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.

Proposed Rules Federal Register

67670

Vol. 69, No. 223

Friday, November 19, 2004

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Parts 1005, 1006, and 1007 

[Docket No. AO–388–A16, AO–356–A38, and 

AO–366–A45; DA–04–07] 

Milk in the Appalachian, Florida, and 

Southeast Marketing Areas; Decision 

on Proposed Amendments to 

Marketing Agreements and to Orders

AGENCY: Agricultural Marketing Service, 

USDA.

ACTION: Proposed rule; final decision.

SUMMARY: This document proposes to 

adopt, on an emergency basis, 

amendments to the Appalachian, 

Florida, and Southeast Federal milk 

marketing orders. Specifically, the 

proposed amendments will implement a 

temporary supplemental charge on Class 

I milk that will be disbursed to handlers 

who incurred transportation costs for 

bulk milk movements for the 

Appalachian, Florida, and Southeast 

orders resulting from hurricanes 

Charley, Frances, Ivan and Jeanne. The 

proposed amendments are based on 

record evidence of a public hearing held 

in Atlanta, Georgia, on October 7, 2004. 

This decision requires determination of 

whether producers approve the orders 

as proposed to be amended.

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: 

antoinette.carter@usda.gov.

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 

Department 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 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 

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 August 2004, the most recent 

representative month, the milk of 7,239 

dairy farmers was pooled under the 

Appalachian (Order 5), Florida (Order 

6), and Southeast (Order 7) milk orders 

(3,400 Order 5 dairy farmers, 267 Order 

6 dairy farmers, and 3,572 Order 7 dairy 

farmers, respectively). Of the 7,239 

dairy farmers, 80 percent met the 

definition of small business. 

Specifically, the number of dairy 

farmers considered small businesses for 

Order 5, Order 6, and Order 7 were 

3,230 or 95 percent, 134 or 50 percent, 

and 3,407 or 95 percent, respectively. 

During the same period, there were 65 

fully regulated plants under Orders 5, 6, 

and 7. Of the 65 plants, 7 were 

considered small businesses. 

Specifically, there were 25 Order 5 

plants (of which 2 were small 

businesses), 12 Order 6 plants (of which 

3 were small businesses), and 28 Order 

7 plants (of which 2 were small 

businesses).

The proposed amendments adopted 

in this final decision will provide 

temporary reimbursement to handlers 

(cooperative associations and 

proprietary handlers) who incurred 

extraordinary transportation expenses 

for bulk milk movements resulting from 

the impact of hurricanes Charley, 

Frances, Ivan, and Jeanne on the 

Southeastern United States, particularly 

the State of Florida. The proposed 

amendments were requested by Dairy 

Farmers of America, Inc., Lone Star 

Milk Producers, Inc., Maryland & 

Virginia Milk Producers Cooperative 

Association, Inc., and Southeast Milk, 

Inc. The dairy farmer members of these 

four cooperatives supply the majority of 

the milk pooled under the Appalachian, 

Florida, and Southeast orders. The 

proposed amendments adopted in this 

final decision will implement, for a 3-

month period beginning January 1, 

2005, a supplemental increase in the 

Class I milk price at a rate not to exceed 

$.04 per hundredweight of milk in the 

Appalachian and Southeast orders, and 

a rate not to exceed $.09 per 

hundredweight of milk in the Florida 

order. The amount generated through 

the Class I milk increase will be 

disbursed during February 2005 through 

April 2005 to qualifying handlers who 

Federal Register / Vol. 69, No. 223 / Friday, November 19, 2004 / Proposed Rules 67671

incurred extraordinary transportation 

costs as a result of the hurricanes. The 

reimbursement for extraordinary 

transportation costs will be disbursed to 

qualifying handlers on an actual 

transportation costs basis or at a rate of 

$2.25 per loaded mile, whichever is 

less. 

The aforementioned hurricanes 

occurred during a 7-week period of time 

and disrupted the orderly flow of milk 

movements in and to the Appalachian, 

Florida, and Southeast marketing areas. 

The four hurricanes caused handlers in 

the southeastern markets, particularly in 

the Florida marketing area, to 

experience disruptions in moving bulk 

milk to supply the Class I (fluid milk) 

needs of the individual marketing areas. 

One of the functions of the Federal 

milk order program is to provide for the 

orderly exchange of milk between the 

dairy farmer and the handler (first 

buyer) to ensure the Class I needs of the 

market are met. The record evidence 

clearly reveals that the movements of 

bulk milk for Orders 5 and 7, and 

particularly Order 6 were disrupted due 

to the hurricanes. Accordingly, the 

adoption of the proposed amendments 

will provide temporary transportation 

cost reimbursement to handlers who 

incurred additional transportation 

expenses for bulk milk movements that 

were disrupted as a result of 

extraordinary weather conditions in 

Orders 5, 6, and 7.

The proposed amendments will 

provide reimbursement to handlers for 

transportation expenses totaling over 

$1.6 million for movements of bulk milk 

due to the hurricanes. The supplemental 

increase in the minimum price of Class 

I milk at a maximum rate of $.09 per 

hundredweight for Order 6 is 

anticipated to increase the price of a 

gallon of milk by not more than $0.0078 

(i.e., less than 1 cent) during each month 

of the 3-month period. Likewise, a 

supplemental increase at a maximum 

rate of $.04 per hundredweight for 

Orders 5 and 7 is anticipated to increase 

the price of a gallon of milk by not more 

than $0.0034 (i.e., less than 1 cent) 

during each month of the 3-month 

period. The estimated impact on the 

price per gallon of milk was calculated 

by converting the hundredweight value 

to gallons using 8.62 pounds of milk per 

gallon. 

Handlers in Orders 5, 6, and 7 should 

not be placed at a competitive 

disadvantage because of the temporary 

and limited supplemental increase in 

the minimum Class I milk price. The 

proposed amendments also are not 

expected to impact the blend price of 

dairy farmers. Accordingly, the 

adoption of the proposed amendments 

should not significantly impact 

producers or handlers due to the limited 

implementation period and the 

minimum increase in the Class I milk 

price. 

A review of reporting requirements 

was completed under the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

Chapter 35). As such, the information 

collection requirements in this final 

decision do not require clearance by the 

Office of Management and Budget 

(OMB) beyond the currently approved 

information collections. This final 

decision will impose only minimal 

reporting requirements on handlers 

applying for reimbursement of 

additional transportation expenses 

incurred due to the aforementioned 

hurricanes. 

Handlers may submit documents 

supporting their claims with their 

monthly handler report of milk receipts 

and utilization. The primary sources of 

data that would be required for 

submission to Market Administrators by 

handlers applying for transportation 

cost reimbursement currently are used 

in most business transactions. These 

documents include—but are not limited 

to—invoices, receiving records, bulk 

milk manifests, hauling billings, and 

contract agreements. Handlers who have 

applied for or received transportation 

cost reimbursement through insurance 

claims or through any State, Federal, or 

other programs must submit 

documentation of such claims of 

reimbursement to the Market 

Administrators for Orders 5, 6, and 7. 

Prior documents in this proceeding:

Notice of Hearing: Issued September 

28, 2004; published September 30, 2004 

(69 FR 58368). 

Preliminary Statement 

Notice is hereby given of the filing 

with the Hearing Clerk of this final 

decision with respect to proposed 

amendments to the tentative marketing 

agreements and the orders regulating the 

handling of milk in the Appalachian, 

Florida, and Southeast marketing areas. 

This notice is issued pursuant to the 

provisions of the Agricultural Marketing 

Agreement Act of the applicable rules of 

practice and procedure governing the 

formulation of marketing agreements 

and marketing orders (7 CFR part 900). 

The proposed amendments set forth 

below are based on the record of a 

public hearing held in Atlanta, Georgia, 

on October 7, 2004, pursuant to a notice 

of hearing issued September 28, 2004, 

and published September 30, 2004 (69 

FR 58368). 

