84038 Federal Register / Vol. 88, No. 230 / Friday, December 1, 2023 / Proposed Rules 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Parts 1005, 1006, and 1007 

[Doc. No. AMS–DA–23–0003; 23–J–0019] 

Milk in the Appalachian, Florida, and 

Southeast Marketing Areas; Final 

Decision on Proposed Amendments to 

Marketing Agreements and to Orders 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Proposed rule; final decision. 

SUMMARY: This proposed rule is the 

Secretary’s final decision in this 

proceeding and recommends 

amendments to the transportation credit 

balancing fund provisions for the 

Appalachian and Southeast Federal 

milk marketing orders, and 

establishment of distributing plant 

delivery credits in the Appalachian, 

Florida, and Southeast Federal milk 

marketing orders. AMS will determine 

whether producers approve of the 

proposed amended orders, as required 

by regulation. 

DATES: The representative period for 

ascertaining producer approval is March 

2023. 

ADDRESSES: To review the hearing 

record, please see https://www.ams.

usda.gov/rules-regulations/milkappalachian-southeast-and-floridaareas-hearing-proposed-amendments. 

FOR FURTHER INFORMATION CONTACT: Erin 

Taylor, USDA/AMS/Dairy Programs, 

Order Formulation and Enforcement 

Branch, STOP 0231-Room 2530, 1400 

Independence Avenue SW, Washington, 

DC 20250–0231, (202) 720–7183, email 

address: Erin.Taylor@usda.gov. 

SUPPLEMENTARY INFORMATION: This final 

decision recommends amendments to 

the transportation credit balancing fund 

(TCBF) provisions in the Appalachian 

and Southeast Federal milk marketing 

orders (FMMOs) that (1) update the 

components of the mileage rate 

calculation; (2) revise the months of 

mandatory and discretionary payment; 

(3) revise the non-reimbursed mileage 

factor; and (4) increase the maximum 

assessment rate on Class I milk. This 

final decision also recommends 

establishment of distributing plant 

delivery credit (DPDC) provisions in the 

Appalachian, Florida, and Southeast 

FMMOs that make marketwide service 

payments to qualifying handlers and 

cooperatives for milk shipments to pool 

distributing plants from farms that are 

year-round, consistent suppliers. AMS 

will determine if producers approve of 

the proposed amended orders, as 

required by regulation. If at least twothirds of the producers or two-thirds of 

the milk represented in the vote approve 

of the amended orders, AMS will issue 

a final rule implementing the changes. 

This administrative action is governed 

by sections 556 and 557 of Title 5 of the 

United States Code and, therefore, is 

excluded from the requirements of 

Executive Orders 12866, 13563, 14094, 

and 13175. 

The amendments to the regulations as 

proposed herein have been reviewed 

under Executive Order 12988, Civil 

Justice Reform. They are not intended to 

have a retroactive effect. If adopted, the 

proposed amendments would not 

preempt any state or local laws, 

regulations, or policies, unless they 

present an irreconcilable conflict with 

this rule. 

The Agricultural Marketing 

Agreement Act of 1937, as amended (7 

U.S.C. 601–674) (AMAA), provides that 

administrative proceedings must be 

exhausted before parties may file suit in 

court. Under section 608c(15)(A) of the 

AMAA, any handler subject to an order 

may request modification or exemption 

from such order by filing a petition with 

the United States Department of 

Agriculture (USDA) stating that the 

order, any provision of the order, or any 

obligation imposed in connection with 

the order is not in accordance with the 

law. A handler is afforded the 

opportunity for a hearing on the 

petition. After a hearing, USDA would 

rule on the petition. The AMAA 

provides that the district court of the 

United States in any district in which 

the handler is an inhabitant, or has its 

principal place of business, has 

jurisdiction in equity to review USDA’s 

ruling on the petition, provided a bill in 

equity is filed not later than 20 days 

after the date of the entry of the ruling. 

Regulatory Flexibility Act and 

Paperwork Reduction Act 

In accordance with the Regulatory 

Flexibility Act (RFA) (5 U.S.C. 601 et 

seq.), the Agricultural Marketing Service 

has considered the economic impact of 

this action on small entities and has 

certified this proposed rule will not 

have a significant economic impact on 

a substantial number of small entities. 

The purpose of the RFA is to fit 

regulatory actions to the scale of 

businesses subject to such actions so 

that small businesses will not be unduly 

or disproportionately burdened. 

Marketing orders and amendments 

thereto are unique in that they are 

normally brought about through group 

action of essentially small entities for 

their own benefit. A small dairy farm as 

defined by the Small Business 

Administration (SBA) (13 CFR 121.201) 

is one that has an annual gross revenue 

of $3.75 million or less, and a small 

dairy products manufacturer is one that 

has no more than the number of 

employees listed in the chart below: 

NAICS code NAICS U.S. industry title Size standards in 

number of employees 

311511 .................... Fluid Milk Manufacturing .................................................................................................................. 1,150 

311512 .................... Creamery Butter Manufacturing ....................................................................................................... 750 

311513 .................... Cheese Manufacturing ..................................................................................................................... 1,250 

311514 .................... Dry, Condensed, and Evaporated Dairy Product Manufacturing .................................................... 1,000 

To determine which dairy farms are 

‘‘small businesses,’’ the $3.75 million 

per year income limit was used to 

establish a milk marketing threshold of 

1,220,703 pounds per month. Although 

this threshold does not factor in 

additional monies that may be received 

by dairy producers, it should be an 

accurate standard for most ‘‘small’’ 

dairy farmers. To determine a handler’s 

size, if the plant is part of a larger 

company operating multiple plants that 

collectively exceed the 750-employee 

limit for creamery butter; the 1,000- 

employee limit for dry, condensed, and 

evaporated dairy product 

manufacturing; the 1,150-employee 

limit for fluid milk manufacturing; or 

the 1,250-employee limit for cheese 

manufacturing; the plant was 

considered a large business even if the 

local plant does not exceed the 750, 

1,000, 1,150, or 1,250-employee limits, 

respectively. 

