PART 1000--GENERAL PROVISIONS OF FEDERAL MILK MARKETING ORDERS 

Subpart A--Scope and Purpose

Sec.

1000.1 Scope and purpose of this Part 1000. 

Subpart B--Definitions

1000.2 General definitions.

1000.3 Route disposition. 

1000.4 Plant. 

1000.5 Distributing plant. 

1000.6 Supply plant.

1000.8 Nonpool plant.

1000.9 Handler. 

1000.14 Other source milk. 

1000.15 Fluid milk product. 

1000.16 Fluid cream product.

1000.17 [Reserved]

1000.18 Cooperative association. 

1000.19 Commercial food processing establishment.

Subpart C--Rules of Practice and Procedure Governing Market 

Administrators

1000.25 Market administrator. 

Subpart D--Rules Governing Order Provisions

1000.26 Continuity and separability of provisions. 

Subpart E--Rules of Practice and Procedure Governing Handlers

1000.27 Handler responsibility for records and facilities.

1000.28 Termination of obligations. 

Subpart F--Classification of Milk

1000.40 Classes of utilization.

1000.41 [Reserved] 

1000.42 Classification of transfers and diversions. 

1000.43 General classification rules. 

1000.44 Classification of producer milk. 

1000.45 Market administrator's reports and announcements

 concerning classification. 

Subpart G--Class Prices 

1000.50 Class prices, component prices, and advanced pricing

 factors.

1000.51 [Reserved] 

1000.52 Adjusted Class I differentials.

1000.53 Announcement of class prices, component prices, and 
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 advanced pricing factors. 

1000.54 Equivalent price. 

Subpart H--Payments for Milk

1000.70 Producer-settlement fund.

1000.76 Payments by a handler operating a partially regulated

 distributing plant.

1000.77 Adjustment of accounts.

1000.78 Charges on overdue accounts.

Subpart I--Administrative Assessment and Marketing Service 

Deduction

1000.85 Assessment for order administration. 

1000.86 Deduction for marketing services. 

Subpart J--Miscellaneous Provisions

1000.90 Dates.

1000.91 [Reserved]

1000.92 [Reserved]

1000.93 OMB control number assigned pursuant to the Paperwork 

 Reduction Act. 

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

 Subpart A--Scope and Purpose 

§ 1000.1 Scope and purpose of this Part 1000. 

This part sets forth certain terms, definitions, and provisions

which shall be common to and apply to each Federal milk marketing

order in 7 CFR, chapter X, except as specifically defined otherwise,

or modified, or otherwise provided, in an individual order in 7 CFR,

chapter X.

Subpart B--Definitions

§ 1000.2 General definitions.

(a) Act means Public Act No. 10, 73d Congress, as amended and

as reenacted and amended by the Agricultural Marketing Agreement Act

of 1937, as amended (7 U.S.C. 601 et seq.).

(b) Order or Federal milk order means the applicable part of 7

CFR, chapter X, issued pursuant to Section 8c of the Act as a Federal

milk marketing order (as amended). 

(c) Department means the U.S. Department of Agriculture. 
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(d) Secretary means the Secretary of Agriculture of the United

States or any officer or employee of the Department to whom authority

has heretofore been delegated, or to whom authority may hereafter be

delegated, to act in his stead. 

(e) Person means any individual, partnership, corporation,

association, or other business unit. 

§ 1000.3 Route disposition.

 Route disposition means a delivery to a retail or wholesale

outlet (except a plant), either directly or through any distribution

facility (including disposition from a plant store, vendor, or

vending machine) of a fluid milk product in consumer-type packages or

dispenser units classified as Class I milk.

§ 1000.4 Plant.

(a) Except as provided in paragraph (b) of this section, plant

means the land, buildings, facilities, and equipment constituting a

single operating unit or establishment at which milk or milk products

are received, processed, or packaged, including a facility described

in paragraph (b)(2) of this section if the facility receives the milk

of more than one dairy farmer. 

(b) Plant shall not include:

(1) A separate building without stationary storage tanks that

is used only as a reload point for transferring bulk milk from one

tank truck to another or a separate building used only as a

distribution point for storing packaged fluid milk products in

transit for route disposition; or

(2) An on-farm facility operated as part of a single dairy farm

entity for the separation of cream and skim or the removal of water

from milk.

§ 1000.5 Distributing plant.

Distributing plant means a plant that is approved by a duly

constituted regulatory agency for the handling of Grade A milk at

which fluid milk products are processed or packaged and from which

there is route disposition or transfers of packaged fluid milk

products to other plants.

§ 1000.6 Supply plant.

Supply plant means a plant approved by a duly constituted

regulatory agency for the handling of Grade A milk that receives milk
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directly from dairy farmers and transfers or diverts fluid milk

products to other plants or manufactures dairy products on its

premises.

§ 1000.8 Nonpool plant.

Nonpool plant means any milk receiving, manufacturing, or

processing plant other than a pool plant. The following categories

of nonpool plants are further defined as follows:

(a) A plant fully regulated under another Federal order means

a plant that is fully subject to the pricing and pooling provisions

of another Federal order.

(b) Producer-handler plant means a plant operated by a

producer-handler as defined under any Federal order.

(c) Partially regulated distributing plant means a nonpool

plant that is not a plant fully regulated under another Federal

order, a producer-handler plant, or an exempt plant, from which there

is route disposition in the marketing area during the month.

(d) Unregulated supply plant means a supply plant that does

not qualify as a pool supply plant and is not a plant fully regulated

under another Federal order, a producer-handler plant, or an exempt

plant.

(e) An exempt plant means a plant described in this paragraph

that is exempt from the pricing and pooling provisions of any order

provided that the operator of the plant files reports as prescribed

by the market administrator of any marketing area in which the plant

distributes packaged fluid milk products to enable determination of

the handler’s exempt status: 

(1) A plant that is operated by a governmental agency that has

no route disposition in commercial channels;

(2) A plant that is operated by a duly accredited college or

university disposing of fluid milk products only through the

operation of its own facilities with no route disposition in

commercial channels;

(3) A plant from which the total route disposition is for

individuals or institutions for charitable purposes without

remuneration; or

(4) A plant that has route disposition and packaged sales of

fluid milk products to other plants of 150,000 pounds or less during

the month. 