The material issues on the record of 

the hearing relate to: 

1. Temporary reimbursement for 

extraordinary transportation costs 

resulting from hurricanes; and 

2. 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 record thereof: 

1. Temporary reimbursement for 

extraordinary transportation costs 

resulting from hurricanes. This final 

decision proposes to adopt amendments 

to the Appalachian, Florida, and 

Southeast milk orders (Orders 5, 6, and 

7) that will implement a temporary 

increase in the minimum Class I milk 

price to provide reimbursement to 

handlers who incurred extraordinary 

transportation expenses to move bulk 

milk for Orders 5, 6, and 7, as a result 

of hurricanes Charley, Frances, Ivan, 

and Jeanne. The record evidence clearly 

supports the adoption of the proposed 

amendments to provide temporary 

reimbursement to handlers who 

incurred extraordinary transportation 

expenses due to the unprecedented 

occurrence of four hurricanes in the 

Southeastern United States over a 7-

week period and the resulting 

disruption of bulk milk movements for 

Orders 5, 6, and 7—particularly for 

Order 6. 

A witness testifying on behalf of Dairy 

Farmers of America, Inc., Lone Star 

Milk Producers, Inc., Maryland and 

Virginia Milk Producers Cooperative 

Association Inc., and Southeast Milk, 

Inc., (proponent cooperatives) presented 

testimony in support of Proposal 1 with 

certain modifications. The witness said 

that Proposal 1 seeks to provide 

emergency relief under the Federal milk 

order system to help reimburse 

marketers of milk for extraordinary costs 

incurred moving bulk milk for Orders 5, 

6, and 7, as a result of hurricanes 

Charley, Frances, Ivan, and Jeanne. 

The proponent cooperatives’ witness 

stated that Proposal 1, if adopted, would 

generate funds for reimbursements for 

extraordinary transportation costs by 

increasing the Class I price of milk at a 

rate not to exceed $.04 per 

hundredweight in Orders 5 and 7 and at 

a rate not to exceed $.09 per 

hundredweight in Order 6 for the period 

of January 1, 2005, through March 31, 

2005. The witness explained that the 

funds generated through the Class I milk 

price increase would be disbursed as 

relief payments to qualifying handlers 

and cooperative associations in their 

67672 Federal Register / Vol. 69, No. 223 / Friday, November 19, 2004 / Proposed Rules 

capacity as handlers for a period not to 

exceed February 2005 through April 

2005. 

The proponent cooperatives’ witness 

testified that during August and 

September 2004 four hurricanes 

(Charley, Frances, Ivan, and Jeanne) 

made landfall in the Southeastern 

United States causing disorderly and 

costly movements of bulk milk in the 

three southeastern marketing areas, 

particularly having an impact on the 

Florida order. The proponent 

cooperatives’ witness noted that 

hurricane Charley made landfall on 

August 13, 2004, at Cayo Costa, Florida; 

hurricane Frances made landfall on 

September 5, 2004, at St. Marks, Florida; 

hurricane Ivan made landfall on 

September 16, 2004, at Mobile, 

Alabama; and hurricane Jeanne made 

landfall at Stuart, Florida, on September 

25, 2004. According to the witness, the 

disruptions in bulk milk movements 

actually began several days before the 

initial landfall of the first major 

hurricane (Charley), and ended several 

days after the landfall of the last 

hurricane (Jeanne). 

According to the proponent 

cooperatives’ witness, reimbursement 

for extraordinary additional 

transportation costs as advanced in 

Proposal 1 would be limited to costs 

incurred as a result of the 

aforementioned hurricanes. The witness 

also indicated that certain milk 

movements occurred preceding landfall 

of the hurricanes causing milk to be 

moved out of the way. In addition, the 

witness pointed out that following each 

of the hurricanes, replacement milk was 

required from other origins and these 

movements should be considered as 

part of the additional transportation 

costs incurred by cooperatives resulting 

from the hurricanes.

According to the proponent 

cooperatives’ witness, if a potential 

qualified shipment of milk was moved 

out of the path of the hurricanes and 

was received at a distributing plant or 

was sitting at a distributing plant and 

then shipped to another plant, then the 

transportation costs incurred should be 

entitled to reimbursement if such milk 

was shipped as bulk milk. The witness 

stated that to date proponent 

cooperatives have identified 

extraordinary transportation costs in 

excess of $1.6 million for bulk milk for 

Orders 5, 6, and 7. The witness stated 

that these losses would probably not be 

recouped from other sources. Therefore, 

the assistance of the Federal milk 

marketing order program was sought as 

a means to provide financial relief for 

these extraordinary additional 

transportation costs. 

The witness for the proponent 

cooperatives explained that Dairy 

Cooperative Marketing Association 

(DCMA), a marketing agency to which 

all the proponent cooperatives are 

members, operates as the over order 

pricing agency in the Southeastern 

United States by coordinating between 

cooperatives the over order prices 

charged to distributing plant customers 

located predominantly in the Order 5, 6, 

and 7 marketing areas. According to the 

witness, many factors affect over order 

prices including—but not limited to—

levels of over order prices in adjacent 

marketing areas, cost and availability of 

bulk and packaged alternative supplies, 

general price level, and regional and 

national supply and demand 

relationships. 

The proponent cooperatives’ witness 

stated that one of the goals of DCMA is 

to reduce Class I milk price volatility to 

its customers. The witness noted that for 

the months of August 2004 through 

October 2004, using the Atlanta total 

Class I milk prices, the DCMA over 

order Class I pricing system reduced the 

volatility on the announced Federal 

order Class I prices by $.50 per 

hundredweight. 

The proponent cooperatives’ witness 

explained the DCMA over order pricing 

plan for 2004 using a table that detailed 

the over order price for Atlanta, Georgia, 

as follows: (1) For Federal order Class I 

base prices (Class I price mover) 

between $12.00 and $14.00 inclusive 

(3.5 percent butterfat equivalent), the 

Class I over order price, prior to any 

applicable fuel cost surcharge shall be 

$1.45; (2) for each cent the Federal order 

Class I base price exceeds $14.00, the 

Class I over order price will be reduced 

by one cent up to a maximum decrease 

of $0.50 and; (3) for each cent the 

Federal order Class I base price is less 

than $12.00, the Class I over order price 

will be increased by one cent up to a 

maximum of $0.50. The table also noted 

the location adjustments for Class I over 

order prices in selected cities. 

The witness pointed out that for the 

past years cooperatives in the 

Southeastern United States have, 

through DCMA, utilized a structured 

system of over order prices that increase 

when Federal milk order Class I milk 

prices are at lower levels, and 

conversely, the over order prices 

decrease when Federal milk order Class 

I prices are at higher levels. The 

proponent cooperatives’ witness 

indicated that this practice may 

continue during January 2005 through 

March 2005, which is the period when 

the Class I milk price would be 

increased if Proposal 1 is adopted. The 

witness also asserted that providing the 

generation of revenue and disbursement 

of relief payments under the Federal 

milk order program would insure all 

market participants that the rate of 

payment is equal for all Class I pool 

handlers and that the costs paid are 

accurately associated with the hurricane 

emergency. 

The proponent cooperatives’ witness 

said that the proponents would support 

a requirement that handlers applying for 

relief payments for extraordinary costs 

incurred due to the aforesaid hurricanes 

submit to the market administrator—

along with supporting documents—a 

statement certifying that as of the 

application date no relief payments had 

been received and no relief payments 

were expected to be received through 

any other state or Federal programs or 

insurance claims. The proponent 

cooperatives’ witness asserted that 

without financial assistance provided 

through the Class I milk price as 

developed in Proposal 1, marketers of 

milk, principally cooperative 

associations, will bear the cost of these 

unanticipated and extraordinary milk 

movements. 

The witness for the proponent 

cooperatives’ stressed that all of the 

additional costs associated with 

transporting loads of milk should be 

reimbursed but not to exceed $2.25 per 

loaded mile. The witness testified that 

a loaded mile was defined as a one-way 

hauling cost for milk delivery from the 

origination point to the destination 

point. The witness also stated that the 

$2.25 mileage rate is a common rate 

being paid for transporting milk and is 

a reasonable maximum rate for hauling. 

The witness expressed the opinion 

that the decision process should be 

concluded very rapidly and suggested 

that delay would not change the result 

or the additional transportation costs 

associated with hurricane related 

events. In addition, the witness was of 

the opinion that additional 

transportation costs should include 

those additional costs incurred by bulk 

milk shippers transporting milk to 

plants outside of hurricane affected 

areas because these plants packaged 

milk to replace the production of plants 

that had been closed due to the extreme 

weather events in the storm affected 

areas.