During January 2023, the milk of 

2,522 dairy farms was pooled on the 

Appalachian (1,578), Florida (113), and 

Southeast (831) FMMOs. Of the total, 

1,491 farms on the Appalachian FMMO 

(94 percent), 69 on the Florida FMMO 

(61 percent), and 787 on the Southeast 

FMMO (95 percent) were considered 

small businesses. 


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During January 2023, there were a 

total of 17 plants associated with the 

Appalachian FMMO (16 fully regulated 

plants and 1 partially regulated plant), 

7 plants associated with the Florida 

FMMO (all fully regulated), and 16 

plants associated with the Southeast 

FMMO (15 fully regulated plants and 1 

partially regulated plant). The number 

of plants meeting the small business 

criteria under the Appalachian, Florida, 

and Southeast FMMOs were estimated 

to be 2 (12 percent), 2 (29 percent), and 

2 (13 percent), respectively. 

Currently, the Appalachian and 

Southeast orders provide transportation 

credit balancing fund (TCBF) payments 

on supplemental shipments of milk for 

Class I use provided the milk was from 

producers located outside of the 

marketing areas who are not regular 

suppliers to the market. Producer milk 

received at a pool distributing plant 

eligible for a transportation credit under 

the orders is defined as bulk milk 

received directly from a dairy farmer (1) 

from whom not more than 50 percent of 

the dairy farmer’s milk production, in 

aggregate, is received as producer milk 

during the immediately preceding 

months of March through May of each 

order; and (2) who produced milk on a 

farm not located within the specified 

marketing areas of either order. Milk 

deliveries from producers located 

outside the marketing area who are 

consistent suppliers to the market, or 

from producers located inside the 

marketing areas, are not eligible for 

transportation credits. 

This decision continues to propose 

amendments to the Appalachian and 

Southeast TCBF provisions. 

Specifically, the proposed amendments 

would amend the non-reimbursed 

mileage level from 85 miles to 15 

percent of total miles and update 

components of the mileage rate factor to 

reflect more current market 

transportation costs. 

The proposed amendments also 

would increase the maximum TCBF 

assessment rates for the Appalachian 

and Southeast orders. Specifically, the 

maximum transportation credit 

assessment rate for the Appalachian and 

Southeast orders would increase to 

$0.30 and $0.60 per hundredweight 

(cwt), respectively. The increases are 

intended to minimize the proration and 

depletion of each Order’s TCBF to 

provide more adequate TCBF payments. 

This decision finds these assessment 

levels necessary because of escalating 

transportation costs coupled with the 

continued decline in milk production in 

the southeastern region necessitating 

longer hauls to procure supplemental 

milk to meet the Class I needs of the 

region. 

This decision also continues to 

propose adoption of DPDCs in the 

Appalachian, Florida, and Southeast 

FMMOs to provide transportation 

assistance to handlers and cooperatives 

procuring year-round, consistent milk 

supplies for the region. Currently, there 

are no provisions in any of the three 

southeastern FMMOs to provide 

transportation assistance to handlers 

and cooperatives for these types of milk 

deliveries. 

The proposed DPDCs would operate 

similar to the TCBF program: (1) funded 

through an assessment on Class I 

producer milk; (2) payable to handlers 

and cooperatives for procuring yearround milk supplies as determined by 

location and delivery criteria; (3) 

payment provisions identical to TCBF 

payments; and (4) contain provisions 

designed to safeguard against excess 

assessment collections and prevent 

persistent and pervasive uneconomic 

milk movements for the purpose of 

receiving a DPDC payment. 

The proposed TCBF and DPDC 

provisions would be applied identically 

to large and small handlers and 

cooperatives regulated by the 

Appalachian, Florida, and Southeast 

FMMOs. Since the proposed 

amendments would apply to all 

regulated cooperatives and handlers 

regardless of their size, the proposed 

amendments should not have a 

significant economic impact on a 

substantial number of small entities. 

A review of reporting requirements 

was completed under the Paperwork 

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

Chapter 35). It was determined that 

these proposed amendments would 

have no impact on reporting, 

recordkeeping, or other compliance 

requirements because those 

requirements would remain unchanged. 

No new forms are proposed, and no 

additional reporting requirements 

would be necessary. 

This final decision does not require 

additional information collection that 

requires clearance by the Office of 

Management and Budget beyond 

currently approved information 

collection. The primary sources of data 

used to complete the forms are routinely 

used in most business transactions. 

Forms require only a minimal amount of 

information which can be supplied 

without data processing equipment or a 

trained statistical staff. Thus, since the 

information is already provided, no new 

information collection requirements are 

needed, and the current information 

collection and reporting burden is 

relatively small. Requiring the same 

reports for all handlers does not 

significantly disadvantage any handler 

that is smaller than the industry 

average. 

The Agricultural Marketing Service is 

committed to complying with the EGovernment Act, to promote the use of 

the internet and other information 

technologies to provide increased 

opportunities for citizen access to 

Government information and services, 

and for other purposes. 

No other burdens are expected to fall 

on the dairy industry as a result of 

overlapping Federal rules. This 

rulemaking proceeding does not 

duplicate, overlap, or conflict with any 

existing Federal rules. 

Prior Documents in This Proceeding 

Notice of Hearing: Published in the 

Federal Register on January 30, 2023 

(88 FR 5800). 

Recommended Decision: Published in 

the Federal Register on July 18, 2023 

(88 FR 46016). 

Secretary’s Decision 

Notice is hereby given of the filing 

with the Hearing Clerk of this final 

decision with respect to proposed 

amendments to the tentative marketing 

agreements and the orders regulating the 

handling of milk in the Appalachian, 

Florida, and Southeast marketing areas. 

This final decision is issued pursuant to 

the provisions of the Agricultural 

Marketing Agreement Act and the 

applicable rules of practice and 

procedure governing the formulation of 

marketing agreements and marketing 

orders (7 CFR part 900). 

A public hearing was held upon 

proposed amendments to the marketing 

agreement and the orders regulating the 

handling of milk in the Appalachian, 

Florida, and Southeast marketing areas. 

The hearing was held, pursuant to the 

provisions of the AMAA, as amended (7 

U.S.C. 601–674), and the applicable 

rules of practice and procedure 

governing the formulation of marketing 

agreements and marketing orders (7 CFR 

part 900). 