§ 1000.9 Handler.
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Handler means:

(a) Any person who operates a pool plant or a nonpool plant.

(b) Any person who receives packaged fluid milk products from

a plant for resale and distribution to retail or wholesale outlets,

any person who as a broker negotiates a purchase or sale of fluid

milk products or fluid cream products from or to any pool or nonpool

plant, and any person who by purchase or direction causes milk of

producers to be picked up at the farm and/or moved to a plant. 

Persons who qualify as handlers only under this paragraph under any

Federal milk order are not subject to the payment provisions of §§ --

--.70, ----.71, ----.72, ----.73, ----.76, and ----.85 of that order.

(c) Any cooperative association with respect to milk that it

receives for its account from the farm of a producer and delivers to

pool plants or diverts to nonpool plants pursuant to § ----.13 of the

order. The operator of a pool plant receiving milk from a

cooperative association may be the handler for such milk if both

parties notify the market administrator of this agreement prior to

the time that the milk is delivered to the pool plant and the plant

operator purchases the milk on the basis of farm bulk tank weights

and samples. 

§ 1000.14 Other source milk.

Other source milk means all skim milk and butterfat contained

in or represented by:

(a) Receipts of fluid milk products and bulk fluid cream

products from any source other than producers, handlers described in

§ 1000.9(c) and § 1135.11, or pool plants;

(b) Products (other than fluid milk products, fluid cream

products, and products produced at the plant during the same month)

from any source which are reprocessed, converted into, or combined

with another product in the plant during the month; and

 (c) Receipts of any milk product (other than a fluid milk

product or a fluid cream product) for which the handler fails to

establish a disposition.

§ 1000.15 Fluid milk product.

(a) Except as provided in paragraph (b) of this section,

fluid milk product means any milk products in fluid or frozen form

containing less than 9 percent butterfat that are intended to be used

as beverages. Such products include, but are not limited to: Milk,

fat-free milk, lowfat milk, light milk, reduced fat milk, milk
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drinks, eggnog and cultured buttermilk, including any such beverage

products that are flavored, cultured, modified with added nonfat milk

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) The term fluid milk product shall not include:

(1) Plain or sweetened evaporated milk/skim milk, sweetened

condensed milk/skim milk, formulas especially prepared for infant

feeding or dietary use (meal replacement) that are packaged in

hermetically-sealed containers, any product that contains by weight

less than 6.5 percent nonfat milk solids, and whey; and

(2) The quantity of skim milk equivalent in any modified

product specified in paragraph (a) of this section that is greater

than an equal volume of an unmodified product of the same nature and

butterfat content.

§ 1000.16 Fluid cream product.

Fluid cream product means cream (other than plastic cream or

frozen cream), including sterilized cream, or a mixture of cream and

milk or skim milk containing 9 percent or more butterfat, with or

without the addition of other ingredients.

§ 1000.17 [Reserved]

§ 1000.18 Cooperative association.

Cooperative association means any cooperative marketing

association of producers which the Secretary determines is qualified

under the provisions of the Capper-Volstead Act, has full authority

in the sale of milk of its members, and is engaged in marketing milk

or milk products for its members. A federation of 2 or more

cooperatives incorporated under the laws of any state will be

considered a cooperative association under any Federal milk order if

all member cooperatives meet the requirements of this section.

§ 1000.19 Commercial food processing establishment.

Commercial food processing establishment means any facility,

other than a milk plant, to which fluid milk products and fluid cream

products are disposed of, or producer milk is diverted, that uses

such receipts as ingredients in food products and has no other

disposition of fluid milk products other than those received in

consumer-type packages (1 gallon or less). Producer milk diverted to
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commercial food processing establishments shall be subject to the

same provisions relating to diversions to plants, including, but not

limited to, §§ ----.13 and ----.52 of each Federal milk order.

Subpart C--Rules of Practice and Procedure Governing Market

Administrators

§ 1000.25 Market administrator.

(a) Designation. The agency for the administration of the

order shall be a market administrator selected by the Secretary and

subject to removal at the Secretary’s discretion. The market

administrator shall be entitled to compensation determined by the

Secretary.

(b) Powers. The market administrator shall have the following

powers with respect to each order under his/her administration:

(1) Administer the order in accordance with its terms and

provisions;

(2) Maintain and invest funds outside of the United States

Department of the Treasury for the purpose of administering the

order; 

(3) Make rules and regulations to effectuate the terms and

provisions of the order;

(4) Receive, investigate, and report complaints of violations

to the Secretary; and

(5) Recommend amendments to the Secretary.

(c) Duties. The market administrator shall perform all the

duties necessary to administer the terms and provisions of each order

under his/her administration, including, but not limited to, the

following:

(1) Employ and fix the compensation of persons necessary to

enable him/her to exercise the powers and perform the duties of the

office;

(2) Pay out of funds provided by the administrative

assessment, except expenses associated with functions for which the

order provides a separate charge, all expenses necessarily incurred

in the maintenance and functioning of the office and in the

performance of the duties of the office, including the market

administrator’s compensation;

(3) Keep records which will clearly reflect the transactions

provided for in the order and upon request by the Secretary,

surrender the records to a successor or such other person as the

Secretary may designate;
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(4) Furnish information and reports requested by the Secretary

and submit office records for examination by the Secretary;

(5) Announce publicly at his/her discretion, unless otherwise

directed by the Secretary, by such means as he/she deems appropriate,

the name of any handler who, after the date upon which the handler is

required to perform such act, has not:

(i) Made reports required by the order;

(ii) Made payments required by the order; or

(iii) Made available records and facilities as required

pursuant to § 1000.27;

(6) Prescribe reports required of each handler under the

order. Verify such reports and the payments required by the order by

examining records (including such papers as copies of income tax

reports, fiscal and product accounts, correspondence, contracts,

documents or memoranda of the handler, and the records of any other

persons that are relevant to the handler’s obligation under the

order), by examining such handler’s milk handling facilities, and by

such other investigation as the market administrator deems necessary

for the purpose of ascertaining the correctness of any report or any

obligation under the order. Reclassify skim milk and butterfat

received by any handler if such examination and investigation

discloses that the original classification was incorrect;

(7) Furnish each regulated handler a written statement of such

handler’s accounts with the market administrator promptly each month. 