The proponent cooperatives’ witness 

and other proponent witnesses 

indicated that the movement of milk 

which would qualify for reimbursement 

should include: (1) Loads of producer 

milk delivered or rerouted to a pool 

distributing plant; (2) loads of producer 

milk delivered or rerouted to a pool 

supply plant which was then transferred 

to a pool distributing plant; (3) loads of 

Federal Register / Vol. 69, No. 223 / Friday, November 19, 2004 / Proposed Rules 67673

bulk milk delivered or rerouted to a 

pool distributing plant from a pool 

supply plant; (4) loads of bulk milk 

delivered or rerouted to a pool 

distributing plant from another order 

plant; and they modified Proposal 1 to 

include reimbursement for bulk milk 

transferred or diverted to a plant 

regulated under another Federal order 

or to other nonpool plants. 

The proponent cooperatives’ witness 

and other proponent witnesses testified 

that storm related rerouting of milk 

movements should be eligible for 

reimbursement because they resulted 

from flooding related road closures, 

bridge and road washouts, massive 

power outages, mandatory official 

evacuation orders, and extended 

temporary closures of distributing 

plants-all due to the extreme weather 

conditions. The witnesses testified that 

reroutes represent only those portions of 

milk movements that were other than 

usual and customary shipping routes 

from individual shipping points. The 

witness presented an example of 

reroutes where bulk milk in Florida on 

tankers destined for distributing plants 

was moved out of Florida, parked at a 

plant lot outside of Florida but not 

received by the plant, and when the 

storm had passed the milk was shipped 

back to distributing plants in Florida for 

processing. 

The proponent cooperatives’ witness 

testified that demonstrated costs are 

those costs for which documentation, 

such as bills of lading, truck tickets, 

truck manifests and driver logs can 

demonstrate to the satisfaction of milk 

market administrators that those 

additional, extraordinary transportation 

costs occurred. The witness noted that 

it would be at the sole discretion of the 

Market Administrator of each order to 

determine which movements of bulk 

milk were conducted in the normal 

course of business and which milk 

movements were attributable to the four 

hurricanes and thus should receive 

reimbursement for extraordinary 

transportation costs.

In other testimony, the proponent 

cooperatives’ witness explained the 

methodology used to determine the 

proposed increases in the Class I price 

for the Appalachian, Southeast, and 

Florida milk orders, as advanced in 

Proposal 1. According to the witness, 

the extraordinary additional milk 

transportation costs totaled 

approximately $1.6 million for the three 

Federal milk orders, with $102,206 

associated with the Appalachian order, 

$1,139,469 associated with the Florida 

order, and $370,085 associated with the 

Southeast order. The witness testified 

that monthly volume estimates of Class 

I producer milk were used as quantities 

in the derivation of the rate of increase 

in the Class I price applicable for each 

order as advanced in Proposal 1 as 

follows: 373 million pounds per month 

for the Appalachian order, 218 million 

pounds for the Florida order, and 392 

million pounds for the Southeast order. 

According to the witness, the estimated 

extraordinary costs incurred in each 

milk marketing area was divided by the 

estimated pounds of milk pooled on 

each order and divided by three to 

provide a monthly rate for each of three 

months. The rates based on these 

calculations for each are: $.0091 per 

hundredweight per month for the 

Appalachian order, $.1735 per 

hundredweight for the Florida order, 

and $.0315 per hundredweight for the 

Southeast order, according to the 

witness. The witness acknowledged that 

these rates differ markedly from the 

rates requested for each order, as 

advanced in Proposal 1 and published 

in the notice of hearing of this 

proceeding. The witness stated that the 

differences were attributable to rapidly 

changing extraordinary transportation 

cost information collected for each order 

and changes in cost allocations between 

orders as information became more 

accurately available. 

The proponent cooperatives’ witness 

explained that under Proposal 1 the 

temporary increase for the three 

consecutive months would set an 

effective cap on the amount of new 

Class I revenue which could be 

generated under the temporary 

amendments at not more than the 

demonstrated costs of moving milk 

because of the four hurricanes. The 

witness emphasized that the total 

revenues generated under this system 

would be limited to the costs incurred 

so that no marketer of milk would profit 

from the payment for these defined 

extraordinary hauling costs, but rather 

would be reimbursed for incurring the 

costs. In addition, the blend price to 

producers under Orders 5, 6, and 7 

would not increase since the money 

collected cannot exceed the money 

spent, noted the witness. 

The proponent cooperatives’ witness 

stated that as proposed Proposal 1 

would require handlers applying for the 

relief payments to prove to the 

satisfaction of the market administrator 

that milk movements were 

extraordinary and a result of the 

hurricane emergencies. As proposed, 

two limits would be placed on the 

payments. First, the total amount of 

reimbursement of extraordinary 

transportation costs would be limited to 

the amount of funds collected under the 

adjustment to the Class I milk value. If 

the demonstrated amount exceeded the 

funds generated from increasing the 

Class I handler value, then the 

remaining extraordinary transportation 

costs would go unpaid. Second, the rate 

per mile of transportation would be 

limited to $2.25 per loaded mile. This 

limit, stated the witness, insures that 

marketers of milk cannot garner 

excessive profits by the inflation of 

hauling costs. 

The proponent cooperatives’ witness 

testified that proponent cooperatives 

would only be eligible for either a 

transportation credit payment in the 

Southeast and Appalachian orders or a 

temporary transportation relief payment 

within the provisions of Proposal 1. 

According to the witness, this would 

eliminate the possibility of ‘‘double 

dipping’’ or receiving double 

compensation for the same 

transportation costs. 

The proponent cooperatives’ witness 

concluded by indicating that, at the end 

of the proposed 3-month period, if any 

funds collected through the 

supplemental increase in the Class I 

milk price in each individual marketing 

area were not disbursed then the 

remaining amount should be refunded 

to the Class I handlers in proportion to 

their contribution in that market. The 

witness stated that a disbursement of 

any remaining funds through the 

producer settlement fund of each 

individual order would be acceptable 

but the preference of the proponent 

cooperatives is that the blend price not 

be enhanced as a result of their 

proposal. The witness further stated that 

Proposal 1 is designed to provide 

Market Administrators the authority to 

reduce the rate of increase of the Class 

I milk price to help ensure no excess 

funds are available for disbursement. 

A witness representing Southeast 

Milk, Inc. (SMI), testified in support of 

Proposal 1. The witness stated that SMI 

is a dairy marketing cooperative 

comprised of approximately 300 dairy 

farmer members with about 74 percent 

of its milk production in Florida, 24 

percent in Georgia, and the remaining 2 

percent in Alabama and Tennessee. 

During August 2004, the witness noted 

that SMI dairy farmer members’ milk 

accounted for about 87.5 percent of the 

producer milk pooled on the Florida 

order, and 17.8 million pounds of its 

dairy farmer members’ milk was pooled 

on the Southeast order.

The witness explained how hurricane 

Frances caused the most disruption due 

to its enormous size and slow 

movement across Florida. The witness 

stated that unlike past hurricanes, 

hurricane Frances disrupted the entire 

state. Also, the witness explained the 

67674 Federal Register / Vol. 69, No. 223 / Friday, November 19, 2004 / Proposed Rules 

extreme precautions taken in response 

to hurricane Frances were a result of the 

very recent experience of hurricane 

Charley during mid-August. 

Additionally, the witness indicated that 

the majority of SMI’s dairy producers 

located in Florida were directly or 

indirectly affected by at least one of 

these hurricanes. 

According to the SMI witness, the 

Florida Department of Agriculture 

estimates agriculture losses from 

hurricanes Charley and Frances will 

exceed $2.1 billion, excluding the 

effects of hurricanes Ivan and Jeanne. 

The witness provided other examples of 

the disruption caused by these 

hurricanes indicating that thirty-four of 

the 36 Florida counties with dairy farms 

were declared to be eligible for 

individual assistance by the Federal 

Emergency Management Agency 

(FEMA). The witness noted that 144 of 

the 170 SMI dairy farms, representing 

almost 88 percent of SMI Florida milk 

production, are located in counties 

declared disaster areas as a direct result 

of the hurricanes. According to the 

witness, Florida’s largest milk 

producing county, Okeechobee, was 

declared a disaster area during three of 

the four hurricanes. The witness 

testified that at least 700 head of dairy 

cows, heifers, and calves were killed 

and the number is increasing daily. In 

conclusion, the witness estimated that 

the decline in milk production per cow, 

due to additional stress cows suffered 

from the hurricane events, would result 

in reduced revenue of at least $15 

million. 

