
threatens the continued production of these products at their 
associated plants.
    The O-AT-KA witness also indicated that label recognition, 
competing handlers who are supplied by non-federally regulated milk 
sources, and the contract bidding processes are exacerbating the 
disadvantageous conditions that are now being borne by O-AT-KA members 
in the form of reduced returns. If the mis-classification is allowed to 
continue, the witness forecasted evaporated milk plants like O-AT-KA 
could ultimately be forced out of producing these products, which would 
likely cause raw milk to be ultimately diverted to nonfat dry milk and 
butter (Class IV classification). Thus, the witness indicated that a 
reclassification to Class IV would deter such unfavorable potential 
outcomes.
    The O-AT-KA witness was of the opinion that blend prices to 
producers would not be significantly affected if Proposal 1 was adopted 
because of the relatively low volume of pooled milk used to produce 
evaporated milk products when compared to the higher volumes of milk 
used to produce all other dairy products. The witness contended that 
the current competitive disparity between Federal milk order 
manufacturers and non-Federal order manufacturers of these products 
will continue until this classification issue is resolved. The witness 
concluded by asking that USDA consider this proposal on an emergency 
basis and take immediate action by issuing a final decision.
    O-AT-KA filed a post-hearing brief reiterating its support for the 
reclassification of canned evaporated milk and canned sweetened 
condensed milk from Class III to Class IV.
    A witness representing the Milnot Holding Corporation (Milnot) 
testified in support of Proposals 1 and 2 to reclassify canned 
evaporated milk and canned sweetened condensed milk as Class IV. The 
witness testified that Milnot is a small business that employs about 
422 employees and processes approximately 200 million pounds of raw 
milk annually into evaporated milk and sweetened-condensed milk in 
consumer-type packages. The witness stated that milk used to make these 
products should be classified in the lowest manufacturing use class 
because of the products' shelf-life and characteristics.
    The Milnot witness stated that canned evaporated milk and canned 
sweetened condensed milk products are packaged in shelf-stable packages 
that provide a shelf life of a year or more without refrigeration. The 
witness stressed that canned evaporated milk and canned sweetened 
condensed milk products are driven by the nonfat solids composition of 
the raw milk used to produce the products which is similar to nonfat 
dry milk--a Class IV product. Similar to the O-AT-KA representative, 
the Milnot witness explained that the higher the nonfat solids content 
of the raw milk, the less water needs to be removed and the more cans 
of product result from the raw milk. Thus, the witness concluded that 
canned evaporated milk and canned sweetened condensed milk products are 
closely related and that such products, therefore, should be classified 
as Class IV since ``the production of these milk items is not related 
to the protein-driven curd development'' associated with cheese 
production.
    The Milnot witness also cited the 1974 uniform classification 
decision, published March 5, 1974 (38 FR 8461-8462), which stated that 
evaporated milk or condensed milk or skim milk products in consumer-
type containers are storable products that should remain in the lowest 
price class (Class III). Like the O-At-KA witness, the witness pointed 
out that the reform of milk marketing orders provided a definitive 
split between Class III and Class IV and overlooked canned evaporated 
milk and canned sweetened condensed milk products by continuing the 
Class III classification for milk used to make these products.
    The Milnot witness also testified that the disadvantageous price 
relationship between Class III and Class IV had become increasingly 
acute over the past year, and it is now especially critical that the 
Department handle the matter expeditiously.
    A witness representing Eagle Family Foods (Eagle) also testified in 
support of reclassifying milk used to produce canned evaporated milk 
products, as well as canned sweetened condensed milk, as a Class IV use 
of milk. The witness explained that Eagle is a small business, 
employing about 300 people and operating two manufacturing plants 
located in Wellsboro, Pennsylvania, and Starkville, Mississippi. 
According to the witness, the primary business of the company is 
manufacturing sweetened condensed milk products for national 
distribution.
    The Eagle witness explained that the milk purchased by their plants 
for manufacturing canned sweetened condensed milk products is pooled on 
Federal milk orders. The cost of the raw milk, the witness contended, 
makes it more difficult to compete and can drastically affect the 
viability of their business. The witness also asserted that sweetened 
condensed milk products are solids-based rather than protein-based 
products and therefore should be classified as Class IV use of milk. As 
did the O-AT-KA and Milnot witnesses, the Eagle witness asked that the 
issue be handled on an emergency basis.
    A witness appearing on behalf of Diehl, Inc. (Diehl), testified in 
support of reclassifying milk used to produce both canned evaporated 
milk and canned sweetened condensed milk products from Class III to 
Class IV because milk used to produce such products are solids-based 
products versus protein-based products. The witness testified that 
Diehl is a family-owned and operated small business which manufactures 
canned dairy products, including canned evaporated milk and canned 
sweetened condensed milk products. The witness stated that Diehl has 
plants in Ohio, Michigan, and Idaho that purchase milk pooled under 
Federal milk orders. The witness also