Furnish a corrected statement to such handler if verification

discloses that the original statement was incorrect; and

(8) Prepare and disseminate publicly for the benefit of

producers, handlers, and consumers such statistics and other

information concerning operation of the order and facts relevant to

the provisions thereof (or proposed provisions) as do not reveal

confidential information.

Subpart D--Rules Governing Order Provisions

§ 1000.26 Continuity and separability of provisions. 

(a) Effective time. The provisions of the order or any

amendment to the order shall become effective at such time as the

Secretary may declare and shall continue in force until suspended or

terminated. 

(b) Suspension or termination. The Secretary shall suspend or

terminate any or all of the provisions of the order whenever he/she

finds that such provision(s) obstructs or does not tend to effectuate
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the declared policy of the Act. The order shall terminate whenever

the provisions of the Act authorizing it cease to be in effect. 

(c) Continuing obligations. If upon the suspension or

termination of any or all of the provisions of the order there are

any obligations arising under the order, the final accrual or

ascertainment of which requires acts by any handler, by the market

administrator or by any other person, the power and duty to perform

such further acts shall continue notwithstanding such suspension or

termination. 

(d) Liquidation. 

(1) Upon the suspension or termination of any or all

provisions of the order the market administrator, or such other

liquidating agent designated by the Secretary, shall, if so directed

by the Secretary, liquidate the business of the market

administrator's office, dispose of all property in his/her possession

or control, including accounts receivable, and execute and deliver

all assignments or other instruments necessary or appropriate to

effectuate any such disposition; and 

(2) If a liquidating agent is so designated, all assets and

records of the market administrator shall be transferred promptly to

such liquidating agent. If, upon such liquidation, the funds on hand

exceed the amounts required to pay outstanding obligations of the

office of the market administrator and to pay necessary expenses of

liquidation and distribution, such excess shall be distributed to

contributing handlers and producers in an equitable manner. 

(e) Separability of provisions. If any provision of the order

or its application to any person or circumstances is held invalid,

the application of such provision and of the remaining provisions of

the order to other persons or circumstances shall not be affected

thereby. 

Subpart E--Rules of Practice and Procedure Governing Handlers

§ 1000.27 Handler responsibility for records and facilities. 

Each handler shall maintain and retain records of its

operations and make such records and its facilities available to the

market administrator. If adequate records of a handler, or of any

other persons, that are relevant to the obligation of such handler

are not maintained and made available, any skim milk and butterfat

required to be reported by such handler for which adequate records

are not available shall be considered as used in the highest-priced

class. 
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(a) Records to be maintained. 

(1) Each handler shall maintain records of its operations

(including, but not limited to, records of purchases, sales,

processing, packaging, and disposition) as are necessary to verify

whether such handler has any obligation under the order and if so,

the amount of such obligation. Such records shall be such as to

establish for each plant or other receiving point for each month: 

(i) The quantities of skim milk and butterfat contained in, or

represented by, products received in any form, including inventories

on hand at the beginning of the month, according to form, time, and

source of each receipt; 

(ii) The utilization of all skim milk and butterfat showing

the respective quantities of such skim milk and butterfat in each

form disposed of or on hand at the end of the month; and 

(iii) Payments to producers, dairy farmers, and cooperative

associations, including the amount and nature of any deductions and

the disbursement of money so deducted. 

(2) Each handler shall keep such other specific records as the

market administrator deems necessary to verify or establish such

handler's obligation under the order. 

(b) Availability of records and facilities. Each handler

shall make available all records pertaining to such handler's

operations and all facilities the market administrator finds are

necessary to verify the information required to be reported by the

order and/or to ascertain such handler's reporting, monetary, or

other obligation under the order. Each handler shall permit the

market administrator to weigh, sample, and test milk and milk

products and observe plant operations and equipment and make

available to the market administrator such facilities as are

necessary to carry out his/her duties. 

(c) Retention of records. All records required under the

order to be made available to the market administrator shall be

retained by the handler for a period of 3 years to begin at the end

of the month to which such records pertain. If, within such 3-year

period, the market administrator notifies the handler in writing that

the retention of such records, or of specified records, is necessary

in connection with a proceeding under section 8c(15)(A) of the Act or

a court action specified in such notice, the handler shall retain

such records, or specified records, until further written

notification from the market administrator. The market administrator

shall give further written notification to the handler promptly upon
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the termination of the litigation or when the records are no longer

necessary in connection therewith. 

§ 1000.28 Termination of obligations.

(a) Except as provided in paragraphs (b) and (c) of this

section, the obligation of any handler to pay money required to be

paid under the terms of the order shall terminate 2 years after the

last day of the month during which the market administrator receives

the handler's report of receipts and utilization on which such

obligation is based, unless within such 2-year period, the market

administrator notifies the handler in writing that such money is due

and payable. Service of such written notice shall be complete upon

mailing to the handler's last known address and it shall contain, but

need not be limited to, the following information: 

(1) The amount of the obligation; 

(2) The month(s) on which such obligation is based; and 

(3) If the obligation is payable to one or more producers or

to a cooperative association, the name of such producer(s) or such

cooperative association, or if the obligation is payable to the

market administrator, the account for which it is to be paid. 

(b) If a handler fails or refuses, with respect to any

obligation under the order, to make available to the market

administrator all records required by the order to be made available,

the market administrator may notify the handler in writing, within

the 2-year period provided for in paragraph (a) of this section, of

such failure or refusal. If the market administrator so notifies a

handler, the said 2-year period with respect to such obligation shall

not begin to run until the first day of the month following the month

during which all such records pertaining to such obligation are made

available to the market administrator. 