The SMI witness pointed out that 

during hurricane Frances, 

approximately 3 million pounds of milk 

were dumped at farms or from trailers 

due to excessive milk age or high 

temperature with a loss value estimated 

at $540,000. It was the opinion of the 

SMI witness that the dumping of milk 

was because milk trucks were not able 

to reach farms due to high winds, 

downed power lines and trees blocking 

roads and farm lanes, and law 

enforcement officials limiting traffic to 

only emergency vehicles. Also, Florida 

based milk haulers avoided hurricane 

zones or were unable to reach certain 

destinations due to traffic and roads that 

were only opened northbound. In 

addition, the witness testified that all of 

SMI’s milk tankers were filled as 

temporary storage units. 

The SMI witness noted that, if 

implemented, Proposal 1 would help 

increase the revenue and income of 

small businesses. According to the 

witness, if the proposal is not 

implemented, SMI members alone 

would pay for the extraordinary 

transportation costs incurred in the 

marketing area. The witness was of the 

opinion that movements of bulk milk to 

nonpool plants should be covered under 

Proposal 1 because milk intended for 

the Class I market from SMI had to be 

rerouted to nonpool plants because 

distributing plants in Florida would not 

or could not receive milk because of 

plant closures or suspended operations 

directly resulting from the hurricanes. 

The witness testified that the alternative 

to shipping this Class I milk to nonpool 

plants was to dump the milk. 

The SMI witness concurred with the 

previous witness that any extra funds 

collected in the marketing area after all 

the funds are disbursed should be paid 

back to the handler who paid those 

dollars through the producer-settlement 

fund. 

A witness representing Dairy Farmers 

of America (DFA), a national dairy 

cooperative with more than 13,000 

members that market milk to plants 

regulated on the Southeast, 

Appalachian, and Florida orders 

testified in support of Proposal 1. The 

DFA witness provided evidence that 

explained the additional supplemental 

milk transportation costs of moving 

milk into the Southeastern United States 

as a result of hurricanes Charley, 

Frances, Ivan and Jeanne. The witness 

testified that beginning on September 

11, 2004, several loads of milk 

originating in Rockingham, Virginia, 

were ordered by a plant in North 

Charleston, South Carolina, to be 

rerouted to a plant in Spartanburg, 

South Carolina because of weather 

related concerns. The witness indicated 

that DFA would provide actual invoices 

for the transportation costs, including 

fuel surcharges, plus any other 

documentation needed by the Market 

Administrator to prove conclusively 

that reroutes took place while 

transporting milk into the southeast 

area. 

A witness representing Lone Star Milk 

Producers (LSMP), a dairy cooperative 

that has members in Kansas, Oklahoma, 

Texas, Missouri, Arkansas, Louisiana, 

Mississippi, Tennessee, and Kentucky, 

testified in support of Proposal 1. The 

witness noted that during the hurricanes 

LSMP was involved in dispatching milk 

to points in the Southeastern United 

States. 

The witness provided evidence 

indicating additional supplemental milk 

transportation costs that occurred when 

delivering milk from Chaves County, 

New Mexico, to a Publix plant in 

Lakeland, Florida. The witness noted 

that LSMP delivered two loads an 

estimated 1,727 miles per load, at a rate 

of $2.04 per loaded mile totaling 

$3523.08 per load or $7046.16 for both 

loads.

A witness representing Maryland & 

Virginia Milk Producers Cooperative 

Association, Inc. (MD&VA), a 

cooperative with approximately 1,450 

members in 11 states marketing milk in 

the Northeast, Appalachian, and 

Southeast orders, testified in support of 

Proposal 1. The MD&VA witness 

provided evidence indicating that 

during the hurricane months 

extraordinary milk movements in the 

Southeast were incurred. Specifically, 

the witness related that a load of milk 

was ordered on September 9, 2004, by 

the Superbrand plant (Winn Dixie Dairy 

Plant) in Taylors, South Carolina. The 

Superbrand plant needed to ship 

packaged milk to Florida so MD&VA 

shipped a load of milk from Franklin, 

Pennsylvania. The load was shipped 

518 miles at a hauling cost of $2.25 per 

mile, totaling $1,166.50. The witness 

explained, additional orders were 

placed on September 10, 2004, for bulk 

milk deliveries to the Superbrand plant 

in Taylors, South Carolina, and MD&VA 

shipped five loads to the Superbrand 

plant (i.e., three from Frederick, 

Maryland, and two from Franklin, 

Pennsylvania). 

A witness representing National Dairy 

Holdings (NDH), which has 12 Class I 

processing plants at various locations in 

the Appalachian, Southeast, and Florida 

marketing areas, and operates a total of 

20 plants across the United States, 

testified in support of Proposal 1. The 

witness emphasized that the scope of 

the devastation and destruction caused 

by the four hurricanes in the 

southeastern part of the United States 

was the basis for NDH’s support of the 

proposal. As a result, stated the witness, 

NDH shut plants in response to 

evacuation notices as the storms headed 

for landfall. Production was stopped 

and the refrigeration systems and 

electrical supply were shut down, noted 

the witness. The aftermath of the 

hurricanes caused power outages and 

the plants to remain closed for days, 

noted the witness. 

It was the opinion of the NDH witness 

that dairy farmers should not be 

burdened with the entire cost of hauling 

milk during the hurricanes. In 

conclusion, the witness stated that 

raising the revenues for reimbursing 

transportation costs under the Federal 

milk marketing orders would ensure 

equitable treatment for all handlers of 

Class I milk regulated under the 

Appalachian, Southeast, and Florida 

orders. 

A witness from Dean Foods Company 

(Dean Foods) testified in support of 

Proposal 1. According to the witness, 

Federal Register / Vol. 69, No. 223 / Friday, November 19, 2004 / Proposed Rules 67675

Dean Foods owns and operates 

distributing plants fully regulated on the 

Appalachian, Southeast, and Florida 

orders. The Dean Foods witness 

acknowledged that Proposal 1 calls for 

a temporary increase in Class I 

differentials—an action the company 

would normally oppose. The adoption 

of Proposal 1 would result in an 

increased cost of milk for Dean Foods, 

and it is unlikely that the company 

would be eligible for reimbursement 

provided for within the proposal, 

according to the witness. However, the 

witness stated that after careful 

consideration and firsthand knowledge 

of the resulting chaos from hurricanes 

Charley, Frances, Ivan and Jeanne, it 

was the opinion of Dean Foods that the 

adoption of Proposal 1 is the most 

reasonable solution for hurricane relief 

for their suppliers in the affected region. 

The Dean Foods witness concluded that 

not only should Proposal 1 be adopted, 

but that it should be considered on an 

emergency basis, stating that any delay 

may result in confusion in the regional 

milk marketplace. 

In a post-hearing brief filed by the 

proponent cooperatives, the 

cooperatives reiterated their support for 

Proposal 1 as modified at the public 

hearing. The proponent cooperatives 

also expressed their desire that a 

specific timeframe should not be 

established for determining the 

eligibility of extraordinary 

transportation costs incurred as a result 

of the four hurricanes. 

No additional post-hearing briefs were 

filed in support of or in opposition to 

Proposal 1. Also, the record contains no 

opposition testimony to the adoption of 

the proposed amendments.

Based on the record evidence of this 

proceeding, this final decision finds that 

Proposal 1, with certain modifications, 

should be adopted for the Appalachian, 

Florida, and Southeast milk orders to 

provide reimbursement to handlers who 

incurred extraordinary transportation 

costs for bulk milk movements due to 

disruptions caused by the 

aforementioned hurricanes. Record 

evidence clearly indicates that 

movements of bulk milk for the 

Appalachian and Southeast orders, and 

particularly the Florida order were 

impacted due to hurricanes Charley, 

Frances, Ivan, and Jeanne. Some 

witnesses referred to the proposed 

amendments as providing relief to 

handlers who incurred extraordinary 

transportation costs due to the 

hurricanes. However, the proposed 

amendments adopted in this final 

decision provide only reimbursement 

for extraordinary transportation costs to 

qualifying handlers due to the 

hurricanes. 