[[Page 57237]]

asked that the proposals be handled on an emergency basis due to what 
they view as the improper classification of milk used to make these 
products.
    A witness appearing on behalf of Association of Dairy Cooperatives 
of the Northeast (ADCNE) testified in favor of the proponents' 
proposals concerning the reclassification of canned evaporated milk and 
canned sweetened condensed milk products as Class IV. According to the 
witness, ADCNE is comprised of several cooperatives that collectively 
represent more than 65 percent of the producers pooled under the 
Northeast milk order.
    The ADCNE witness testified that it is important for Federal milk 
orders to appropriately classify products. Canned evaporated milk and 
canned sweetened condensed milk, the witness asserted, are long shelf-
life products that fit best in Class IV under the current system of 
product classification and end-product pricing. He pointed out that 
large price differences between Class III and Class IV can place 
Federal order manufacturers of canned evaporated milk and canned 
sweetened condensed milk products--which are distributed nationally--at 
a substantial competitive disparity with non-Federal order 
manufacturers. The witness supported USDA adopting Proposals 1 and 2 on 
an emergency basis.
    ADCNE also filed a post-hearing brief reiterating their position 
and asserting that the mis-classification of canned evaporated milk and 
canned sweetened condensed milk products in Class III (cheese use 
category) has resulted in a $4.00 per hundredweight price discrepancy 
between Class III and Class IV that is extremely burdensome to Federal 
order processors of these products, including the ADCNE member O-AT-KA. 
ADCNE stated that it is imperative the changes be made on an expedited 
basis to restore order to the national market for these products.
    A witness appearing on behalf of New York State Dairy Foods, Inc. 
(NYSDF), testified in support of Proposal 1. The witness contended that 
O-AT-KA can no longer effectively compete in evaporated milk markets 
without incurring very large losses due to the current price disparity 
between Federally regulated milk used to produce evaporated milk 
consumer products and non-Federally regulated milk used to make such 
products.
    The NYSDF witness also testified that a Class IV classification is 
appropriate since evaporated milk, like dried milk powders, is a 
product end use involving extensive special processing and the removal 
of the water from milk. The witness asserted that evaporated milk is 
similar to nonfat milk powder and butter because it has a relatively 
long storage capability. The witness also supported the 
reclassification of milk used to produce canned sweetened condensed 
milk from Class III to Class IV.
    The National Milk Producers Federation (NMPF) filed a brief in 
support of the reclassification of canned evaporated milk and canned 
sweetened condensed milk from Class III to Class IV. NMPF represents 
nearly 60,000 dairy farmers that produce the majority of the United 
States milk supply.
    NMPF's brief asserted that Class III is fundamentally for cheese 
products which is consistent with the Class III cheese based pricing 
formula, whereas Class IV is a class for milk ingredients such as 
butter and milk powders. NMPF believes evaporated and sweetened 
condensed milk products are more appropriately associated with products 
such as milk powders and butter rather than cheese products.
    NMPF encouraged USDA to consider, with respect to adopting 
Proposals 1 and 2, the compatibility with State regulations, which 
would contribute to more orderly marketing both in and outside of 
Federal milk marketing order areas. NMPF also supported the handling of 