(c) Notwithstanding the provisions of paragraphs (a) and (b)

of this section, a handler's obligation under the order to pay money

shall not be terminated with respect to any transaction involving

fraud or willful concealment of a fact, material to the obligation,

on the part of the handler against whom the obligation is sought to

be imposed. 

(d) Unless the handler files a petition pursuant to section

8c(15)(A) of the Act and the applicable rules and regulations (7 CFR

900.50 through 900.71) within the applicable 2-year period indicated

below, the obligation of the market administrator: 
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(1) To pay a handler any money which such handler claims is

due under the terms of the order shall terminate 2 years after the

end of the month during which the skim milk and butterfat involved in

the claim were received; or 

(2) To refund any payment made by a handler (including a

deduction or offset by the market administrator) shall terminate 2

years after the end of the month during which payment was made by the

handler. 

Subpart F--Classification of Milk

§ 1000.40 Classes of Utilization.

Except as provided in § 1000.42, all skim milk and butterfat

required to be reported pursuant to § ----.30 of each Federal milk

order shall be classified as follows:

(a) Class I milk shall be all skim milk and butterfat:

(1) Disposed of in the form of fluid milk products, except as

otherwise provided in this section;

(2) In packaged fluid milk products in inventory at the end of

the month; and 

(3) In shrinkage assigned pursuant to § 1000.43(b).

(b) Class II milk shall be all skim milk and butterfat:

(1) In fluid milk products in containers larger than 1 gallon

and fluid cream products disposed of or diverted to a commercial food

processing establishment if the market administrator is permitted to

audit the records of the commercial food processing establishment for

the purpose of verification. Otherwise, such uses shall be Class I;

(2) Used to produce:

(i) Cottage cheese, lowfat cottage cheese, dry curd cottage 

cheese, ricotta cheese, pot cheese, Creole cheese, and any similar

soft, high-moisture cheese resembling cottage cheese in form or use;

(ii) Milkshake and ice milk mixes (or bases), frozen desserts,

and frozen dessert mixes distributed in half-gallon containers or

larger and intended to be used in soft or semi-solid form;

(iii) Aerated cream, frozen cream, sour cream, sour

half-and-half, sour cream mixtures containing nonmilk items, yogurt,

and any other semi-solid product resembling a Class II product;

(iv) Custards, puddings, pancake mixes, coatings, batter, and

similar products;

(v) Buttermilk biscuit mixes and other buttermilk for baking

that contain food starch in excess of 2% of the total solids,
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provided that the product is labeled to indicate the food starch

content; 

(vi) Formulas especially prepared for infant feeding or

dietary use (meal replacement) that are packaged in

hermetically-sealed containers; 

(vii) Candy, soup, bakery products and other prepared foods

which are processed for general distribution to the public, and

intermediate products, including sweetened condensed milk, to be used

in processing such prepared food products;

(viii) A fluid cream product or any product containing

artificial fat or fat substitutes that resembles a fluid cream

product, except as otherwise provided in paragraph (c) of this

section; and

(ix) Any product not otherwise specified in this section; and

(3) In shrinkage assigned pursuant to § 1000.43(b).

(c) Class III milk shall be all skim milk and butterfat:

(1) Used to produce:

(i) Cream cheese and other spreadable cheeses, and hard cheese

of types that may be shredded, grated, or crumbled;

(ii) Plastic cream, anhydrous milkfat, and butteroil; and

(iii) Evaporated or sweetened condensed milk in a

consumer-type package; and

(2) In shrinkage assigned pursuant to § 1000.43(b).

(d) Class IV milk shall be all skim milk and butterfat:

(1) Used to produce:

(i) Butter; and

(ii) Any milk product in dried form;

(2) In inventory at the end of the month of fluid milk

products and fluid cream products in bulk form; 

(3) In the skim milk equivalent of nonfat milk solids used to

modify a fluid milk product that has not been accounted for in Class

I; and

(4) In shrinkage assigned pursuant to § 1000.43(b).

(e) Other uses. Other uses include skim milk and butterfat

used in any product described in this section that is dumped, used

for animal feed, destroyed, or lost by a handler in a vehicular

accident, flood, fire, or similar occurrence beyond the handler's

control. Such uses of skim milk and butterfat shall be assigned to

the lowest priced class for the month to the extent that the

quantities destroyed or lost can be verified from records

satisfactory to the market administrator.
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§ 1000.41 [Reserved]

§ 1000.42 Classification of transfers and diversions.

(a) Transfers and diversions to pool plants. Skim milk or

butterfat transferred or diverted in the form of a fluid milk product

or transferred in the form of a bulk fluid cream product from a pool

plant or a handler described in § 1135.11 of this chapter to another

pool plant shall be classified as Class I milk unless the handlers

both request the same classification in another class. In either

case, the classification shall be subject to the following

conditions:

(1) The skim milk and butterfat classified in each class shall

be limited to the amount of skim milk and butterfat, respectively,

remaining in such class at the receiving plant after the computations

pursuant to § 1000.44(a)(9) and the corresponding step of §

1000.44(b); 

(2) If the transferring plant received during the month other

source milk to be allocated pursuant to § 1000.44(a)(3) or the

corresponding step of § 1000.44(b), the skim milk or butterfat so

transferred shall be classified so as to allocate the least possible

Class I utilization to such other source milk; and 

(3) If the transferring handler received during the month

other source milk to be allocated pursuant to § 1000.44(a)(8) or (9)

or the corresponding steps of § 1000.44(b), the skim milk or

butterfat so transferred, up to the total of the skim milk and

butterfat, respectively, in such receipts of other source milk, shall

not be classified as Class I milk to a greater extent than would be

the case if the other source milk had been received at the receiving

plant.

