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 
 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. 

 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 part of 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. 

(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 consumertype 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 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.

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 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 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;

(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 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. 

(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 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 et seq.) within the applicable 2-year period indicated

below, the obligation of the market administrator: 

(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,

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.

§ 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 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: 

(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 secondto-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

producer-handler;

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

form of a packaged fluid milk product; and

(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; 

(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;

(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, 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 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

lowest-priced 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;

(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 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. 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 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;

(iv) Fluid milk products and bulk fluid cream products

received from a producer-handler as defined under this order 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 subtracted in previous paragraphs, 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 above result 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 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 in the manner specified below 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 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

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 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)-(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 5th 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. 

(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

(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 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]