the action on an emergency basis to remove the competitive disadvantage 
currently imposed on Federal order manufacturers of canned evaporated 
milk and canned sweetened condensed milk products.
    There was no opposition testimony for the adoption of Proposals 1 
and 2 given at the hearing or contained in post-hearing briefs. 
However, two exceptions were filed in response to the tentative final 
decision pertaining to reclassification amendments for milk used to 
produce canned evaporated milk or canned sweetened condensed milk.
    A comment from Nestle' USA (Nestle') requested that a decision be 
postponed for 90 days because the emergency reclassification, in their 
view, is based on data and statistics that do not reflect appropriately 
on the longer term historical reality and is not in the best immediate 
and future interests of the consumer--commercial customers as well as 
Federal aid recipients through USDA purchasing programs. According to 
Nestle', the selective use of Class III and Class IV price data, USDA 
bid award data, and instances of contradictory information and 
projections within the hearing record requires further investigation to 
ensure adoption of a decision that would best represent the long-term 
needs of all parties.
    Another comment was submitted stating that the invitation for a 
public hearing did not adequately invite all interested parties, 
resulting in record evidence and a decision that are biased and one-
sided.
    Findings & Conclusions:
    The tentative final decision and this final decision finds that the 
record evidence of this proceeding strongly supports the 
reclassification of milk used to produce evaporated milk in consumer-
type packages or sweetened condensed milk in consumer-type packages 
from Class III to Class IV. The proposed amendments adopted in the 
tentative final decision and this final decision reclassify milk used 
to produce canned evaporated milk or canned sweetened condensed milk to 
a Class IV use of milk. The milk used to produce these products, like 
other Class IV dry milk products, has a relatively long shelf life, may 
be stored without refrigeration, is sold over a wide geographic area 
competing for sales with milk from non-Federally regulated sources, and 
remains an outlet for milk not needed for fluid use. Most importantly, 
the yields of these products are based directly on the nonfat solids 
content of the raw milk used to make these products. Thus, the 
reclassification appropriately classifies and prices milk used to 
produce evaporated milk or sweetened condensed milk products in 
consumer-type packages under all Federal milk orders.
    As noted in the tentative final decision, the Agricultural 
Marketing Agreement Act of 1937 specifies that Federal milk marketing 
orders classify milk ``in accordance with the form in which or the 
purpose for which it is used.'' Currently, Federal milk orders 
establish uniform classification of milk provisions for all Federal 
milk orders consisting of four classes of use (Class I, Class II, Class 
III, and Class IV) for pricing milk.
    The classes of use can be categorized as a fluid/beverage class and 
three manufacturing classes of milk. Class I consists of those products 
that are used for fluid/beverage use with certain exceptions for 
formulas especially prepared for infant feeding or dietary use in 
hermetically-sealed containers. Class II includes soft or spoonable 
products such as cottage cheese, sour cream, ice cream, yogurt, and 
milk that is used in the manufacture of other food products. Class III 
consists of milk used in hard cheeses, cream cheese, and other 
spreadable cheese. Class IV consists of butter or any milk product in 
dried form and bulk milk that is in inventory at the end of the month.