(b) Transfers and diversions to a plant regulated under

another Federal order. Skim milk or butterfat transferred or

diverted in the form of a fluid milk product or transferred in the

form of a bulk fluid cream product from a pool plant to a plant

regulated under another Federal order shall be classified in the

following manner. Such classification shall apply only to the skim

milk or butterfat that is in excess of any receipts at the pool plant

from a plant regulated under another Federal order of skim milk and

butterfat, respectively, in fluid milk products and bulk fluid cream

products, respectively, that are in the same category as described in

paragraph (b)(1) or (2) of this section: 
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(1) As Class I milk, if transferred as packaged fluid milk

products;

(2) If transferred or diverted in bulk form, classification

shall be in the classes to which allocated under the other order:

(i) If the operators of both plants so request in their

reports of receipts and utilization filed with their respective

market administrators, transfers in bulk form shall be classified as

other than Class I to the extent that such utilization is available

for such classification pursuant to the allocation provisions of the

other order;

(ii) If diverted, the diverting handler must request a

classification other than Class I. If the plant receiving the

diverted milk does not have sufficient utilization available for the

requested classification and some of the diverted milk is

consequently assigned to Class I use, the diverting handler shall be

given the option of designating the entire load of diverted milk as

producer milk at the plant physically receiving the milk. 

Alternatively, if the diverting handler so chooses, it may designate

which dairy farmers whose milk was diverted during the month will be

designated as producers under the order physically receiving the

milk. If the diverting handler declines to accept either of these

options, the market administrator will prorate the portion of

diverted milk in excess of Class II, III, and IV use among all the

dairy farmers whose milk was received from the diverting handler on

the last day of the month, then the second-to-last day, and

continuing in that fashion until the excess diverted milk has been

assigned as producer milk under the receiving order; and

(iii) If information concerning the classes to which such

transfers or diversions were allocated under the other order is not

available to the market administrator for the purpose of establishing

classification under this paragraph, classification shall be Class I,

subject to adjustment when such information is available.

(c) Transfers and diversions to producer-handlers and to

exempt plants. Skim milk or butterfat that is transferred or

diverted from a pool plant to a producer-handler under any Federal

order or to an exempt plant shall be classified:

(1) As Class I milk if transferred or diverted to a producerhandler;

(2) As Class I milk if transferred to an exempt plant in the

form of a packaged fluid milk product; and
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(3) In accordance with the utilization assigned to it by the

market administrator if transferred or diverted in the form of a bulk

fluid milk product or transferred in the form of a bulk fluid cream

product to an exempt plant. For this purpose, the receiving

handler’s utilization of skim milk and butterfat in each class, in

series beginning with Class IV, shall be assigned to the extent

possible to its receipts of skim milk and butterfat, in bulk fluid

cream products, and bulk fluid milk products, respectively, pro rata

to each source.

(d) Transfers and diversions to other nonpool plants. Skim

milk or butterfat transferred or diverted in the following forms from

a pool plant to a nonpool plant that is not a plant regulated under

another order, an exempt plant, or a producer-handler plant shall be

classified: 

(1) As Class I milk, if transferred in the form of a packaged

fluid milk product; and 

(2) As Class I milk, if transferred or diverted in the form of

a bulk fluid milk product or transferred in the form of a bulk fluid

cream product, unless the following conditions apply: 

(i) If the conditions described in paragraphs (d)(2)(i)(A) and

(B) of this section are met, transfers or diversions in bulk form

shall be classified on the basis of the assignment of the nonpool

plant's utilization, excluding the milk equivalent of both nonfat

milk solids and concentrated milk used in the plant during the month,

to its receipts as set forth in paragraphs (d)(2)(ii) through (viii)

of this section:

(A) The transferring handler or diverting handler claims such

classification in such handler’s report of receipts and utilization

filed pursuant to § ----.30 of each Federal milk order for the month

within which such transaction occurred; and 

(B) The nonpool plant operator maintains books and records

showing the utilization of all skim milk and butterfat received at

such plant which are made available for verification purposes if

requested by the market administrator; 

(ii) Route disposition in the marketing area of each Federal

milk order from the nonpool plant and transfers of packaged fluid

milk products from such nonpool plant to plants fully regulated

thereunder shall be assigned to the extent possible in the following

sequence: 

(A) Pro rata to receipts of packaged fluid milk products at

such nonpool plant from pool plants; 
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(B) Pro rata to any remaining unassigned receipts of packaged

fluid milk products at such nonpool plant from plants regulated under

other Federal orders; 

(C) Pro rata to receipts of bulk fluid milk products at such

nonpool plant from pool plants; and 

(D) Pro rata to any remaining unassigned receipts of bulk

fluid milk products at such nonpool plant from plants regulated under

other Federal orders;

(iii) Any remaining Class I disposition of packaged fluid milk

products from the nonpool plant shall be assigned to the extent

possible pro rata to any remaining unassigned receipts of packaged

fluid milk products at such nonpool plant from pool plants and plants

regulated under other Federal orders;

(iv) Transfers of bulk fluid milk products from the nonpool

plant to a plant regulated under any Federal order, to the extent

that such transfers to the regulated plant exceed receipts of fluid

milk products from such plant and are allocated to Class I at the

receiving plant, shall be assigned to the extent possible in the

following sequence: 

(A) Pro rata to receipts of fluid milk products at such

nonpool plant from pool plants; and 

(B) Pro rata to any remaining unassigned receipts of fluid

milk products at such nonpool plant from plants regulated under other

Federal orders;

(v) Any remaining unassigned Class I disposition from the

nonpool plant shall be assigned to the extent possible in the

following sequence: 

(A) To such nonpool plant's receipts from dairy farmers who

the market administrator determines constitute regular sources of

Grade A milk for such nonpool plant; and 

(B) To such nonpool plant's receipts of Grade A milk from

plants not fully regulated under any Federal order which the market

administrator determines constitute regular sources of Grade A milk

for such nonpool plant;

(vi) Any remaining unassigned receipts of bulk fluid milk

products at the nonpool plant from pool plants and plants regulated

under other Federal orders shall be assigned, pro rata among such

plants, to the extent possible first to any remaining Class I

utilization and then to all other utilization, in sequence beginning

with Class IV at such nonpool plant;
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(vii) Receipts of bulk fluid cream products at the nonpool

plant from pool plants and plants regulated under other Federal

orders shall be assigned, pro rata among such plants, to the extent

possible to any remaining utilization, in sequence beginning with

Class IV at such nonpool plant; and

(viii) In determining the nonpool plant's utilization for

purposes of this paragraph, any fluid milk products and bulk fluid

cream products transferred from such nonpool plant to a plant not

fully regulated under any Federal order shall be classified on the

basis of the second plant's utilization using the same assignment

priorities at the second plant that are set forth in this paragraph. 