The proposed amendments set forth 

below are based on the record of a 

public hearing held in Franklin, 

Tennessee, from February 28–March 2, 

2023, pursuant to a notice of hearing 

published January 30, 2023 (88 FR 

5800). 

The material issues on the record of 

hearing relate to: 

1. Transportation Credit Balancing Fund 

Provisions 

2. Distributing Plant Delivery Credits 


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Findings and Conclusions 

The following findings and 

conclusions on the material issues are 

based on evidence presented at the 

hearing and the record thereof: 

Summary of Testimony and PostHearing Briefs 

Several witnesses testified on behalf 

of the Dairy Cooperative Marketing 

Association (DCMA). DCMA is a 

common marketing agency operating in 

the southeast region of the United States 

(U.S.). Members of DCMA include 

Appalachian Dairy Farmers 

Cooperative; Cobblestone Milk 

Cooperative; Cooperative Milk 

Producers Association; Dairy Farmers of 

America, Inc.; Lanco-Pennland Milk 

Producers; Lone Star Milk Producers 

Association; Maryland & Virginia Milk 

Producers Association; Select Milk 

Producers, Inc.; and Southeast Milk, Inc. 

According to DCMA, its members 

market approximately 80 percent of the 

milk pooled in the three southeastern 

orders and process and distribute a 

substantial percentage of the region’s 

Class I fluid milk products through 

cooperative-owned distributing plants. 

Several witnesses testified in support 

of Proposals 1 and 2 to update the 

components of the TCBF and mileage 

rate factor (MRF) contained in the 

Appalachian and Southeast FMMOs. A 

consultant witness for DCMA testified 

milk production in the southeastern 

region of the U.S. continues to decline 

as population increases. As a result, the 

witness stated, the Appalachian and 

Southeast marketing areas must 

continually seek supplemental supplies 

of milk from outside their normal 

milksheds. The witness stressed that 

DCMA members must travel farther 

distances to obtain supplemental milk 

while at the same time, diesel and nonfuel costs for shipping supplemental 

milk have risen sharply. The witness 

explained these marketing conditions 

result in milk suppliers absorbing a 

larger percentage of the transportation 

costs, diminishing the effectiveness of 

TCBF credits. 

The DCMA witness presented a 

comparison of current and proposed 

MRF components: base fuel rates; 

average truck miles-per-gallon (MPG); 

base haul rates; and average tank sizes. 

From 2006 to 2020, the witness stated 

input costs/factors increased by the 

following: 59 percent for the base fuel 

rate, 13 percent for average MPG for 

transport equipment, 92 percent for the 

base haul rate (costs other than fuel), 

and 4 percent for the average tank load 

weight. 

The DCMA witness testified that 

while both population and milk 

consumption in the region are 

increasing, dairy farm numbers are 

declining, necessitating milk traveling 

farther distances to serve the market. 

The DCMA witness testified that over 

the 5-year period 2017–2021, the USDA 

National Agricultural Statistics Service 

(NASS) total farm count in the southeast 

decreased by 719 farms (declining 38 

percent, 45 percent, and 56 percent in 

the Appalachian, Florida, and Southeast 

FMMOs, respectively). Looking back 

from 2000 to 2022, DCMA noted in its 

post-hearing brief that the Appalachian 

order lost 77 percent of its farms (2,813 

to 650 farms), the Florida order lost 75 

percent (194 to 49 farms), and the 

Southeast order lost 86 percent (3,504 to 

489 farms). 

Regional milk production showed a 

similar decline of 12.8 percent from 

2017 to 2021, according to the DCMA 

witness. The witness noted every state 

in the region experienced decreased 

production over the five-year period; 

only North Carolina and Georgia had an 

annual milk production increase from 

2020 to 2021. 

The DCMA witness used USDA data 

to describe sources of milk for each of 

the southeastern Orders. According to 

the DCMA witness, USDA data reveals 

in 2021, 46 percent of milk pooled on 

the Appalachian FMMO was sourced 

from outside the marketing area. The 

witness calculated that during the low 

production month of October, 

approximately 99 loads of supplemental 

milk per day, on average for 2019–2021, 

were needed to meet the pool 

distributing plant demand of the 

Appalachian FMMO. For the Southeast 

and Florida FMMOs, the witness stated 

that during that same time period, 56 

and 18 percent, respectively, of pool 

distributing plant demand was met from 

farms outside the marketing area. The 

witness noted the supplemental milk 

meeting Florida demand primarily 

comes from farms located in Georgia. 

The DCMA witness testified the 

closure of fluid milk distributing plants 

has increased marketing costs for the 

remaining dairy farms in the southeast 

region. Citing USDA data, the DCMA 

witness said the number of pool 

distributing plants regulated by the 

southeastern FMMOs was down 

significantly when comparing 2000 to 

2022; a reduction of 39 percent (26 to 

16 plants), 33 percent (12 to 8 plants), 

and 54 percent (32 to 15 plants) on the 

Appalachian, Florida, and Southeast 

FMMOs, respectively. The witness 

argued fewer plants mean longer 

distances and higher hauling costs to 

the dairy farms and cooperative 

handlers delivering milk to the region. 

DCMA asserted in its post-hearing brief 

the average miles to procure a load of 

supplemental milk in October 2020 was 

774 miles; a 51 percent increase from 

2003. 

The DCMA witness presented data 

showing milk supply deficits in Class I 

and Class II use in December 2020 and 

May 2021. Only in one month (May 

2021) did a southeastern order (Florida) 

have enough in-area production to meet 

Class I milk needs of pool distributing 

plants. In the other five monthly 

comparisons, in-area production ranged 

from 67 to 97 percent of demand. When 

DCMA accounted for Class II usage, the 

witness testified, the ability for in-area 

production to meet the additional 

demand was further diminished. The 

witness emphasized that when demand 

is greater than in-area supply, the 

southeastern orders must acquire milk 

from other FMMO areas to meet the 

demand. 