[[Page 57238]]

    Federal milk marketing orders establish and maintain orderly 
marketing conditions for dairy farmers and handlers through classified 
pricing (pricing milk based on use) and the pooling of the proceeds of 
milk used in a marketing area. These provisions allow Federal milk 
marketing orders to establish minimum prices that handlers must pay for 
milk based on use and return a weighted average or uniform price that 
dairy farmers receive for their milk. These provisions ensure that all 
dairy farmers supplying a market share in the benefit that arises from 
classified pricing through marketwide pooling of milk.
    Federal milk orders provide a pricing system for manufactured dairy 
products that is based on end-product price formulas. Under this system 
of pricing, the Class III price for milk is derived from the price of 
butterfat, protein, and other nonfat/non-protein milk solids (other 
solids). The butterfat, protein, and other solids prices are dependent 
upon the wholesale prices of butter, cheese, and dry whey, 
respectively, and make allowances and yield factors for the dairy 
products. The Class IV price is derived from the price of butterfat and 
nonfat milk solids. The price of butter and nonfat milk solids are 
dependent upon the wholesale price of butter and nonfat dry milk, 
respectively, and make allowances and yield factors for the products.
    As concluded in the tentative final decision, the record evidence 
clearly indicates that product yields for canned evaporated milk and 
canned sweetened condensed milk products are based exclusively on the 
solids content of the raw milk used to make the product. The record 
reveals that evaporated milk must have a minimum of 6.5 percent 
butterfat and 23 percent total solids and that sweetened condensed milk 
must have a minimum of 8 percent butterfat and 28 percent total solids. 
The higher the milk solids content of the raw milk used to make canned 
evaporated milk or canned sweetened condensed milk the less water needs 
to be removed, which results in more cans of these products produced at 
the above standards. The protein content of the raw milk is not 
relevant to the production of these condensed milk products. 
Accordingly, the tentative final decision and this final decision 
concludes that the reclassification of milk used to produce canned 
evaporated and canned sweetened condensed milk products as a Class IV 
use will ensure that the milk used to produce these products is 
properly classified and priced.
    The uniform classification of milk decision of 1974 stated that 
canned evaporated milk and canned sweetened condensed milk are storable 
products that should remain in the lowest manufacturing use class based 
on a 3-class system. The 1974 decision further states that ``A Class 
III classification for producer milk in these products will permit such 
uses to remain as a competitive outlet for milk surplus to the needs of 
the Class I market.'' The 1974 decision also states such products made 
from milk regulated under these orders must compete over wide areas 
with the same products processed from ungraded milk or other graded 
milk.'' These characteristics of canned evaporated and canned sweetened 
condensed milk products remain applicable today, some 30 years later.
    The Class III classification determination of canned evaporated 
milk and canned sweetened condensed milk was left unchanged during the 
review of the national uniform classification of milk provisions for 
Federal milk marketing orders in 1993. During the reform of the Federal 
milk order program the classification of milk used to produce canned 
evaporated milk and canned sweetened condensed milk products remained 
as Class III milk use products even though Federal order reform 
resulted in a definitive split between milk used to produce Class III 
and Class IV products. The Class III designation in all Federal milk 
orders was determined for milk used to produce cheese with the 
corresponding Class III price based primarily on cheese prices, the 
make allowance for cheese, and cheese yields from a hundredweight of 
milk.
    On the basis of the record evidence, the tentative final decision 
and this final decision find that the product characteristics of 
evaporated milk and sweetened condensed milk are more similar to nonfat 
dry milk (a Class IV product) rather than cheese (a Class III product). 
Like dry milk powders, these products can be stored for long periods of 
time without refrigeration. These products also are competitive outlets 
for milk that is surplus to the Class I needs of a Federal order 
market. Most importantly, the yields for canned evaporated and canned 
sweetened condensed milk products are tied directly to the milk solids 
contained in the raw milk used to produce these products versus the 
protein content as for Class III products.
    The record evidence of this proceeding provided historical data of 
class prices covering the period since Federal milk orders were 
reformed in January 2000 through September 2003. According to this 
data, the Class IV price exceeded the Class III price by an average of 
$2.13 per hundredweight in 2000, $0.91 per hundredweight in 2001, and 
$0.42 per hundredweight in 2002. However, the Class III price for the 
period of January 2003 through September 2003 has exceeded the Class IV 
price by an average of $1.07 per hundredweight. The monthly Class III 
price for milk, generally, was below the Class IV price from the 
implementation of Federal milk marketing order reform in January 2000 
through June 2003. The monthly Class III price increased above the 
Class IV price beginning in July 2003, and the price difference 
increased to a level of $4.25 per hundredweight in September 2003. As 
determined in the tentative final decision, this data clearly 
demonstrates that the Class III and Class IV price relationship has 
shifted since the reform of Federal milk orders in 2000 and that the 
Class III and Class IV prices move independently of each other.
    The price difference between Class III and Class IV gave rise to 
proponents' concerns of competitive inequities. The predictions of 
competitive inequities that would likely continue if the Department 
determined that milk used to produce such products remain classified as 
a Class III use of milk may or may not be valid. These concerns alone 
do not provide adequate rationale for determining if the milk used to 
produce such products are properly classified under the Federal milk 
order system. What is most important is that milk is properly 
classified in accordance with form and use and in doing so promotes 
orderly marketing conditions.
    All of the proponents of Proposals 1 and 2 are handlers who operate 
nonpool plants and, accordingly, are not regulated by any Federal milk 
marketing order. However, the record reveals that these entities 
purchase and receive milk that is pooled and priced under a Federal 
milk marketing order. Unlike pool handlers, nonpool handlers do not 
pool their milk receipts or share in the returns that are determined 
through the marketwide pooling of milk. Nonpool handlers are not 
required to purchase milk already pooled and priced under the terms of 
an order. In this regard, the price paid by nonpool handlers is not 
known if purchased through nonpool sources, and even if purchased 
through pool sources, such purchase may or may not have transacted at 
minimum class prices. Such is especially true when a nonpool handler 
receives milk through diversion from pool handlers. A pooled handler 
diverting milk to a nonpool plant is the entity that incurs the payment 
obligation to dairy farmers and accounts to the marketwide pool for the 
volume of milk at the classified use

