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[Federal Register: August 24, 2010 (Volume 75, Number 163)]
[Rules and Regulations]               
[Page 51929-51931]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24au10-5]                         

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1000

[Doc. No. AMS-DA-09-0062; AO-14-A73, et al.; DA-03-10]

 
Milk in the Northeast and Other Marketing Areas; Order Amending 
the Orders

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule maintains the current fluid milk product 
definition's compositional standard of 6.5 percent nonfat milk solids 
criterion and incorporates an equivalent 2.25 percent true milk protein 
criterion for determining if a product meets the compositional 
standard. This final rule also determines how milk and milk-derived 
ingredients should be priced under all Federal milk marketing orders 
when used in products meeting the fluid milk product definition. It 
provides exemptions for drinkable yogurt products containing at least 
20 percent yogurt (by weight), kefir, and products intended to be meal 
replacements from the fluid milk product definition. A referendum was 
held and the required number of producers approved the issuance of the 
orders as amended.

DATES: Effective Date: January 1, 2011.

FOR FURTHER INFORMATION CONTACT: Henry H. Schaefer, Economist, USDA/
AMS/Dairy Programs, Upper Midwest Milk Market Administrators Office, 
Suite 200, 1600 West 82nd Street, Minneapolis, Minnesota 55431-1420, 
(952) 831-5292, e-mail address: hschaefer@fmma30.com; or William 
Francis, Associate Deputy Administrator, USDA/AMS/Dairy Programs, Order 
Formulation and Enforcement, Stop 0231--Room 2971-S, 1400 Independence 
Avenue, SW., Washington, DC 20250-0231, (202) 720-6274, e-mail address: 
william.francis@ams.usda.gov.

SUPPLEMENTARY INFORMATION: This final rule amends the fluid milk 
product definition in all Federal milk marketing orders. This 
rulemaking action maintains the current fluid milk product definition's 
compositional standard of 6.5 percent nonfat milk solids and 
incorporates an equivalent 2.25 percent true milk protein criterion for 
determining if a product meets the compositional standard. This final 
rule also amends determining how milk and milk-derived ingredients 
should be priced under all Federal milk marketing orders when used in 
products meeting the fluid milk product definition. It exempts 
drinkable yogurt products containing at least 20 percent yogurt (by 
weight), kefir, infant formulas, dietary products (meal replacements) 
and other products that may contain milk-derived ingredients from the 
fluid milk product definition.
    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.
    This final rule herein has been reviewed under Executive Order 
12988, Civil Justice Reform. The final rule is not intended to have a 
retroactive effect.
    The Agricultural Marketing Agreement Act of 1937 (Act), 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

[[Page 51930]]

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 habitant, or has its principal place of business, has 
jurisdiction in equity to review the USDA's ruling on the petition, 
provided a bill in equity is filed not later than 20 days after the 
date of the entry of the ruling.

Regulatory Flexibility Act and Paperwork Reduction Act

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601-
612), the Agricultural Marketing Service has considered the economic 
impact of this action on small entities and has certified that this 
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.
    For the month of June 2005, the month the hearing was held, 52,425 
dairy farmers were pooled on the Federal order system. Of the total, 
49,160, or 94 percent were considered small businesses. During the same 
month, 1,530 plants were regulated by or reported their milk receipts 
to their respective Market Administrator. Of the total, 847, or 55 
percent were considered small businesses.
    The fluid milk product definition sets out the criteria for 
determining if the use of producer milk and milk-derived ingredients in 
such products should be priced at the Class I price. The established 
criteria for the classification of producer milk are applied in an 
identical fashion to both large and small businesses and will not have 
any different impact on those businesses producing fluid milk products 
thus assuring that similarly situated handlers have the same minimum 
price as required by section 608(c)5 of the Act. Therefore, the 
amendments will not have a significant economic impact on a substantial 
number of small entities. The impact of the proposed amendments on 
large and small entities would be negligible. In fact, the amendment 
proposing to change the classification of kefir and drinkable yogurt is 
estimated to affect blend prices by no more than $0.0026 per cwt based 
on record evidence.
    The Agricultural Marketing Service is committed to complying with 
the E-Government Act to promote the use of the Internet and other 
information technologies to provide increased opportunities for citizen 
access to Government information and services, and for other purposes.
    A review of reporting requirements was completed under the 
Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35). It was 
determined that these amendments would have no impact on reporting, 
recordkeeping, or other compliance requirements because they would 
remain identical to the current requirements. No new forms are proposed 
and no additional reporting requirements are necessary.
    This notice does not require additional information collection that 
needs clearance by the Office of Management and Budget (OMB) beyond 
currently approved information collection. The primary sources of data 
used to complete the forms are routinely used in most business 
transactions. The forms require only a minimal amount of information 
that can be supplied without data processing equipment or a trained 
statistical staff. Thus, the information collection and reporting 
burden is relatively small. Requiring the same reports for all handlers 
does not significantly disadvantage any handler that is smaller than 
the industry average.

Prior Documents in This Proceeding

    Notice of Hearing: Issued April 6, 2005; published April 12, 2005 
(70 FR 19012).
    Recommended Decision: Issued May 12, 2006; published May 17, 2006 
(71 FR 28590).
    Final Decision: Issued May 21, 2010; published June 14, 2010 (75 FR 
33534).
    Technical Correction: Issued June 18, 2010; published June 24, 2010 
(75 FR 36015).