Record data indicates proponent 

cooperatives—at the time of the 

hearing—had identified 664 loads of 

bulk milk movements for Orders 5, 6, 

and 7 that were impacted by the 

hurricanes at an estimated total for 

extraordinary transportation costs of 

about $1.6 million. A breakdown of the 

record data shows the total loads and 

estimated extraordinary costs for Orders 

5, 6, and 7 are 118 loads at $102,206, 

323 loads at $1,134,469, and 223 loads 

at $370,085, respectively. Record 

evidence indicates that these 

extraordinary transportation expenses 

are a result of circumstances caused by 

the historically unprecedented landing 

of four hurricanes across Southeastern 

United States during a 7-week period. 

Record testimony details the impact 

of these hurricanes on the three orders, 

particularly Order 6, whereby the 

normal movement of milk from dairy 

farmers to processors and consumers 

was disrupted by unprecedented 

weather and weather-driven 

circumstances. The record demonstrates 

disruption of the milk marketing system 

that clearly rises to the level of market 

disorder of varying degrees for the 

Florida, Southeast, and Appalachian 

orders. In addition, the record evidence 

demonstrates that these disorderly 

marketing conditions were weatherdriven events that could not be avoided. 

According to the record evidence, the 

days prior to the initial hurricane 

Charley through the aftermath of 

hurricane Jeanne is a period that 

represents bulk milk movement 

disruptions caused by official 

declarations of mandatory evacuations 

for portions of Florida, processing plant 

closings for an extended numbers of 

days and subsequent refusal of milk 

deliveries by such plants, suspended 

operations by plants for storm related 

reasons, and shut-downs of roads and 

bridges that required large scale rerouting of bulk milk supply traffic to 

Florida from the Southeast, 

Appalachian, and other milk marketing 

areas. 

The record of the proceeding shows 

that handlers experienced other mass 

disruptions of normal milk marketing 

including the inability to pick up, 

deliver, and transport bulk producer 

milk caused by a wide array of storm 

related disruptions of power supplies 

and basic transportation infrastructure 

with Florida having the most disruptive 

impact. In varying degrees, the impact 

cascaded across the integrated bulk milk 

marketing system of the Appalachian, 

Southeast, and Florida milk orders. 

One of the functions of the Federal 

milk order program is to provide for the 

orderly exchange of milk between the 

dairy farmer and the handler (first 

buyer) to ensure the Class I needs of the 

market are met. The record evidence 

clearly reveals that the movements of 

bulk milk in Orders 5, 7, and 

particularly 6 were disrupted due to the 

hurricanes. Accordingly, the proposed 

amendments should be adopted in 

Orders 5, 6, and 7 to provide 

reimbursement to handlers incurring 

additional transportation expenses for 

bulk milk movements due to the 

unprecedented weather conditions that 

occurred in the marketing areas and the 

resulting disruption.

The proposed amendments adopted 

in this final decision would implement 

in Orders 5, 6, and 7 a temporary 

increase in the Class I milk price to 

provide reimbursement to handlers and 

cooperative associations in their 

capacity as handlers (hereinafter 

referred to as handlers) who incurred 

extraordinary costs in moving bulk milk 

as a result of the hurricanes impact on 

the Southeastern United States, 

particularly the Florida marketing area. 

The proposed amendments, for a 3-

month period beginning January 1, 

2005, would implement an increase in 

the Class I milk price at a rate not to 

exceed $.04 per hundredweight in the 

Appalachian and Southeast orders, and 

at a rate not to exceed $.09 per 

hundredweight in the Florida order. The 

funds generated through the temporary 

Class I milk price increase would be 

disbursed during February 2005 through 

April 2005 to qualifying handlers who 

incurred extraordinary transportation 

costs as a result of the aforementioned 

hurricanes. The reimbursement, as 

proposed by the proponent cooperatives 

and adopted in this decision, would be 

disbursed to qualifying handlers on an 

actual transportation cost basis or at a 

rate of $2.25 per loaded mile, whichever 

is less. 

As adopted in this final decision, 

extraordinary transportation costs 

eligible for reimbursement are 

specifically those costs associated with 

the costs incurred in transporting bulk 

milk as a result of the hurricanes. As 

indicated in the record for this 

proceeding, the extraordinary costs are 

those costs that are above the usual and 

customary costs associated with moving 

bulk milk—including supplemental 

bulk milk—to the Appalachian, Florida, 

and Southeast marketing areas. The 

transportation costs will be the hauling 

rate including any fuel surcharge. 

Record data indicates that the fuel 

surcharge may be included in the flat 

hauling rate or listed as a separate fee 

67676 Federal Register / Vol. 69, No. 223 / Friday, November 19, 2004 / Proposed Rules 

on the billing documents such as bills 

of lading, manifest tickets, and invoices. 

Accordingly, premium charges or giveup charges will not be considered as 

transportation costs under the proposed 

amendments. 

Record evidence supports applying a 

maximum mileage rate of $2.25 per 

loaded mile. A loaded mile, as 

explained by proponents at the hearing, 

is the one-way hauling distance from 

the origination point to the destination 

point. Record data reveals the mileage 

rate charged by haulers and paid by 

proponent cooperatives ranged from 

$2.02 per loaded mile to $2.27 per 

loaded mile. This decision finds that the 

mileage rate of $2.25 per loaded mile is 

reasonable and supported by record 

evidence. Thus, this rate is adopted.

The proposed amendments adopted 

in this final decision provide, for the 

months of January 2005 through March 

2005, a temporary increase in the price 

for Class I milk at a maximum rate of 

$.09 per hundredweight for the Florida 

order and at a maximum rate of $.04 per 

hundredweight for the Appalachian and 

Southeast orders. 

The proposed amendments, adopted 

in this final decision, provide that the 

Market Administrators for Order 5, 6, 

and 7 calculate the Class I price increase 

rate based on the total estimated 

extraordinary transportation costs and 

the estimated Class I producer milk 

receipts for January 2005 through March 

2005, using 2003 and 2004 order data as 

a benchmark for estimating the Class I 

milk receipts. 

The rate established by the Market 

Administrators for Orders 5, 6, and 7 

shall be listed on the monthly Federal 

milk order advance Class I price 

announcement. The first date for 

submitting claims to the Market 

Administrators for Order 5, 6, and 7 for 

reimbursement of extraordinary 

transportation costs will be December 

10, 2004, thereafter, claims may be 

submitted through February 1, 2005, for 

consideration of reimbursement. These 

deadlines will provide Market 

Administrators sufficient time to review 

the claims submitted and determine 

whether such claims are eligible for 

reimbursement under the proposed 

amendments. The rate assessed for 

January 2005 will be listed on the 

advance Class I price announcement 

scheduled to be released on December 

23, 2004. For Class I rates that will be 

assessed in February and March 2005, 

the rates will be calculated by the 

Market Administrators for Order 5, 6, 

and 7 and included on the advance 

Class I price announcements scheduled 

to be released January 21, 2005, and 

February 18, 2005, respectively. 

This final decision also provides the 

Market Administrator of the order with 

the authority to reduce the rate of 

increase on the Class I milk price based 

on the estimated transportation cost 

reimbursement claims received. Any 

balance remaining at the end of the 

disbursement period shall be prorated to 

Class I pool distributing plant handlers 

who were assessed the Class I milk price 

increased rate. 

Record evidence indicates that 

movements of bulk milk in the 

Appalachian, Florida, and Southeast 

orders were disrupted as a result of 

hurricanes Charley, Frances, Ivan and 

Jeanne from August 2004 through early 

October 2004. Record testimony reveals 

that the initial hurricane (hurricane 

Charley) made landfall on August 10, 

2004, but that disruptions in bulk milk 

movements were experienced days prior 

to the hurricane making landfall. The 

record evidence and testimony further 

indicates that disruptions in milk 

movements continued through early 

October 2004. Accordingly, this final 

decision provides that only 

extraordinary transportation expenses 

that were after August 4, 2004, and 

before October 3, 2004, for each of the 

three orders should be eligible for 

reimbursement under the proposed 

amendments. This established time 

period should help Market 

Administrators in determining which 

transportation costs are eligible for 

reimbursement under the respective 

orders. 

The proposal, as adopted in this final 

decision, specifies the types of milk 

movements that will qualify for 

transportation cost reimbursement as 

the following: (1) Loads of producer 

milk delivered or rerouted to a pool 

distributing plant; (2) loads of producer 

milk delivered or rerouted to a pool 

supply plant which was then transferred 

to a pool distributing plant; (3) loads of 

bulk milk delivered or rerouted to a 

pool distributing plant from a pool 

supply plant; (4) loads of bulk milk 

delivered or rerouted to a pool 

distributing plant from another order 

plant; and (5) loads of bulk milk 

transferred or diverted to a plant 

regulated under another Federal order 

or to other nonpool plants.