§ 1000.43 General classification rules.

In determining the classification of producer milk pursuant to

§ 1000.44, the following rules shall apply:

(a) Each month the market administrator shall correct for

mathematical and other obvious errors all reports filed pursuant to §

----.30 of each Federal milk order and shall compute separately for

each pool plant, for each handler described in § 1000.9(c) and §

1135.11 of this chapter, the pounds of skim milk and butterfat,

respectively, in each class in accordance with §§ 1000.40 and

1000.42, and paragraph (b) of this section.

(b) Shrinkage and Overage. For purposes of classifying all

milk reported by a handler pursuant to § ----.30 of each Federal milk

order the market administrator shall determine the shrinkage or

overage of skim milk and butterfat for each pool plant and each

handler described in § 1000.9(c) and § 1135.11 of this chapter by

subtracting total utilization from total receipts. Any positive

difference shall be shrinkage, and any negative difference shall be

overage.

(1) Shrinkage incurred by pool plants qualified pursuant to §

----.7 of any Federal milk order shall be assigned to the lowestpriced class to the extent that such shrinkage does not exceed:

(i) Two percent of the total quantity of milk physically

received at the plant directly from producers’ farms on the basis of

farm weights and tests;

(ii) Plus 1.5 percent of the quantity of bulk milk physically

received on a basis other than farm weights and tests, excluding

concentrated milk received by agreement for other than Class I use;
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(iii) Plus .5 percent of the quantity of milk diverted by the

plant operator to another plant on a basis other than farm weights

and tests; and

(iv) Minus 1.5 percent of the quantity of bulk milk

transferred to other plants, excluding concentrated milk transferred

by agreement for other than Class I use. 

(2) A handler described in § 1000.9(c) or § 1135.11 of this

chapter that delivers milk to plants on a basis other than farm

weights and tests shall receive a lowest-priced-class shrinkage

allowance of .5 percent of the total quantity of such milk picked up

at producers’ farms.

(3) Shrinkage in excess of the amounts provided in paragraphs

(b)(1) and (2) of this section shall be assigned to existing

utilization in series starting with Class I. The shrinkage assigned

pursuant to this paragraph shall be added to the handler’s reported

utilization and the result shall be known as the gross utilization in

each class.

(c) If any of the water 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.

(d) Skim milk and butterfat contained in receipts of bulk

concentrated fluid milk and nonfluid milk products that are

reconstituted for fluid use shall be assigned to Class I use, up to

the reconstituted portion of labeled reconstituted fluid milk

products, on a pro rata basis (except for any Class I use of specific

concentrated receipts that is established by the handler) prior to

any assignments under § 1000.44 of this chapter. Any remaining skim

milk and butterfat in concentrated receipts shall be assigned to uses

under § 1000.44 on a pro rata basis, unless a specific use of such

receipts is established by the handler.

§ 1000.44 Classification of producer milk.

For each month the market administrator shall determine for

each handler described in § 1000.9(a) for each pool plant of the

handler separately and for each handler described in § 1000.9(c) and

§ 1135.11 the classification of producer milk by allocating the
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handler's receipts of skim milk and butterfat to the handler’s gross

utilization of such receipts pursuant to § 1000.43(b)(3) as follows: 

(a) Skim milk shall be allocated in the following manner:

(1) Subtract from the pounds of skim milk in Class I the

pounds of skim milk in:

(i) Receipts of packaged fluid milk products from an

unregulated supply plant to the extent that an equivalent amount of

skim milk disposed of to such plant by handlers fully regulated under

any Federal order is classified and priced as Class I milk and is not

used as an offset for any other payment obligation under any order;

(ii) Packaged fluid milk products in inventory at the

beginning of the month. This paragraph shall apply only if the pool

plant was subject to the provisions of this paragraph or comparable

provisions of another Federal order in the immediately preceding

month; 

(iii) Fluid milk products received in packaged form from

plants regulated under other Federal orders; and

(iv) To the extent that the receipts described in paragraphs

(a)(1)(i) through (iii) of this section exceed the gross Class I

utilization of skim milk, the excess receipts shall be subtracted

pursuant to paragraph (a)(3)(vi) of this section.

(2) Subtract from the pounds of skim milk in Class II the

pounds of skim milk in the receipts of skim milk in bulk concentrated

fluid milk products and in other source milk (except other source

milk received in the form of an unconcentrated fluid milk product or

a fluid cream product) that is used to produce, or added to, any

product in Class II (excluding the quantity of such skim milk that

was classified as Class IV milk pursuant to § 1000.40(d)(3)). To the

extent that the receipts described in this paragraph exceed the gross

Class II utilization of skim milk, the excess receipts shall be

subtracted pursuant to paragraph (a)(3)(vi) of this section.

(3) Subtract from the pounds of skim milk remaining in each

class, in series beginning with Class IV, the pounds of skim milk in: 

(i) Receipts of bulk concentrated fluid milk products and

other source milk (except other source milk received in the form of

an unconcentrated fluid milk product);

(ii) Receipts of fluid milk products and bulk fluid cream

products for which appropriate health approval is not established and

from unidentified sources; 

(iii) Receipts of fluid milk products and bulk fluid cream

products from an exempt plant;
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(iv) Fluid milk products and bulk fluid cream products

received from a producer-handler as defined under the order in this

part or any other Federal order; 

(v) Receipts of fluid milk products from dairy farmers for

other markets; and

 (vi) The excess receipts specified in paragraphs (a)(1)(iv)

and (a)(2) of this section.

