[Federal Register Volume 69, Number 223 (Friday, November 19, 2004)]
[Proposed Rules]
[Pages 67670-67680]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-25684]


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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. 223 / Friday, November 19, 2004 / 
Proposed Rules

[[Page 67670]]



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.

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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: 
<a href="/cdn-cgi/l/email-protection#f1909f859e989f94858594df929083859483b184829590df969e87"><span class="__cf_email__" data-cfemail="bbdad5cfd4d2d5decfcfde95d8dac9cfdec9fbcec8dfda95dcd4cd">[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 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

[[Page 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

[[Page 67672]]

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

[[Page 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

[[Page 67674]]

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,

[[Page 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 weather-
driven 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 re-routing 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

[[Page 67676]]

on the billing documents such as bills of lading, manifest tickets, and 
invoices. Accordingly, premium charges or give-up 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

[[Page 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

[[Page 67678]]

    (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 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 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:


Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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

[[Page 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 Sec.  
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 
Sec.  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:


Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  
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:


Sec.  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 Sec.  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 Sec.  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 Sec.  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

[[Page 67680]]

announced along with the prices announced in Sec.  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 Sec.  
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 
Sec.  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 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

    II. The following provisions: Sec.  ------\3\ 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 ------\4\, ------ 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.
    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

    \1\ First and last sections of order.
    \2\ Appropriate Part number.
    \3\ Next consecutive section number.
    \4\ Appropriate representative period for the order.

[FR Doc. 04-25684 Filed 11-16-04; 8:45 am]
BILLING CODE 3410-02-P


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