As adopted in this final decision, 

reroutes constitute only those portions 

of milk movements that were other than 

usual and customary shipping routes 

from individual shipping points. The 

transportation costs associated with the 

additional movement of the bulk milk to 

alternative delivery points will be 

eligible for reimbursement. However, 

the transportation costs for the initial 

movement of the bulk milk will not be 

eligible for reimbursement. 

Other types of movements that are 

covered under the proposed 

amendments include but are not limited 

to transportation costs associated with 

bulk milk moved out of the path of the 

hurricanes that was later shipped to a 

distributing plant. Also, those 

additional costs incurred by handlers 

shipping bulk milk to plants outside of 

hurricane affected areas because these 

plants packaged milk to replace the 

production of plants that had been 

closed due to the extreme weather 

events in the hurricane affected areas 

will be eligible for reimbursement. 

Proponent cooperatives modified 

their proposal at the hearing to allow 

loads of bulk milk transferred or 

diverted to a plant regulated under 

another Federal milk order or to other 

nonpool plants to qualify for 

transportation cost reimbursement. 

Record data reveals that at the time of 

the hearing SMI had identified a total of 

130 loads of bulk milk movements for 

the Florida and Southeast orders that 

were hurricane related. The record 

testimony indicates that approximately 

50 to 55 percent of these SMI bulk milk 

movements were to nonpool plants. 

The record indicates that fluid 

processing plants in Florida were not 

operating for several extended periods 

during hurricanes Charlie, Frances, 

Ivan, and Jeanne. According to record 

evidence, the only option for the 

marketing of this milk was to ship it to 

a nonpool plant that was a significant 

distance from the milk’s intended fluid 

market. This quantity of bulk milk 

movements represents a substantial 

percentage of the movements for the 

Florida order and the estimated 

extraordinary transportation costs 

incurred under the Florida order. 

Record testimony indicates these 

loads of bulk milk were initially 

intended to be delivered to pool 

distributing plants to fulfill the Class I 

needs of the market. However, due to 

disruptions caused by the four 

hurricanes, the pool distributing plants 

were closed or their operations 

suspended for extended periods. Record 

evidence also indicates that the only 

alternative to the rerouting of bulk milk 

was to dump the milk because 

alternative markets were unavailable.

Since the record establishes that the 

milk would have been used to supply 

the Class I market if pool distributing 

plants would have been able to accept 

deliveries, such milk movements should 

be eligible for transportation cost 

reimbursement under the orders. On the 

basis of the record evidence, this final 

decision finds that—in order for 

Federal Register / Vol. 69, No. 223 / Friday, November 19, 2004 / Proposed Rules 67677

handlers to qualify for reimbursement of 

extraordinary transportation costs 

incurred moving bulk milk to nonpool 

plants-such handlers will be required to 

provide proof to the satisfaction of the 

order Market Administrator that such 

bulk milk movements were hurricane 

related and that the intended delivery of 

such milk was to pool distributing 

plants for Class I use. Handlers should 

apply under the Order in which the 

milk was pooled. 

Proponent cooperatives modified 

Proposal 1 at the hearing to prevent the 

dual reimbursement of transportation 

costs associated with bulk milk 

movements under Orders 5 and 7, 

which currently provide transportation 

credits for supplemental Class I milk. 

Specifically, for milk movements that 

would qualify for reimbursement under 

Orders 5 or 7 transportation credit 

provisions and the temporary 

transportation cost reimbursement 

proposed amendments, the proponent 

cooperatives’ propose that the amount 

of reimbursement received under Order 

5 or Order 7 transportation credits 

provisions be reduced by the amount of 

eligible cost reimbursement that would 

be due under the temporary 

reimbursement proposed amendments. 

This final decision adopts this proposed 

amendment with modification. 

Under the proposed amendments 

adopted in this decision, handlers who 

have received transportation credits for 

movements of bulk milk under Section 

82 of Orders 5 and 7 will be eligible to 

receive reimbursement for the same 

loads of milk under the transportation 

cost reimbursement proposed 

amendments provided such milk 

movements resulted from the 

hurricanes. The reimbursement amount 

will be the difference between the 

amount of transportation credits 

received by the handlers under Order 5 

or Order 7 and the amount due to such 

handlers under the transportation cost 

reimbursement proposed amendments. 

The proposed amendments, as 

adopted in the decision, provide the 

Market Administrators of Orders 5, 6, 

and 7 the sole authority to evaluate the 

evidence to determine which 

transportation cost claims are eligible 

for reimbursement. The Market 

Administrator will review all 

documents submitted by handlers in a 

timely manner in determining which 

claims are eligible for transportation 

cost reimbursement under the proposed 

amendments. Under each of the three 

orders, handlers applying for 

reimbursement of extraordinary 

transportation costs must submit proof 

to the satisfaction of the Market 

Administrator that such transportation 

costs are eligible for reimbursement. 

Handlers may submit documents 

supporting their claims with their 

monthly handler report of milk receipts 

and utilization. These documents may 

include but are not limited to invoices, 

receiving records, bulk milk manifests, 

hauling billings, transaction records, 

and contract agreements. Handlers who 

have applied for or received 

transportation cost reimbursement 

through insurance claims or through 

any State, Federal, or other programs 

must submit documentation of such 

claims of reimbursement to the Market 

Administrators for Orders 5, 6, and 7. 

Proponent cooperatives assert that 

their proposed amendments for 

transportation cost reimbursement, if 

adopted, would be of marketwide 

benefit for market participants 

(producers and handlers) of Orders 5, 6, 

and 7. Although the proposed 

amendments adopted in this final 

decision address the disorderly 

movements of bulk milk resulting from 

the hurricanes, only those handlers who 

incurred extraordinary transportation 

costs for certain milk movements will be 

eligible for reimbursement under Orders 

5, 6, and 7. Only extraordinary 

transportation costs for moving bulk 

milk due to the hurricanes will be 

eligible for reimbursement under Orders 

5, 6, and 7 and the payments for such 

costs will be limited to only qualifying 

handlers (handlers and cooperative 

associations in their capacity as 

handlers). 

2. Determining whether emergency 

marketing conditions exist that would 

warrant the omission of a recommended 

decision and the opportunity to file 

written exceptions. Record evidence 

supports the adoption of Proposal 1, 

with modifications, on an emergency 

temporary basis due to the 

unprecedented occurrences of 

hurricanes Charley, Frances, Ivan, and 

Jeanne within a 7-week period and the 

resulting disruption on milk movements 

for Orders 5, 6, and 7. The proposed 

amendments to Orders 5, 6, and 7 

would provide reimbursement to 

handlers who incurred extraordinary 

transportation costs for bulk milk 

movements due to the four hurricanes 

by temporarily increasing the price for 

Class I milk and disbursing the funds 

generated by the Class I milk price 

increase during February 2005 through 

April 2005. 

Record evidence clearly indicates that 

movements of bulk milk for the 

Appalachian and Southeast orders, and 

particularly the Florida order were 

impacted due to hurricanes Charley, 

Frances, Ivan, and Jeanne. Record 

evidence clearly indicates there were a 

number of transportation and marketing 

disruptions that impacted Orders 5, 6, 

and 7 due to the hurricanes including 

official declarations of mandatory 

evacuations for portions of Florida, 

processing plant closures and 

suspended operations, and shut-downs 

of roads and bridges that required 

rerouting of bulk milk. Also, record 

evidence shows that Order 5, 6, and 7 

handlers experienced other mass 

disruptions including the inability to 

pick up, deliver, and transport bulk 

producer milk. Accordingly, the timely 

implementation of the proposed 

amendments will provide much needed 

reimbursement to handlers who 

experienced extraordinary costs in 

hauling bulk milk for Orders 5, 6, and 

7 as a result of the four hurricanes. 

Rulings on Proposed Findings and 

Conclusions 

Briefs and proposed findings and 

conclusions were filed on behalf of 

certain interested parties. These 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 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. 

(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 areas, 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 

67678 Federal Register / Vol. 69, No. 223 / Friday, November 19, 2004 / Proposed Rules 

(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. 