(4) Subtract from the pounds of skim milk remaining in all

classes other than Class I, in sequence beginning with Class IV, the

receipts of fluid milk products from an unregulated supply plant that

were not previously subtracted in this section for which the handler

requests classification other than Class I, but not in excess of the

pounds of skim milk remaining in these other classes combined.

(5) Subtract from the pounds of skim milk remaining in all

classes other than Class I, in sequence beginning with Class IV,

receipts of fluid milk products from an unregulated supply plant that

were not previously subtracted in this section, and which are in

excess of the pounds of skim milk determined pursuant to paragraphs

(a)(5)(i) and (ii) of this section;

(i) Multiply by 1.25 the pounds of skim milk remaining in

Class I at this allocation step; and 

(ii) Subtract from the result in paragraph (a)(5)(i) the

pounds of skim milk in receipts of producer milk and fluid milk

products from other pool plants.

(6) Subtract from the pounds of skim milk remaining in all

classes other than Class I, in sequence beginning with Class IV, the

pounds of skim milk in receipts of bulk fluid milk products from a

handler regulated under another Federal order that are in excess of

bulk fluid milk products transferred or diverted to such handler, if

other than Class I classification is requested, but not in excess of

the pounds of skim milk remaining in these classes combined.

(7) Subtract from the pounds of skim milk remaining in each

class, in series beginning with Class IV, the pounds of skim milk in

fluid milk products and bulk fluid cream products in inventory at the

beginning of the month that were not previously subtracted in this

section.

(8) Subtract from the pounds of skim milk remaining in each

class at the plant receipts of skim milk in fluid milk products from

an unregulated supply plant that were not previously subtracted in

this section and that were not offset by transfers or diversions of

fluid milk products to the unregulated supply plant from which fluid
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milk products to be allocated at this step were received. Such

subtraction shall be pro rata to the pounds of skim milk in Class I

and in Classes II, III, and IV combined, with the quantity prorated

to Classes II, III, and IV combined being subtracted in sequence

beginning with Class IV.

(9) Subtract from the pounds of skim milk remaining in each

class the pounds of skim milk in receipts of bulk fluid milk products

from a handler regulated under another Federal order that are in

excess of bulk fluid milk products transferred or diverted to such

handler that were not subtracted in paragraph (a)(6) of this section. 

Such subtraction shall be pro rata to the pounds of skim milk in

Class I and in Classes II, III, and IV combined, with the quantity

prorated to Classes II, III, and IV combined being subtracted in

sequence beginning with Class IV, with respect to whichever of the

following quantities represents the lower proportion of Class I milk:

(i) The estimated utilization of skim milk of all handlers in

each class as announced for the month pursuant to § 1000.45(a); or

(ii) The total pounds of skim milk remaining in each class at

this allocation step.

(10) Subtract from the pounds of skim milk remaining in each

class the pounds of skim milk in receipts of fluid milk products and

bulk fluid cream products from another pool plant and from a handler

described in § 1135.11 of this chapter according to the

classification of such products pursuant to § 1000.42(a).

(11) If the total pounds of skim milk remaining in all classes

exceed the pounds of skim milk in producer milk, subtract such excess

from the pounds of skim milk remaining in each class in series

beginning with Class IV. 

(b) Butterfat shall be allocated in accordance with the

procedure outlined for skim milk in paragraph (a) of this section.

(c) The quantity of producer milk in each class shall be the

combined pounds of skim milk and butterfat remaining in each class

after the computations pursuant to paragraphs (a) and (b) of this

section. 

§ 1000.45 Market administrator’s reports and announcements

concerning classification. 

(a) Whenever required for the purpose of allocating receipts

from plants regulated under other Federal orders pursuant to

§ 1000.44(a)(9) and the corresponding step of § 1000.44(b), the

market administrator shall estimate and publicly announce the
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utilization (to the nearest whole percentage) in Class I during the

month of skim milk and butterfat, respectively, in producer milk of

all handlers. The estimate shall be based upon the most current

available data and shall be final for such purpose.

(b) The market administrator shall report to the market

administrators of other Federal orders as soon as possible after the

handlers’ reports of receipts and utilization are received, the class

to which receipts from plants regulated under other Federal orders

are allocated pursuant to §§ 1000.43(d) and 1000.44 (including any

reclassification of inventories of bulk concentrated fluid milk

products), and thereafter any change in allocation required to

correct errors disclosed on the verification of such report.

(c) The market administrator shall furnish each handler

operating a pool plant and each handler described in § 1135.11 of

this chapter who has shipped fluid milk products or bulk fluid cream

products to a plant fully regulated under another Federal order the

class to which the shipments were allocated by the market

administrator of the other Federal order on the basis of the report

by the receiving handler and, as necessary, any changes in the

allocation arising from the verification of such report.

(d) The market administrator shall report to each cooperative

association which so requests, the percentage of producer milk

delivered by members of the association that was used in each class

by each handler receiving the milk. For the purpose of this report,

the milk so received shall be prorated to each class in accordance

with the total utilization of producer milk by the handler.

Subpart G--Class Prices

§ 1000.50 Class prices, component prices, and advanced pricing

factors.

Class prices per hundredweight of milk containing 3.5 percent

butterfat, component prices, and advanced pricing factors shall be as

follows. The prices and pricing factors described in paragraphs (a),

(b), (c), (e), (f), and (q) of this section shall be based on a

weighted average of the most recent 2 weekly prices announced by the

National Agricultural Statistical Service (NASS) before the 24th day

of the month. These prices shall be announced on or before the 23rd

day of the month and shall apply to milk received during the

following month. The prices described in paragraphs (g) through (p)

of this section shall be based on a weighted average for the

preceding month of weekly prices announced by NASS on or before the
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5

th day of the month and shall apply to milk received during the

preceding month. The price described in paragraph (d) of this

section shall be derived from the Class II skim milk price announced

on or before the 23rd day of the month preceding the month to which

it applies and the butterfat price announced on or before the 5th day

of the month following the month to which it applies. 