Milk deficits, in addition to longer 

distances traveled, according to the 

witness, causes the TCBF to be depleted 

at a rate faster than the funds are 

replenished. The DCMA witness 

reviewed TCBF data on supplemental 

milk being delivered to Appalachian 

and Southeast pool distributing plants 

from 2020–2022. The witness said TCBF 

eligible loads increased from 5,374 in 

2020 to 6,642 loads in 2022 on the 

Appalachian FMMO and from 15,869 

loads in 2020 to 18,217 loads in 2022 for 

the Southeast FMMO. According to the 

witness, this import of large volumes of 

supplemental milk into the two 

marketing areas would not occur unless 

necessary to fill pool distributing plant 

demand. 

In addition to longer hauling 

distances, explained the witness, the 

TCBF factors have not been updated 

since 2006, and consequently fall short 

of providing a reasonable partial 

reimbursement of current, actual 

transportation costs. The DCMA witness 

described four supply and demand 

scenarios, representative of actual 

arrangements, to demonstrate the gap 

between the existing TCBF provisions 

and those proposed by DCMA, using 

2021 data. In the four scenarios 

outlined, the current TCBF payment 

accounted for 25 to 58 percent of the 

amount calculated using the DCMA 

proposed changes. 

The DCMA witness presented recent 

data to support the proposed changes 

contained in Proposals 1 and 2. 

Regarding the base diesel fuel price, the 

witness stated DCMA supports 

continued use of the Energy Information 

Administration of the United States 

Department of Energy (EIA) data— 


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specifically, the Lower Atlantic and 

Gulf Coast EIA regions. The witness 

reviewed EIA diesel fuel prices and 

found that May 4 through November 9, 

2020, as a 28-week period of relatively 

stable diesel prices, averaged $2.262 per 

gallon. The current MRF calculation 

uses a base diesel price of $1.42 per 

gallon. According to the witness, the 

price difference illustrates the need to 

update the factors, and DCMA supports 

adopting $2.26 as the base diesel fuel 

price. 

The DCMA witness next evaluated the 

MPG of combination trucks and 

supported using U.S. Department of 

Transportation MPG fuel efficiency 

data. The most recently published data 

(2019) showed an MPG rate of 6.0478. 

The DCMA witness estimated a 

calculation for 2022 using the five-year 

change in MPG from 2014–2019 of 

0.0430 per year. The witness added this 

amount annually to the 2019 published 

rate of 6.0478, yielding a per gallon 

estimate of 6.1770 in 2022, which 

DCMA rounded to 6.2. The witness 

testified DCMA members supported a 

6.2 MPG assumption as a reasonable 

fleet average across operations with 

varying transport tanks and varying ages 

of equipment. Additionally, the witness 

said a higher MPG assumption would 

lower a TCBF payment and therefore 

guard against handlers engaging in 

uneconomic milk shipments to qualify 

for higher TCBF payments. 

The DCMA witness entered data 

substantiating their proposed base haul 

rate of $3.67 per loaded mile. According 

to the witness, DCMA surveyed member 

haul rates during September and 

October 2020, representing months of 

heavy supplemental milk purchases 

which are included in the May to 

November 2020 time period used to 

determine the proposed average diesel 

fuel price. The witness said the 

aggregated survey results represented 

2,951 supplemental milk hauls from 

nine states considered traditional 

sources of supplemental milk to pool 

distributing plants geographically 

spread across the three southeastern 

FMMOs. According to the DCMA 

witness, the average rate per loaded 

mile was $3.67, representing an average 

distance of 818 miles, an average tanker 

load size of 49,700 pounds, and an 

average total haul bill of $3,003. The 

survey results, said the witness, support 

the DCMA-proposed base haul rate of 

$3.67 per loaded mile. The surveyed 

tank size of 49,700 pounds was used to 

justify increasing the reference load in 

the MRF calculation. DCMA noted in its 

post-hearing brief that costs have 

increased from its calculated 2020 rate, 

up to as much as $5.10 to $5.25 per 

loaded mile. 

Using the proposed TCBF provisions, 

DCMA estimated TCBF payments from 

2020 through 2022 using USDA data 

and compared the results with what 

TCBF payments would have been under 

current provisions, assuming all claims 

could have been paid in full. According 

to the witness, under those 

assumptions, current TCBF payments 

represent 59 percent, on average, of 

what payments would have been using 

DCMA’s proposed updated factors. The 

witness emphasized the analysis 

demonstrates how current TCBF 

provisions are not representative of 

current transportation costs and should 

be updated. 

Using actual TCBF pounds from 

2020–2022, the witness offered an 

analysis to determine necessary 

assessment levels under the proposed 

TCBF provisions. To do so, the witness 

provided data of TCBF assessments and 

payments from 2020–2022, including 

proration. The witness used USDA data 

to show the impact of various scenarios 

on the levels of assessment and 

payments based on two alternative 

DCMA-proposed MRFs, in comparison 

to actual TCBF claims and payments. 

The analysis showed assessment rates 

needed to fully pay all claims in 2020 

could be up to $0.18 and $0.88 per cwt 

in the Appalachian and Southeast 

FMMOs, respectively. Based on the 

analysis, the witness testified DCMA 

proposes to double the maximum 

assessment rate in each order, to $0.30 

and $0.60 per cwt in the Appalachian 

and Southeast FMMOs, respectively. 

DCMA noted in its post-hearing brief a 

maximum rate of $0.30 per cwt in the 

Appalachian FMMO would cover full 

claims immediately and allow room for 

increases in claims without 

necessitating proration for some time. 

Also, according to the brief, a maximum 

of $0.60 per cwt in the Southeast FMMO 

will allow for most of the current 

supplemental milk transportation 

credits to be paid, with reduced 

occurrences of proration. 