Marketing Agreement and Order 

Amending the Orders 

Annexed hereto and made a part 

hereof are two documents, a Marketing 

Agreement regulating the handling of 

milk, and an Order amending the orders 

regulating the handling of milk in the 

aforesaid marketing areas, which 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 two documents 

annexed hereto be published in the 

Federal Register. 

Determination of Producer Approval 

and Representative Period 

August 2004 is hereby determined to 

be the representative period for the 

purpose of ascertaining whether the 

issuance of the orders, as amended and 

as hereby proposed to be amended, 

regulating the handling of milk in the 

Appalachian, Florida, and Southeast 

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 1005, 

1006, and 1007 

Milk marketing orders.

Dated: November 15, 2004. 

A.J. Yates, 

Administrator, Agricultural Marketing 

Service.

Order Amending the Orders Regulating 

the Handling of Milk in the 

Appalachian, Florida, and Southeast 

Marketing Areas 

(This order shall not become effective 

unless and until the requirements of 

§ 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 

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), 

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 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, 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 Appalachian, 

Florida, and Southeast 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:

PARTS 1005, 1006, AND 1007—

[AMENDED] 

1. The authority citation for 7 CFR 

Parts 1005, 1006, and 1007 continues to 

read as follows:

Authority: 7 U.S.C. 601–674.

PART 1005—MILK IN THE 

APPALACHIAN MILK MARKETING 

AREA 

2. Section 1005.60 is amended by 

revising paragraph (a) and adding a new 

paragraph (g) to read as follows:

§ 1005.60 Handler’s value of milk.

* * * * *

(a) Multiply the pounds of skim milk 

and butterfat in producer milk that were 

classified in each class pursuant to 

§ 1000.44(c) by the applicable skim milk 

and butterfat prices, and add the 

resulting amounts; except that for the 

months of January 2005 through March 

2005, the Class I skim milk price for this 

purpose shall be the Class I skim milk 

price as determined in § 1000.50(b) plus 

$0.04 per hundredweight, and the Class 

I butterfat price for this purpose shall be 

the Class I butterfat price as determined 

in § 1000.50(c) plus $0.0004 per pound. 

The adjustments to the Class I skim milk 

and butterfat prices provided herein 

may be reduced by the market 

administrator for any month if the 

market administrator determines that 

the payments yet unpaid computed 

pursuant to paragraphs (g)(1) through (5) 

and paragraph (g)(7) of this section will 

be less than the amount computed 

pursuant to paragraph (g)(6) of this 

section. The adjustments to the Class I 

skim milk and butterfat prices provided 

herein during the months of January 

2005 through March 2005 shall be 

announced along with the prices 

announced in § 1000.53(b);

* * * * *

(g) For the months of January 2005 

through March 2005 for handlers who 

have submitted proof satisfactory to the 

market administrator to determine 

eligibility for reimbursement of 

transportation costs, subtract an amount 

equal to: 

(1) The cost of transportation on loads 

of producer milk delivered or rerouted 

to a pool distributing plant which were 

delivered as a result of hurricanes 

Charley, Frances, Ivan and Jeanne. 

(2) The cost of transportation on loads 

of producer milk delivered or rerouted 

to a pool supply plant that was then 

transferred to a pool distributing plant 

which were delivered as a result of 

hurricanes Charley, Frances, Ivan and 

Jeanne, and; 

(3) The cost of transportation on loads 

of bulk milk delivered or rerouted to a 

pool distributing plant from a pool 

supply plant which were delivered as a 

result of hurricanes Charley, Frances, 

Ivan and Jeanne. 

(4) The cost of transportation on loads 

of bulk milk delivered or rerouted to a 

pool distributing plant from another 

order plant which were delivered as a 

result of hurricanes Charley, Frances, 

Ivan and Jeanne. 

(5) The cost of transportation on loads 

of bulk milk transferred or diverted to 

a plant regulated under another Federal 

order or to other nonpool plants which 

Federal Register / Vol. 69, No. 223 / Friday, November 19, 2004 / Proposed Rules 67679

were delivered as a result of hurricanes 

Charley, Frances, Ivan and Jeanne. 

(6) The total amount of payment to all 

handlers under this section shall be 

limited for each month to an amount 

determined by multiplying the total 

Class I producer milk for all handlers 

pursuant to § 1000.44(c) times $0.04 per 

hundredweight. 

(7) If the cost of transportation 

computed pursuant to paragraphs (g)(1) 

through (5) of this section exceeds the 

amount computed pursuant to 

paragraph (g)(6) of this section, the 

market administrator shall prorate such 

payments to each handler based on the 

handler’s proportion of transportation 

costs submitted pursuant to paragraphs 

(g)(1) through (5) of this section. 

Transportation costs submitted pursuant 

to paragraphs (g)(1) through (5) of this 

section which are not paid as a result of 

such a proration shall be included in 

each subsequent month’s transportation 

costs submitted pursuant to paragraphs 

(g)(1) through (5) of this section until 

paid, or until the time period for such 

payments is concluded. 

(8) The reimbursement of 

transportation costs pursuant to this 

section shall be the actual demonstrated 

cost of such transportation of bulk milk 

delivered or rerouted as described in 

paragraphs (g)(1) through (5) of this 

section, or the miles of transportation on 

loads of bulk milk delivered or rerouted 

as described in paragraphs (g)(1) 

through (5) of this section multiplied by 

$2.25 per loaded mile, whichever is 

less. 

(9) For each handler, the 

reimbursement of transportation costs 

pursuant to paragraph (g) of this section 

for bulk milk delivered or rerouted as 

described in paragraphs (g)(1) through 

(5) of this section shall be reduced by 

the amount of payments received for 

such milk movements from the 

transportation credit balancing fund 

pursuant to § 1005.82.

* * * * *

PART 1006—MILK IN THE FLORIDA 

MILK MARKETING AREA 

3. Section 1006.60 is amended by 

revising paragraph (a) and adding a new 

paragraph (g) to read as follows:

§ 1006.60 Handler’s value of milk.

* * * * *

(a) Multiply the pounds of skim milk 

and butterfat in producer milk that were 

classified in each class pursuant to 

§ 1000.44(c) by the applicable skim milk 

and butterfat prices, and add the 

resulting amounts; except that for the 

months of January 2005 through March 

2005, the Class I skim milk price for this 

purpose shall be the Class I skim milk 

price as determined in § 1000.50(b) plus 

$0.09 per hundredweight, and the Class 

I butterfat price for this purpose shall be 

the Class I butterfat price as determined 

in § 1000.50(c) plus $0.0009 per pound. 

The adjustments to the Class I skim milk 

and butterfat prices provided herein 

may be reduced by the market 

administrator for any month if the 

market administrator determines that 

the payments yet unpaid computed 

pursuant to paragraphs (g)(1) through (5) 

and paragraph (g)(7) of this section will 

be less than the amount computed 

pursuant to paragraph (g)(6) of this 

section. The adjustments to the Class I 

skim milk and butterfat prices provided 

herein during the months of January 

2005 through March 2005 shall be 

announced along with the prices 

announced in § 1000.53(b);

* * * * *

(g) For the months of January 2005 

through March 2005 for handlers who 

have submitted proof satisfactory to the 

market administrator to determine 

eligibility for reimbursement of 

transportation costs subtract an amount 

equal to: 

(1) The cost of transportation on loads 

of producer milk delivered or rerouted 

to a pool distributing plant which were 

delivered as a result of hurricanes 

Charley, Frances, Ivan and Jeanne. 

(2) The cost of transportation on loads 

of producer milk delivered or rerouted 

to a pool supply plant that was then 

transferred to a pool distributing plant 

which were delivered as a result of 

hurricanes Charley, Frances, Ivan and 

Jeanne, and; 

(3) The cost of transportation on loads 

of bulk milk delivered or rerouted to a 

pool distributing plant from a pool 

supply plant which were delivered as a 

result of hurricanes Charley, Frances, 

Ivan and Jeanne. 

(4) The cost of transportation on loads 

of bulk milk delivered or rerouted to a 

pool distributing plant from another 

order plant which were delivered as a 

result of hurricanes Charley, Frances, 

Ivan and Jeanne. 

(5) The cost of transportation on loads 

of bulk milk transferred or diverted to 

a plant regulated under another Federal 

order or to other nonpool plants which 

were delivered as a result of hurricanes 

Charley, Frances, Ivan and Jeanne. 