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.
    The following findings are hereby made with respect to the 
Northeast and other marketing orders:

(a) Findings Upon the Basis of the Hearing Record

    A public hearing was held with regard to certain proposed 
amendments to the tentative marketing agreements and to the orders 
regulating the handling of milk in the Northeast and other marketing 
areas. The hearing was held pursuant to the provisions of the AMAA 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 
AMAA;
    (2) The parity prices of milk, as determined pursuant to section 2 
of the AMAA, 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;
    (3) The said orders, as hereby amended, regulate the handling of 
milk in the same manner as, and are applicable only to persons in the 
respective classes of industrial or commercial activity specified in, 
the marketing agreements upon which a hearing has been held; and
    (4) All milk and milk products handled by handlers, as defined in 
the tentative marketing agreements and the orders as hereby amended, 
are in the current of interstate commerce or directly burden, obstruct, 
or affect interstate commerce in milk or its products.

(b) Determinations

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

[[Page 51931]]

    (2) The issuance of this order amending the Northeast and other 
orders is the only practical means pursuant to the declared policy of 
the AMAA of advancing the interests of producers as defined in the 
orders as hereby amended; and
    (3) The issuance of this order amending the Northeast and other 
orders is favored by at least two-thirds of the producers who were 
engaged in the production of milk for sale in the respective marketing 
areas.

List of Subjects in 7 CFR Part 1000

    Milk marketing orders.

Order Relative to Handling

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

0
For reasons set forth in the preamble, 7 CFR part 1000 is amended as 
follows:

PART 1000--GENERAL PROVISIONS OF FEDERAL MILK MARKETING ORDERS

0
1. The authority citation for 7 CFR part 1000 continues to read as 
follows:

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

0
2. In Sec.  1000.15, paragraphs (a) and (b)(1) are revised to read as 
follows:

Sec.  1000.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section, fluid milk 
product shall mean any milk products in fluid or frozen form that are 
intended to be used as beverages containing less than 9 percent 
butterfat and 6.5 percent or more nonfat solids or 2.25 percent or more 
true milk protein. Sources of such nonfat solids/protein include but 
are not limited to: Casein, whey protein concentrate, milk protein 
concentrate, dry whey, caseinates, lactose, and any similar dairy 
derived ingredient. Such products include, but are not limited to: 
Milk, fat-free milk, lowfat milk, light milk, reduced fat milk, milk 
drinks, eggnog and cultured buttermilk, including any such beverage 
products that are flavored, cultured, modified with added or reduced 
nonfat solids, sterilized, concentrated, or reconstituted. As used in 
this part, the term concentrated milk means milk that contains not less 
than 25.5 percent, and not more than 50 percent, total milk solids.
    (b) * * *
    (1) Any product that contains less than 6.5 percent nonfat milk 
solids and contains less than 2.25 percent true milk protein; whey; 
plain or sweetened evaporated milk/skim milk; sweetened condensed milk/
skim milk; yogurt containing beverages with 20 or more percent yogurt 
by weight and kefir; products especially prepared for infant feeding or 
dietary use (meal replacement) that are packaged in hermetically sealed 
containers; and products that meet the compositional standards 
specified in paragraph (a) of this section but contain no fluid milk 
products included in paragraph (a) of this section.
* * * * *

0
3. In Sec.  1000.40, paragraph (b)(2)(iii) and (b)(2)(vi) are revised 
to read as follows:

Sec.  1000.40  Classes of utilization.

* * * * *
    (b) * * *
    (2) * * *
    (iii) Aerated cream, frozen cream, sour cream, sour half-and-half, 
sour cream mixtures containing non-milk items; yogurt, including yogurt 
containing beverages with 20 percent or more yogurt by weight and 
kefir, and any other semi-solid product resembling a Class II product;
* * * * *
    (vi) Products especially prepared for infant feeding or dietary use 
(meal replacements) that are packaged in hermetically sealed containers 
and products that meet the compositional standards of Sec.  1000.15(a) 
but contain no fluid milk products included in Sec.  1000.15(a).
* * * * *

0
4. In Sec.  1000.43, paragraph (c) is revised to read as follows:

Sec.  1000.43  General classification rules.

* * * * *
    (c) If any of the water but none of the nonfat solids contained in 
the milk from which a product is made is removed before the product is 
utilized or disposed of by the handler, the pounds of skim milk in such 
product that are to be considered under this part as used or disposed 
of by the handler shall be an amount equivalent to the nonfat milk 
solids contained in such product plus all of the water originally 
associated with such solids. If any of the nonfat solids contained in 
the milk from which a product is made are removed before the product is 
utilized or disposed of by the handler, the pounds of skim milk in such 
product that are to be considered under this part as used or disposed 
of by the handler shall be an amount equivalent to the nonfat milk 
solids contained in such product plus all of the water and nonfat 
solids originally associated with such solids determined on a protein 
equivalent basis.
* * * * *

    Dated: August 17, 2010.
Rayne Pegg,
Administrator, Agricultural Marketing Service.
[FR Doc. 2010-20972 Filed 8-23-10; 8:45 am]
BILLING CODE 3410-02-P
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