The DCMA witness also elaborated on 

the proposal to make February an 

optional, not mandatory, payment 

month. Since less supplemental milk is 

needed in February, the witness said it 

was appropriate for February to no 

longer be a mandatory payment month 

so those funds could instead be used in 

later months when supplemental milk 

needs are greater. The witness presented 

data to demonstrate the possible 

benefits of converting February from a 

mandatory to an optional payment 

month. The witness stated the impact of 

including February as a mandatory 

payment month is only apparent when 

payments are prorated, which is not 

projected to occur in the Appalachian 

order. For the Southeast FMMO, the 

witness entered data that showed more 

dollars would have been directed to the 

months it was needed in 2020 and 2021, 

resulting in fewer prorated payment 

months, had February been an optional 

payment month rather than a mandatory 

payment month. The witness reiterated 

that under DCMA’s proposal, a handler 

could petition the market administrator 

to request February TCBF payments by 

providing supporting data and rationale. 

Last, the DCMA witness explained the 

flat mileage deduction of 85 miles for 

loads delivered directly from farms to 

distributing plants should be changed to 

a percentage basis, initially set at 15 

percent. DCMA argued the change 

would more equitably reimburse short 

and long hauls, thus reducing the 

potential disorderly incentive to import 

supplemental milk from greater 

distances. The witness noted the current 

85-mile deduction represented 10.4 

percent of the 818-mile average haul 

observed in the DCMA survey and 

concluded that a 15-percent deduction 

is an appropriate initial rate. 

In its post-hearing brief, DCMA noted 

there was only nominal opposition from 

industry participants to its proposals to 

amend the transportation credit 

balancing funds. DCMA reiterated 

testimony by witnesses supporting its 

proposals: a decreased supply of milk, 

fewer plants to process local milk, 

increased distances to bring in milk, and 

an increased population in the region. 

Compounding market disruptions, 

DCMA argues in its brief, is the increase 

in the cost of moving milk since the 

TCBF reimbursement rates were 

implemented in 2006. 

The post-hearing brief touched on 

changes in the movement of milk as a 

result of these factors, including 

movements that often lose value going 

‘‘against the grain,’’ from south to west 

or south to north. These movements, the 

proponents argue, are prime examples 

of disorderly marketing since the 

Federal Order Class I price grid is 

intended to reflect lower prices at 

supply areas and higher prices at 

demand points. The region’s loss of 

plants, the proponents argue, has caused 

the Federal order provisions to be out of 

sync with the marketplace. 

The DCMA witness also offered 

testimony supporting adoption of 

Proposals 3, 4, and 5, to establish a 

distributing plant delivery credit 

(DPDC) in the Appalachian, Florida, and 

Southeast FMMOs for marketwide 

service payments to handlers acquiring 

consistent, year-round milk supplies for 


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pool distributing plants. The DCMA 

witness reviewed data for each of the 

southeastern orders showing 54 percent, 

82 percent, and 44 percent of Class I 

demand is met with in-area milk 

production from the Appalachian, 

Florida, and Southeast orders 

respectively. According to the witness, 

in-area milk supplies face the same cost 

factors as supplemental supplies. 

However, because there is no 

transportation compensation for 

obtaining in-area milk supplies, the cost 

burden falls on the handlers supplying 

Class I demand, primarily DCMA 

cooperatives and their members. The 

witness asserted that local milk 

production should be on equal footing 

for transportation assistance as 

supplemental milk supplies, as local 

deliveries promote transportation 

efficiency. The witness reiterated earlier 

market statistics showing declines of inarea milk production, farms, and pool 

distributing plants throughout the 

southeastern region as justification for 

adopting DPDC for year-round, 

consistent milk supplies. 

The DCMA witness described the 

situation in the Florida order, which 

currently has no transportation credit 

assistance. According to the witness, a 

significant amount of milk production is 

located in central Florida, which is 

typically delivered to a plant in Miami 

over 200 miles away. Because MiamiDade County has the highest Class I 

differential zone in the country, the 

Class I differential provides some 

financial incentive to move milk in that 

direction. However, when demand at 

the Miami plant is met, the central 

Florida milk must move north to a lower 

Class I differential zone. While the 

distances may be similar, there is no 

transportation assistance provided 

through the differentials to cover the 

transportation cost. Therefore, the 

witness said, a DPDC in the Florida 

FMMO is warranted. 

The witness explained the 

compounding transportation situation 

in the southeastern Orders by presenting 

a map of pool distributing plants in 

2000 vs. 2022, which showed a decrease 

from 73 plants in January 2000 to 39 in 

2022, a 47 percent reduction. The 

witness said the decline in farms and 

plants in the region will continue to 

lead to increased delivery miles and 

costs and will put availability of local 

milk supplies at risk. 

The DCMA witness explained the 

DPDC funds would be separate from the 

producer settlement fund, be payable to 

handlers providing the marketwide 

service of meeting Class I demand with 

consistent, year-round milk supplies, 

and not impact the Federal order 

minimum announced producer blend 

prices. According to the witness, the 

proposed provisions establish maximum 

allowable assessments on Class I milk 

specific to each Order and guidelines for 

the market administrator on how to set 

or waive the rate and investigate misuse, 

for example, if a handler consistently 

moves milk uneconomically to collect 

payment. 

The DCMA witness outlined proposed 

DPDC eligibility criteria. According to 

the witness, with fewer farms and pool 

distributing plants, milk regularly 

crosses state and Federal order borders 

of the three southeastern orders; 

therefore, milk from one Order should 

qualify for payments when delivered to 

another Order. For the Appalachian and 

Florida orders, the witness proposed 

producer milk originating in certain 

counties outside of the respective 

Federal order boundaries that are 

considered part of the milksheds be 

eligible for a DPDC payment. For the 

Appalachian order, DCMA included 

select unregulated counties in Virginia 

and West Virginia that provide milk to 

a fully regulated Appalachian order 

pool distributing plant in the same 

unregulated area. The counties are also, 

according to DCMA, the regular source 

of milk to Appalachian order pool 

distributing plants in North and South 

Carolina. Under these circumstances, 

DCMA argues, the counties are parts of 

the regular procurement area for the 

Appalachian order, and the handlers 

obtaining milk supplies from these 

counties should be entitled to receive 

DPDC for those shipments. 

The provisions proposed by DCMA 

also permit milk from an order pool 

supply plant to qualify for DPDCs in all 

three orders. According to DCMA, a 

pool supply plant located in the 

Appalachian marketing area assembles 

milk delivered in farm pick-up trucks 

from smaller producers. The milk is 

then shipped in larger transports to 

Appalachian order pool distributing 

plants. Transporting via supply plant is 

a necessary method for these producers 

whose milk is a consistent supply to the 

market. According to DCMA’s proposal, 

DPDCs would apply only on the mileage 

from the supply plant to the order’s 

distributing plant. 