[[Page 57239]]

value of milk so diverted. Consequently, the price a nonpool handler 
actually pays for such milk is not known. Therefore, the tentative 
final decision and this final decision find that it cannot be 
determined whether a competitive advantage or disadvantage may arise in 
those times when the Class III price for milk rises above the Class IV 
price, which results in the Class IV price being the lowest valued use 
of milk.
    Hearing participants expressed concern about price disparities that 
result from the improper classification of milk used to produce 
evaporated milk and sweetened condensed milk products as Class III with 
entities that do not use milk priced under a Federal milk marketing 
order. Like the tentative final decision, this final decision does not 
rely on findings with respect to such concerns as a reason for changing 
the classification of milk used to produce these products from the 
current Class III milk use classification to a Class IV use.
    As indicated by the record, milk used to produce canned evaporated 
milk or canned sweetened condensed milk products is directly tied to 
the value of the milk solids content of raw milk and resulting yields 
based on the solids content of raw milk as opposed to the protein 
content for Class III products. The current inappropriate 
classification of milk used to produce canned evaporated milk or canned 
sweetened condensed milk products as a Class III use of milk has 
implications affecting both handlers and producers. From the handler 
perspective, the mis-classification of milk may affect the price they 
pay for milk in these uses and may affect their competitive position 
with milk from non-Federally regulated sources. From the producer 
viewpoint, the mis-classification of milk affects the total value of 
the marketwide pool of milk and thus affects the blend price dairy 
farmers receive for their milk. Analysis of production data from 2000 
to 2002 for canned evaporated milk and canned sweetened condensed milk 
reveals that the blend price for all orders would have increased by 
$0.0117 per hundredweight. From either viewpoint, all market 
participants should be assured that orderly marketing conditions are 
advanced by properly classifying milk in accordance with form and use. 
Record evidence clearly indicates that the impact of reclassification 
of milk used to produce these dairy products is of nominal impact to 
producer milk value.
    The Nestle' comment requesting a 90-day delay in the issuance of a 
decision is denied due to the lack of record evidence to support the 
claim. Nestle suggested that the official record data was inadequate 
and did not include historical realities; and thus, the decision 
adopting the reclassification proposals was not in the best interest of 
consumers. The record evidence of this proceeding--as specified in the 
tentative decision--clearly and strongly supports the reclassification 
of canned evaporated milk and canned sweetened condensed milk from 
Class III to Class IV based on the products' characteristics, 
composition, and production yields. In addition, record data indicates 
that the reclassification amendments will not have a significant 
economic impact on affected entities.
    The comment submitted in response to the tentative final decision 
claiming the public was inadequately notified of the public hearing and 
that the decision issued pertaining to the reclassification of canned 
evaporated milk and canned sweetened condensed milk was one-sided--
reflecting only the views of the proponents--and not in the pubic 
interest is unfounded. Notices informing interested persons that a 
public hearing would be held to consider proposed amendments to certain 
classification of milk use provisions of all Federal orders were 
published in the Federal Register. Interested persons were also 
notified through other means such as notifications by Market 
Administrators and the posting of the Notices on the USDA, Agricultural 
Marketing Service, Dairy Programs Internet site. In addition, the 
formal rulemaking process provides an opportunity for interested 
parties, which includes dairy industry participants--producers and 
processors--and consumers, to participate in the public hearing 
proceeding by presenting record evidence in the form of testimony, 
views, data, arguments, and/or comments concerning the proposals being 
considered. Accordingly, it must be concluded that adequate notice was 
provided to interested parties. Also, the findings and conclusions 
specified in the tentative final decision and adopted in this final 
decision are based on the hearing record evidence that clearly supports 
the reclassification of canned evaporated milk and canned sweetened 
condensed milk from Class III to Class IV.
    Based upon the official record it is therefore concluded that milk 
used to produce evaporated milk or sweetened condensed milk in 
consumer-type packages should be classified as a Class IV use of milk.
    2. Classification of monthly bulk milk ending inventory. Proposal 3 
of the hearing notice, seeking to classify milk in bulk ending 
inventory each month to the lowest priced class of Class III or Class 
IV, was not adopted in the tentative final decision and is not adopted 
in this final decision. Currently, bulk fluid milk products and bulk 
fluid cream products in inventory at the end of the month are 
classified as a Class IV use of milk.
    A witness testifying on behalf of New York State Dairy Foods, Inc. 
(NYSDF), testified that the classification of bulk ending inventories 
beginning with Class IV often tends to increase the volume of other 
source milk assigned to a higher-valued class at the transferee plants 
than is accorded producer milk pooled on an order. The witness asserted 
that this was not the intent of the present provision dealing with the 
proper classification of milk in ending inventory. The witness 
presented data and testimony which indicated that class prices often 
fluctuate independently and do not always maintain a constant 
relationship to one another. According to the witness, the typically 
higher-valued classes can experience a price inversion resulting in a 
negative producer price differential. The witness asserted that a more 
equitable sharing of pool proceeds would result from bulk ending 
inventories being classified at the lowest-valued class. There was no 
opposing testimony provided at the hearing.
    The Association of Dairy Cooperatives in the Northeast (ADCNE) 
filed a post-hearing brief in opposition to the proposal to change the 
classification of monthly bulk ending inventory. The ADCNE brief stated 
that testimony supporting the adoption of the proposal was only 
provided by Northeast milk order handlers even though the proposal 
would affect all Federal milk orders in the United States. According to 
ADCNE, the ``tilt'' in USDA/Commodity Credit Corporation butter/powder 
support price purchase prices will continue into the foreseeable future 
thus mitigating the need to reclassify milk in ending inventories as a 
Class IV use of milk. ADCNE indicated there could be unintended 
consequences of making such a change that could result in losses of 
producer income. Accordingly, ADCNE concluded that the proposal is not 
critical and should not be adopted without further input and a complete 
examination of the issue.
    The National Milk Producers Federation (NMPF) also filed a post-
hearing brief in opposition to the adoption of Proposal 3 on an 
emergency basis. According to NMPF, the impact of the proposal to 
reclassify monthly bulk ending inventory of fluid milk products and 
fluid cream products from Class IV to the lowest-priced class of Class 
III or