(a) Class I price. The Class I price per hundredweight,

rounded to the nearest cent, shall be .965 times the Class I skim

milk price plus 3.5 times the Class I butterfat price. 

(b) Class I skim milk price. The Class I skim milk price per

hundredweight shall be the adjusted Class I differential specified in

§ 1000.52 plus the higher of the advanced pricing factors computed in

paragraph (q)(1) or (2) of this section.

(c) Class I butterfat price. The Class I butterfat price per

pound shall be the adjusted Class I differential specified in §

1000.52 divided by 100, plus the advanced butterfat price computed in

paragraph (q)(3) of this section.

(d) The Class II price per hundredweight, rounded to the

nearest cent, shall be .965 times the Class II skim milk price plus

3.5 times the Class II butterfat price.

(e) Class II skim milk price. The Class II skim milk price

per hundredweight shall be the advanced Class IV skim milk price

computed in paragraph (q)(2) of this section plus 70 cents. 

(f) Class II nonfat solids price. The Class II nonfat solids

price per pound, rounded to the nearest one-hundredth cent, shall be

the Class II skim milk price divided by 9.

(g) Class II butterfat price. The Class II butterfat price

per pound shall be the butterfat price plus $.007.

(h) Class III price. The Class III price per hundredweight,

rounded to the nearest cent, shall be .965 times the Class III skim

milk price plus 3.5 times the butterfat price.

(i) Class III skim milk price. The Class III skim milk price

per hundredweight, rounded to the nearest cent, shall be the protein

price per pound times 3.1 plus the other solids price per pound times

5.9.

(j) Class IV price. The Class IV price per hundredweight,

rounded to the nearest cent, shall be .965 times the Class IV skim

milk price plus 3.5 times the butterfat price.

(k) Class IV skim milk price. The Class IV skim milk price

per hundredweight, rounded to the nearest cent, shall be the nonfat

solids price per pound times 9. 
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(l) Butterfat price. The butterfat price per pound, rounded to

the nearest one-hundredth cent, shall be the U.S. average NASS AA

Butter survey price reported by the Department for the month less

11.4 cents, with the result divided by 0.82.

(m) Nonfat solids price. The nonfat solids price per pound,

rounded to the nearest one-hundredth cent, shall be the U.S. average

NASS nonfat dry milk survey price reported by the Department for the

month less 13.7 cents, with the result divided by 1.02.

(n) Protein price. The protein price per pound, rounded to

the nearest one-hundredth cent, shall be computed as follows:

(1) Compute a weighted average of the amounts described in

paragraphs (n)(1)(i) and (ii) of this section:

(i) The U.S. average NASS survey price for 40-lb. block cheese

reported by the Department for the month; and

(ii) The U.S. average NASS survey price for 500-pound barrel

cheddar cheese (39 percent moisture) reported by the Department for

the month plus 3 cents;

(2) Subtract 17.02 cents from the price computed pursuant to

paragraph (n)(1) of this section and multiply the result by 1.405; 

(3) Add to the amount computed pursuant to paragraph (n)(2) of

this section an amount computed as follows:

(i) Subtract 17.02 cents from the price computed pursuant to

paragraph (n)(1) of this section and multiply the result by 1.582;

(ii) Subtract the butterfat price computed pursuant to

paragraph (l) of this section from the amount computed pursuant to

paragraph (n)(3)(i) of this section; and

(iii) Multiply the amount computed pursuant to paragraph

(n)(3)(ii) of this section by 1.28.

(o) Other solids price. The other solids price per pound,

rounded to the nearest one-hundredth cent, shall be the U.S. average

NASS dry whey survey price reported by the Department for the month

minus 13.7 cents, with the result divided by 0.968.

(p) Somatic cell adjustment. The somatic cell adjustment per

hundredweight of milk shall be determined as follows:

(1) Multiply .0005 by the weighted average price computed

pursuant to paragraph (n)(1) of this section and round to the 5th

decimal place;

(2) Subtract the somatic cell count of the milk (reported in

thousands) from 350; and
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(3) Multiply the amount computed in paragraph (p)(1) of this

section by the amount computed in paragraph (p)(2) of this section

and round to the nearest full cent. 

(q) Advanced pricing factors. For the purpose of computing

the Class I skim milk price, the Class II skim milk price, the Class

II nonfat solids price, and the Class I butterfat price for the

following month, the following pricing factors shall be computed

using the weighted average of the 2 most recent NASS U.S. average

weekly survey prices announced before the 24th day of the month:

(1) An advanced Class III skim milk price per hundredweight,

rounded to the nearest cent, shall be computed as follows:

(i) Following the procedure set forth in paragraphs (n) and

(o) of this section, but using the weighted average of the 2 most

recent NASS U.S. average weekly survey prices announced before the

24th day of the month, compute a protein price and an other solids

price; 

(ii) Multiply the protein price computed in paragraph

(q)(1)(i) of this section by 3.1;

(iii) Multiply the other solids price per pound computed in

paragraph (q)(1)(i) of this section by 5.9; and

(iv) Add the amounts computed in paragraphs (q)(1)(ii) and

(iii) of this section. 

(2) An advanced Class IV skim milk price per hundredweight,

rounded to the nearest cent, shall be computed as follows:

(i) Following the procedure set forth in paragraph (m) of this

section, but using the weighted average of the 2 most recent NASS

U.S. average weekly survey prices announced before the 24th day of

the month, compute a nonfat solids price; and

(ii) Multiply the nonfat solids price computed in paragraph

(q)(2)(i) of this section by 9.

(3) An advanced butterfat price per pound, rounded to the

nearest one-hundredth cent, shall be calculated by computing a

weighted average of the 2 most recent U.S. average NASS AA Butter

survey prices announced before the 24th day of the month, subtracting

11.4 cents from this average, and dividing the result by 0.82.

§ 1000.51 [Reserved]