The Georgia counties included in the 

DCMA Proposal 4, according to 

testimony by its witnesses, are a yearround integral part of the supply for the 

Florida order; therefore, DCMA believes 

handlers acquiring milk from those 

areas should be eligible for DPDCs. 

According to the DCMA witness, its 

members, who supply a majority of the 

milk on the three Orders, face similar 

cost factors for both regular and 

supplemental supplies. Therefore, the 

witness said, it is appropriate for the 

DPDC payment provisions to be the 

same as the TCBF provisions. 

The DCMA witness estimated the 

maximum assessment rates needed to 

fund DPDC payments in each of the 

three Orders. DCMA’s analysis 

concluded maximum assessment rates 

of $0.60, $0.85, and $0.50 per cwt on 

Class I milk pooled on the Appalachian, 

Florida, and Southeast FMMOs, 

respectively, were warranted. The 

DCMA witness explained the 

assessment rates should initially be set 

$0.05 lower than the maximum rates to 

be initially conservative when 

implementing this new fund. The 

proposed provisions allow for the 

market administrator to review and 

adjust assessment rates in each FMMO, 

if necessary, after a year of operation. 

The witness next discussed the 

impact changes to the TCBF provisions 

and establishment of DPDC could have 

on plant competitiveness in the region. 

Ultimately, the witness argued, an 

analysis shows the DCMA proposed 

assessment levels do not put in-area 

pool distributing plants at a competitive 

disadvantage compared to out-of-area 

plants. 

The witness concluded by 

emphasizing the need for emergency 

hearing procedures, especially due to 

the current inflationary economic 

environment, the fact that transportation 

costs have not been updated for 15 

years, and the changing market structure 

in the southeastern region. The 

consequence of not using emergency 

hearing procedures, the witness 

claimed, would be more farms going out 

of business. 

A witness from Dairy Farmers of 

America (DFA), one of the nine 

cooperative members of DCMA, testified 

in support of DCMA Proposals 1 

through 5. DFA’s Southeast Council 

encompasses the Appalachian, Florida, 

and Southeast FMMOs, where they have 

830 dairy farm members. The witness 

offered testimony regarding the impact 

adopting Proposals 1 through 5 could 

have on the competitiveness of 

packaged milk delivered into the 

southeastern marketing areas. The 

witness analyzed transportation rates for 

60 routes within the southeast FMMOs 

and the surrounding areas to determine 

how the cost of transporting packaged 

fluid milk into the marketing areas 

compared to the proposed TCBF and 

DCDP assessments contained in 

Proposals 1 through 5. According to the 

witness, the results indicate that even 

with the proposed assessments on Class 

I milk, packaged fluid milk moving into 

the marketing areas would not have a 


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cost advantage over Class I products 

produced by plants regulated by the 

three FMMOs and subject to the 

proposed assessments. 

Another witness appearing on behalf 

of DFA offered testimony on diesel fuel 

price volatility. To highlight diesel fuel 

price volatility, the DFA witness charted 

U.S. EIA monthly retail on-highway 

diesel fuel prices, both for the U.S. and 

states comprising the southeast region 

since 2006 alongside the projection for 

February 2023 to December 2025. 

According to the data, since January 2, 

2006, diesel fuel prices in the southeast 

region have averaged $3.19 per gallon, 

ranging from $1.96 gallon (February 

2016) to $5.73 per gallon (June 2022). 

The witness explained that record low 

U.S. oil supplies, reduced oil refining 

capacity, and geopolitical events are all 

factors driving diesel fuel price 

volatility and large price ranges. On the 

demand side, the witness said 

variability in fuel consumption, the 

overall health of the U.S. economy and 

China’s rebound from COVID–19 have 

all contributed. 

A witness appearing on behalf of 

Maryland and Virginia Milk Producers 

Cooperative (MDVA), a dairy 

cooperative with approximately 930 

dairy farmer members located in 10 

states and a member of DCMA, testified 

in support of Proposals 1 through 5, and 

specifically on the marketing conditions 

within the Appalachian marketing area. 

The witness testified their members’ 

milk is marketed on the Appalachian, 

Southeast, Northeast, and Mideast 

orders. MDVA owns and operates two 

fluid processing facilities within the 

Appalachian order and supplies milk to 

several other processors in the region. 

The witness testified milk production 

has sharply declined in the southeast 

region, down 32 percent over the last 15 

years. MDVA therefore relies on 

supplemental milk from other regions to 

meet its year-round obligations. The 

witness testified that during peak 

demand in late summer and early fall, 

MDVA requires approximately 25 loads 

per day of supplemental milk to fulfill 

demand. The witness stated the MDVA 

average distance to the market for 

supplemental supplies from the 

northeast is 450 miles, and current 

transportation cost is $4.90 to $5.25 per 

loaded mile, which equates to roughly 

$4.43 per cwt of milk. The witness 

testified that roughly $2.93 per cwt of its 

cost to transport supplemental milk to 

the market is not covered by the gain in 

Class I differential between the supply 

and demand zones. 

In recent years, according to the 

witness, equipment parts, oil, labor, 

insurance, and fuel costs have 

increased. Since TCBF factors have not 

been updated since 2006, the percentage 

of the transportation cost covered by the 

TCBF has decreased. As hauling bills 

must be paid, the witness said the 

cooperative relies on either deductions 

from dairy farmer milk checks or overorder premiums to cover the additional 

cost. The witness testified regarding 

MDVA’s difficult experience in 

obtaining and maintaining over order 

premiums. The witness spoke to the 

concern of Class I handlers maintaining 

raw product cost equity with their 

competitors. The witness said Class I 

handlers are reluctant to pay over order 

premiums in the current market 

environment because they are not 

assured competitors are also incurring 

the same cost. In the witness’s 

experience, Class I handlers are more 

willing to pay for additional 

transportation costs if it is announced 

by the FMMO and enforced uniformly 

on all Class I handlers. 