[[Page 57240]]

Class IV cannot be analyzed without knowledge of the specific 
conforming changes to other affected sections.
    The NMPF brief stated that Proposal 3 seemed reasonable in that it 
would allow processors to avoid advancing money to the pool that could 
be returned for ultimate use in a lower priced class. The NMPF brief 
argued that the ``lower-of'' concept for classifying inventories is 
supportable as an analog to the ``higher-of'' principle for Class I 
milk. Accordingly, the NMPF brief requested that interested parties be 
provided ample opportunity to comment on the proposed rule should 
Proposal 3 be recommended for adoption.
    Findings and Conclusions:
    The tentative final decision and this final decision find that the 
hearing record does not provide sufficient evidence to adopt a change 
in the classification rules applicable to monthly bulk ending 
inventory. Specifically, the hearing record does not provide 
information on the potential impact of the proposed amendment on 
affected parties. Accordingly, the bulk ending inventory 
reclassification proposal is not adopted.
    3. Determining whether emergency marketing conditions exist that 
would warrant the omission of a recommended decision and the 
opportunity to file written exceptions. The hearing record for this 
proceeding clearly established that the proposals to reclassify milk 
used to produce evaporated milk or sweetened condensed milk in 
consumer-type packages from Class III to Class IV should be adopted on 
an emergency basis. Record evidence clearly established that milk used 
to produce these products was inappropriately classified as a Class III 
milk use. The hearing record indicates that the milk used to produce 
these products should be classified as Class IV and should be priced 
under Federal milk orders accordingly.
    Milk used to produce canned evaporated milk or canned sweetened 
condensed milk products is more appropriately related to the solids 
content of the raw milk used to make these products, which has a direct 
bearing on the yields of these products. The current Class III 
classification of milk is tied to a value determined primarily to 
reflect the protein content of milk, which distorts the basis for 
determining the appropriate value of milk used to produce canned 
evaporated milk and canned sweetened condensed milk products where the 
solids content determines the appropriate milk value. Thus, the mis-
classification of milk results in improper pricing of such milk under 
Federal milk orders which causes disorderly marketing conditions 
affecting both handlers and producers. Consequently, it was determined 
that emergency marketing conditions exist, and therefore the issuance 
of a recommended decision was omitted.