(6) The total amount of payment to all 

handlers under this section shall be 

limited for each month to an amount 

determined by multiplying the total 

Class I producer milk for all handlers 

pursuant to § 1000.44(c) times $0.09 per 

hundredweight. 

(7) If the cost of transportation 

computed pursuant to paragraphs (g)(1) 

through (5) of this section exceeds the 

amount computed pursuant to 

paragraph (g)(6) of this section, the 

market administrator shall prorate such 

payments to each handler based on each 

handler’s proportion of transportation 

costs submitted pursuant to paragraphs 

(g)(1) through (5) of this section. 

Transportation costs submitted pursuant 

to paragraphs (g)(1) through (5) of this 

section which are not paid as a result of 

such a proration shall be included in 

each subsequent month’s transportation 

costs submitted pursuant to paragraphs 

(g)(1) through (5) of this section until 

paid, or until the time period for such 

payments has concluded. 

(8) The reimbursement of 

transportation costs pursuant to this 

section shall be the actual demonstrated 

cost of such transportation of bulk milk 

delivered or rerouted as described in 

paragraphs (g)(1) through (5) of this 

section, or the miles of transportation on 

loads of bulk milk delivered or rerouted 

as described in paragraphs (g)(1) 

through (5) of this section multiplied by 

$2.25 per loaded mile, whichever is 

less.

* * * * *

PART 1007—MILK IN THE SOUTHEAST 

MILK MARKETING AREA 

4. Section 1007.6 is amended by 

revising paragraph (a) and adding a new 

paragraph (g) to read as follows:

§ 1007.60 Handler’s value of milk.

* * * * *

(a) Multiply the pounds of skim milk 

and butterfat in producer milk that were 

classified in each class pursuant to 

§ 1000.44(c) by the applicable skim milk 

and butterfat prices, and add the 

resulting amounts; except that for the 

months of January 2005 through March 

2005, the Class I skim milk price for this 

purpose shall be the Class I skim milk 

price as determined in § 1000.50(b) plus 

$0.04 per hundredweight, and the Class 

I butterfat price for this purpose shall be 

the Class I butterfat price as determined 

in § 1000.50(c) plus $0.0004 per pound. 

The adjustments to the Class I skim milk 

and butterfat prices provided herein 

may be reduced by the market 

administrator for any month if the 

market administrator determines that 

the payments yet unpaid computed 

pursuant to paragraphs (g)(1) through (5) 

and paragraph (g)(7) of this section will 

be less than the amount computed 

pursuant to paragraph (g)(6) of this 

section. The adjustments to the Class I 

skim milk and butterfat prices provided 

herein during the months of January 

2005 through March 2005 shall be 

67680 Federal Register / Vol. 69, No. 223 / Friday, November 19, 2004 / Proposed Rules 

announced along with the prices 

announced in § 1000.53(b);

* * * * *

(g) For the months of January 2005 

through March 2005 for handlers who 

have submitted proof satisfactory to the 

market administrator to determine 

eligibility for reimbursement of 

transportation costs, subtract an amount 

equal to: 

(1) The cost of transportation on loads 

of producer milk delivered or rerouted 

to a pool distributing plant which were 

delivered as a result of hurricanes 

Charley, Frances, Ivan and Jeanne. 

(2) The cost of transportation on loads 

of producer milk delivered or rerouted 

to a pool supply plant that was then 

transferred to a pool distributing plant 

which were delivered as a result of 

hurricanes Charley, Frances, Ivan and 

Jeanne, and;

(3) The cost of transportation on loads 

of bulk milk delivered or rerouted to a 

pool distributing plant from a pool 

supply plant which were delivered as a 

result of hurricanes Charley, Frances, 

Ivan and Jeanne. 

(4) The cost of transportation on loads 

of bulk milk delivered or rerouted to a 

pool distributing plant from another 

order plant which were delivered as a 

result of hurricanes Charley, Frances, 

Ivan and Jeanne. 

(5) The cost of transportation on loads 

of bulk milk transferred or diverted to 

a plant regulated under another Federal 

order or to other nonpool plants which 

were delivered as a result of hurricanes 

Charley, Frances, Ivan and Jeanne. 

(6) The total amount of payment to all 

handlers under this section shall be 

limited for each month to an amount 

determined by multiplying the total 

Class I producer milk for all handlers 

pursuant to § 1000.44(c) times $0.04 per 

hundredweight. 

(7) If the cost of transportation 

computed pursuant to paragraphs (g)(1) 

through (5) of this section exceeds the 

amount computed pursuant to 

paragraph (g)(6) of this section, the 

market administrator shall prorate such 

payments to each handler based on each 

handler’s proportion of transportation 

costs submitted pursuant to paragraphs 

(g)(1) through (5) of this section. 

Transportation costs submitted pursuant 

to paragraphs (g)(1) through (5) of this 

section which are not paid as a result of 

such a proration shall be included in 

each subsequent month’s transportation 

costs submitted pursuant to paragraphs 

(g)(1) through (5) of this section until 

paid, or until the time period for such 

payments has concluded. 

(8) The reimbursement of 

transportation costs pursuant to this 

section shall be the actual demonstrated 

cost of such transportation of bulk milk 

delivered or rerouted as described in 

paragraphs (g)(1) through (5) of this 

section, or the miles of transportation on 

loads of bulk milk delivered or rerouted 

as described in paragraphs (g)(1) 

through (5) of this section multiplied by 

$2.25 per loaded mile, whichever is 

less. 

(9) For each handler, the 

reimbursement of transportation costs 

pursuant to paragraph (g) of this section 

for bulk milk delivered or rerouted as 

described in paragraphs (g)(1) through 

(5) of this section shall be reduced by 

the amount of payments received for 

such milk movements from the 

transportation credit balancing fund 

pursuant to § 1007.82.

* * * * *

[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 

§§lll1 to lll, all inclusive, of the 

order regulating the handling of milk in the 

(lllName of order lll) marketing area 

(7 CFR Part lll2) which is annexed 

hereto; and

II. The following provisions: §lll3

Record of milk handled and authorization to 

correct typographical errors. 

(a) Record of milk handled. The 

undersigned certifies that he/she handled 

during the month of lll4, lll

hundredweight of milk covered by this 

marketing agreement. 

(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. 

§lll3 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) lllllllllllllll

(Title) lllllllllllllllll

(Address) llllllllllllllll

(Seal) 

Attest

1First and last sections of order. 

2Appropriate Part number. 

3Next consecutive section number. 

4Appropriate representative period for the 

order.

[FR Doc. 04–25684 Filed 11–16–04; 8:45 am] 

BILLING CODE 3410–02–P

DEPARTMENT OF ENERGY

Office of Energy Efficiency and 

Renewable Energy 

10 CFR Part 430

[Docket No. EE–RM/STD–00–550] 

RIN 1904–AB08

Energy Conservation Program for 

Commercial and Industrial Equipment: 

Energy Conservation Standards for 

Distribution Transformers

AGENCY: Office of Energy Efficiency and 

Renewable Energy, Department of 

Energy.

ACTION: Advance notice of proposed 

rulemaking; notice of availability of a 

supplemental technical support 

document appendix, and correction. 

SUMMARY: In conjunction with an earlier 

advance notice of proposed rulemaking 

(ANOPR) to establish energy 

conservation standards for distribution 

transformers, DOE announces the 

availability of a supplemental technical 

support document (TSD) appendix. DOE 

has also identified a mislabeling found 

in the ANOPR.

SUPPLEMENTARY INFORMATION: As 

indicated at the public meeting on 

September 28, 2004, the Department of 

Energy (DOE) announces the availability 

of a supplemental TSD appendix 

entitled, ‘‘Appendix 8E: Average 

Transformer Design Properties from 

Life-Cycle Cost Model.’’ This appendix 

provides information for the public to 

consider in connection with the July 29, 

2004, ANOPR (69 FR 45375). 

DOE has also identified a mislabeling 

found in the ANOPR on pages 45401 

through 45404 and in Chapter 8 of the 

TSD on pages 8–38 through 8–43. On 

these pages, the text mistakenly labels 

some reported values as an ‘‘average 

manufacturer’s selling price’’ when they 

should be referred to as the ‘‘consumer 

equipment cost before installation.’’

This mislabeling does not impact the 

inputs, results, or any other aspect of 

the ANOPR.