The witness testified Proposals 1 and 

2 would align MRF components with 

current freight rates and adopting those 

proposals is imperative to maintaining 

supplemental milk supplies needed to 

meet Class I demand. Without these 

updates, the witness stated, handlers 

will be less willing to provide 

supplemental milk supplies to the 

Appalachian order during periods of 

large deficits, which would negatively 

impact the region’s processing capacity. 

The witness noted that since the early 

2000s, 11 pool distributing plants have 

closed within MDVA’s core area of the 

Appalachian order. The result is 

increased distances to the next closest 

plant, and with it, increased costs to 

balance Class I demand. 

The MDVA witness testified raw milk 

loads are shuffled based on customer 

orders to ensure adequate available 

supplies without exceeding silo 

capacity. With fewer plants in the 

network, there are fewer opportunities 

to use the next plant’s silo capacity; this 

makes the ability to ‘‘stair step’’ milk 

through the region to align supply with 

demand more difficult and more costly. 

The witness stated sometimes milk must 

travel north to find a balancing plant, 

typically a more costly option. 

According to the witness, Class I 

differentials are not adequately 

compensating dairy farmers for milk 

movements within the Appalachian 

marketing area, which Proposal 3 would 

address. For example, the witness said, 

when producer milk is delivered to a 

plant 200 miles away in a 30 cent-higher 

differential zone, the change in Class I 

differential zone only covers about 15 

percent of the cost of moving the milk 

within the market. The witness stated 

Proposal 3 provides additional 

compensation and incentives to move 

milk within the Order and offsets some 

of the deficiencies in the current Class 

I differentials. 

The witness discussed the challenges 

of providing supplemental milk to the 

Appalachian order, such as filling the 

school milk pipeline and weatherrelated events such as a snowstorm, 

which stress already complicated milk 

marketing and transportation systems. 

The witness testified to MDVA’s efforts 

last year in meeting increased school 

demand by assembling, reloading, and 

then transferring to Class I plants 

approximately 80 loads of milk from its 

pool supply plant in Strasburg, Virginia, 

at great expense to the cooperative. The 

witness testified that based on their 

knowledge the MDVA’s plant in 

Strasburg, Virginia, is the only pool 

supply plant currently operating in this 

manner in the southeast for the 

Appalachian, Florida, and Southeast 

orders. The plant is sourced primarily 

by small farms in Maryland and 

Pennsylvania, and much of the milk 

collected at Strasburg is then reshipped 

to Appalachian and Southeast FMMO 

pool distributing plants. The witness 

opined these deliveries meet the 

region’s Class I demand and should be 

eligible for DPDC. 

The witness also testified in support 

of extending DPDC eligibility to include 

unregulated counties in Virginia that 

supply its plant in Newport News, 

Virginia, a year-round pool distributing 

plant on the Appalachian FMMO. 

The witness testified that if a handler 

does not bring in enough supplemental 

milk, the plant will not have milk for 

consumers, and consumers will see 

empty shelves. Consequently, the 

region’s processors face pressure 

because retailers could go outside of the 

Order to purchase packaged milk and 

handlers could lose customers. 

The witness stressed that the 

proposals should be considered on an 

emergency basis so cooperatives and 

their dairy farmer-members supplying 

the region’s Class I demand can begin to 

receive cost recovery that they have 

been unable to obtain on their own. 

Without this assistance, the witness 

opined, more producers in the region 

would exit the business, further 

reducing local milk supplies, and 

negatively impacting local Class I 

processors. 

A witness appearing on behalf of 

Southeast Milk, Inc. (SMI), a member of 

DCMA, testified in support of Proposals 

1 through 5, and their adoption on an 

emergency basis. SMI is a dairy 

cooperative with approximately 135 


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dairy farmer members pooled on all 

three southeastern orders. 

The SMI witness testified specifically 

in support of Proposal 4 to adopt DPDCs 

for the Florida FMMO. Milk produced 

in and pooled on the Florida FMMO has 

steadily declined since 2016, according 

to the witness. The witness cited USDA 

data showing 87 percent of the Order’s 

milk in 2019 was produced in Florida, 

compared to 76 percent in 2022. The 

witness noted that of 24 states in 

NASS’s monthly milk production 

report, Florida had the largest year-overyear milk production decline in 2022, a 

decrease of 10.9 percent. In 2022, the 

state of Florida reported its lowest milk 

volume since 1984. 

According to the witness, reasons for 

declining milk production in Florida 

include higher freight costs (a high 

percent of dairy feed, supplies, and 

fertilizer are imported into the state), 

environmental challenges, opportunity 

costs, urbanization, and lower margins. 

The witness argued the implementation 

of Proposal 4 would ease the 

transportation burden cooperatives face 

in supplying the Class I market and help 

slow the decline of Florida milk 

production. 

The SMI witness stressed that less 

milk produced in Florida means more 

milk from outside the state is needed to 

supply the Order’s fluid milk needs. 

The witness testified, based on SMI 

marketings and personal industry 

knowledge, a significant portion of milk 

sourced from outside the marketing area 

comes from the 49 South Georgia 

counties included in Proposal 4. While 

South Georgia historically served as the 

reserve milk supply for the Florida 

market, as production has declined in 

Florida and increased in Georgia, South 

Georgia is now a regular milk supplier 

to Florida pool distributing plants. The 

witness said that at a minimum, South 

Georgia milk must travel 225 miles from 

the Florida-Georgia border to the closest 

pool distributing plant. As these South 

Georgia counties now serve as a regular 

source of producer milk for the Florida 

order, the SMI witness testified, 

Proposal 4 is needed to provide some 

level of reimbursement of hauling 

expense for the distance the milk travels 

to Florida pool distributing plants. 

Similar to other witnesses, the SMI 

witness discussed the common 

occurrence of milk moving against the 

Class I differential surface because there 

are fewer pool distributing plants. 