Rulings on Proposed Findings and Conclusions

    Briefs and proposed findings and conclusions were filed on behalf 
of certain interested parties. The briefs, proposed findings and 
conclusions, and the evidence in the record were considered in making 
the findings and conclusions set forth above. To the extent that the 
suggested findings and conclusions filed by interested parties are 
inconsistent with the findings and conclusions set forth herein, the 
requests to make such findings or reach such conclusions are denied for 
the reasons previously stated in this decision.

General Findings

    The findings and determinations hereinafter set forth supplement 
those that were made when the Northeast and other marketing 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.
    (a) The tentative marketing agreements and the orders, as hereby 
proposed to be amended, and all of the terms and conditions thereof, 
will tend to effectuate the declared policy of the Act;
    (b) 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 marketing area, and the minimum 
prices specified in the tentative marketing agreements and the orders, 
as hereby proposed to be amended, 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
    (c) The tentative marketing agreements and the orders, as hereby 
proposed to be amended, will regulate the handling of milk in the same 
manner as, and will be applicable only to persons in the respective 
classes of industrial and commercial activity specified in, marketing 
agreements upon which a hearing has been held.

Rulings on Exceptions

    In arriving at the findings and conclusions, and the regulatory 
provisions of this decision, each of the exceptions received was 
carefully and fully considered in conjunction with the record evidence. 
To the extent that the findings and conclusions and the regulatory 
provisions of this decision are at variance with any of the exceptions, 
such exceptions are hereby overruled for the reasons previously stated 
in this decision.

Marketing Agreement and Order

    Annexed hereto and made a part hereof is a Marketing Agreement 
regulating the handling of milk. The Order amending the orders 
regulating the handling of milk in the Northeast and all other 
marketing areas was approved by producers and published in the Federal 
Register on April 23, 2004 (69 FR 21950), as an Interim Final Rule. 
Both of these documents have been decided upon as the detailed and 
appropriate means of effectuating the foregoing conclusions.
    It is hereby ordered that this entire decision and the marketing 
agreement annexed hereto be published in the Federal Register.

Referendum Order To Determine Producer Approval; Determination of 
Representative Period; and Designation of Referendum Agent

    It is hereby directed that referenda be conducted and completed on 
or before the 30th day from the date this decision is published in the 
Federal Register, in accordance with the procedure for the conduct of 
referenda (7 CFR 900.300-311), to determine whether the issuance of the 
orders as amended and as hereby proposed to be amended, regulating the 
handling of milk in the Northeast and Mideast marketing areas is 
approved or favored by producers, as defined under the terms of the 
order (as amended and as hereby proposed to be amended), who during 
such representative period were engaged in the production of milk for 
sale within the aforesaid marketing areas.
    The representative period for the conduct of such referenda is 
hereby determined to be January 2004.
    The agents of the Secretary to conduct such referenda are hereby 
designated to be the respective market administrators of the aforesaid 
orders.

Determination of Producer Approval and Representative Period

    January 2004 is hereby determined to be the representative period 
for the purpose of ascertaining whether the issuance of the orders, as 
hereby

[[Page 57241]]

proposed to be amended, regulating the handling of milk in the 
Appalachian, Florida, Southeast, Upper Midwest, Central, Pacific 
Northwest, Southwest, and Arizona Las Vegas marketing areas, is 
approved or favored by producers, as defined under the terms of the 
orders (as amended and as hereby proposed to be amended) who during 
such representative period were engaged in the production of milk for 
sale within the aforesaid marketing areas.

List of Subjects in 7 CFR Parts 1000, 1001, 1005, 1006, 1007, 1030, 
1032, 1033, 1124, 1126, and 1131

    Milk marketing orders.

    Dated: September 20, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.

Order Amending the Orders Regulating the Handling of Milk in the 
Northeast and Other Marketing Areas

    (This order shall not become effective unless and until the 
requirements of Sec.  900.14 of the rules of practice and procedure 
governing proceedings to formulate marketing agreements and marketing 
orders have been met.)

Findings and Determinations

    The findings and determinations hereinafter set forth supplement 
those that were made when the 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.
    (a) Findings. 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 Northeast and other 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), 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 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 regulate the handling of milk 
in the same manner as, and are applicable only to persons in the 
respective classes of industrial or commercial activity specified in, 
marketing agreements upon which a hearing has been held.

Order Relative to Handling

    It is therefore ordered, that on and after the effective date 
hereof, the handling of milk in the Northeast and other marketing areas 
shall be in conformity to and in compliance with the terms and 
conditions of the order, as amended, and as hereby amended, as follows:
    The provisions of the order amending the orders contained in the 
interim amendment of the orders issued by the Administrator, 
Agricultural Marketing Service, on April 19, 2004, and published in the 
Federal Register on April 23, 2004 (69 FR 21950), are adopted without 
change and, shall be the terms and provisions of this order.
    [This marketing agreement will not appear in the Code of Federal 
Regulations.]

Marketing Agreement Regulating the Handling of Milk in Certain 
Marketing Areas

    The parties hereto, in order to effectuate the declared policy 
of the Act, and in accordance with the rules of practice and 
procedure effective thereunder (7 CFR Part 900), desire to enter 
into this marketing agreement and do hereby agree that the 
provisions referred to in paragraph I hereof as augmented by the 
provisions specified in paragraph II hereof, shall be and are the 
provisions of this marketing agreement as if set out in full herein.
    I. The findings and determinations, order relative to handling, 
and the provisions of Sec. Sec.  ------------\1\ to---------- , all 
inclusive, of the order regulating the handling of milk in the (----
---- Name of order--------) marketing area (7 CFR Part--------\2\) 
which is annexed hereto; and
---------------------------------------------------------------------------

    \1\ First and last sections of order.
    \2\ Appropriate Part number.
---------------------------------------------------------------------------

    II. The following provisions: Sec.  ------------\3\ Record of 
milk handled and authorization to correct typographical errors.
---------------------------------------------------------------------------

    \3\ Next consecutive section number.
---------------------------------------------------------------------------

    (a) Record of milk handled. The undersigned certifies that he/
she handled during the month of ------------\4\ ,-------- 
hundredweight of milk covered by this marketing agreement.
---------------------------------------------------------------------------

    \4\ Appropriate representative period for the order.
---------------------------------------------------------------------------

    (b) Authorization to correct typographical errors. The 
undersigned hereby authorizes the Deputy Administrator, or Acting 
Deputy Administrator, Dairy Programs, Agricultural Marketing 
Service, to correct any typographical errors which may have been 
made in this marketing agreement.
    Sec.  ------------\3\ Effective date. This marketing agreement 
shall become effective upon the execution of a counterpart hereof by 
the Secretary in accordance with Section 900.14(a) of the aforesaid 
rules of practice and procedure.
    In Witness Whereof, The contracting handlers, acting under the 
provisions of the Act, for the purposes and subject to the 
limitations herein contained and not otherwise, have hereunto set 
their respective hands and seals.

Signature

By (Name)--------------------------------------------------------------

(Title)----------------------------------------------------------------

(Address)--------------------------------------------------------------

(Seal)

Attest

[FR Doc. 04-21416 Filed 9-23-04; 8:45 am]
BILLING CODE 3410-02-P


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