According to the witness, in January 

2023 all of SMI’s Appalachian order 

milk moved from a higher ($4.00) to a 

lower ($3.60) zone. Of the cooperative’s 

milk pooled on the Southeast and 

Florida FMMOs, 44 percent and 14 

percent, respectively, moved from 

higher to lower Class I differential 

zones, the witness said. The SMI 

witness concluded that implementation 

of Proposal 4 will assist the cooperative 

in recouping transportation costs for 

milk, especially for milk that receives 

no additional assistance through 

changes in Class I differential zones. 

The SMI witness entered 

transportation costs it has experienced, 

as SMI owns and operates its own milk 

hauling fleet. Cost data included average 

annual diesel fuel prices (up 129 

percent from 2020 to 2022), average 

annual milk hauler wages (up 38 

percent from CY2018 to CY2023 YTD), 

and other increases to purchase new 

trucking equipment. The witness also 

spoke to other increases such as, but not 

limited to, employee benefits, insurance 

premiums, and equipment maintenance. 

For January 2023, the witness stated, 

SMI hauling costs are nearly double 

what would have been covered by the 

TCBF under the proposed provisions in 

Proposals 4, 5, and 6. SMI, the witness 

testified, attempts to improve efficiency 

of milk hauling and to control expenses, 

but those efforts only offset a portion of 

the higher milk hauling expenses. The 

cost to haul milk from SMI member 

farms to pool distributing plants greatly 

exceeds the proposed DPDC. 

This witness also addressed the 

cooperative’s efforts to recover some of 

the increased costs through over-order 

premiums. While SMI does collect some 

over-order premiums, the witness said 

they do not cover all the costs of 

servicing the fluid market. Buyers are 

concerned about competitors and seek 

to ensure equal raw product cost which, 

according to the witness, is the key to 

orderly milk marketing. The witness 

testified processors prefer to pay 

through the Federal order system 

because it provides assurance of equal 

footing with competitors. 

The witness noted that Proposal 4 

does not change diversion requirements. 

Diverted milk would not be eligible to 

receive the DPDC; only milk delivered 

to a pool distributing plant could 

receive the credit. 

Finally, regarding the request to 

consider the proposals on an emergency 

basis, the SMI witness testified that 

adopting DPDCs would provide 

cooperatives, handlers, and 

subsequently their dairy farmermembers, with much needed cost 

assistance to continue serving the 

Florida market. 

A third DFA witness testified 

regarding the marketing conditions in 

the Southeast FMMO. The witness said 

the volume of Class I milk pooled on the 

Southeast order has been declining, but 

at a slower pace than the in-area milk 

production decline. This results in 

increasing volumes of milk being 

delivered to Southeast order pool 

distributing plants from outside the 

marketing area at greater expense, a cost 

primarily borne by the farmers that 

supply the market. 

The DFA witness stated the cost of 

milk hauling has increased over the last 

several years, and clearly has increased 

since Class I differentials were last 

updated. The witness said the location 

of supplemental milk sources varies 

based on the location of the plant and 

the distance to the plant. The witness 

testified there are currently 15 pool 

distributing plants regulated on the 

Southeast order, 13 of which likely 

receive substantial quantities of 

supplemental milk. According to the 

witness, the distance to move milk to 

most of these plants is considerable. The 

witness said the Southeast order plants 

in Georgia are generally most-practically 

served with supplemental milk supplies 

from the north, and occasionally with 

milk from the Central and Southwest 

marketing areas. 

The witness testified that hauling 

costs for moving milk from the 

Southwest to Southeast order are 

between roughly $4.85 and $5.10 per 

loaded mile. In a sample milk haul, 

incorporating the Class I differential and 

location value impacts, a blend price 

gain moving milk into the Southeast 

order would cover about 45 percent of 

the cost of hauling. The witness 

concluded that the expected TCBF 

payment would cover approximately 16 

percent of the real cost of hauling. 

The witness emphasized that while 

the TCBF payment only covers a portion 

of the cost of hauling, handlers and 

cooperatives are guaranteed to receive 

it. Since over-order prices are rarely 

sufficient to cover the large differences 

in hauling costs, dairy farmers are left 

to pay the remainder, the witness 

stressed. The witness spoke of the 

difficulty in negotiating and 

maintaining over-order premiums with 

a Class I plant. Factors like the location 

of the receiving plant and the distance 

the plant is to a viable supplemental 

milk source, the plant’s relative access 

to local supplies, and its net need for 

supplemental milk cause additional 

costs to vary by plant. The witness 

emphasized that unequal costs of milk 

is a recognized source of market 

disorder. 

The witness also testified on hauling 

capacity challenges faced by 

supplemental suppliers. Challenges 

include supply chain shortages for 

trucks and trailers, lack of qualified and 

willing truck drivers, rules on allowable 


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hours for trucks to run each day, and 

truck scheduling challenges. Hauling 

schedules are so tight, the witness 

noted, even the smallest variation in the 

daily delivery schedule can disrupt 

logistics for several days and create 

additional costs that are borne by the 

cooperative suppliers. 

The DFA witness concluded that 

Proposals 1 and 2 would benefit 

consumers with an unimpeded and 

orderly flow of milk into the region and 

regulated Class I processors with a 

continued supply and orderly pricing of 

milk. Without a properly functioning 

transportation credit system, the witness 

argued, the region’s milk supply would 

be threatened. 

The third DFA witness also testified 

in support of Proposals 3, 4, and 5, 

specifically, why raw milk produced in 

the state of Georgia and transported 

throughout the southeastern orders 

should be eligible for the proposed 

DPDCs. The witness referenced a map 

comparing U.S. milk production in 2021 

and 2022 showing that of the 

southeastern states, Georgia was the 

only state with significant milk 

production growth. Yet, the witness 

said, the growth of milk production in 

Georgia does not compensate for the 

decline in milk production in Florida 

alone. Meanwhile, Florida and Georgia 

are experiencing record population 

growth, according to the witness, which 

increases demand for fluid milk. 

The DFA witness said the DFA milk 

supply in Georgia’s southern counties 

delivers daily to Florida pool 

distributing plants, serving the market’s 

Class I demand. In 2022, the witness 

testified, 31 percent of the DFA milk in 

the southern Georgia counties shipped 

to Florida pool distributing plants. 

In addition to Florida, the DFA 

witness said, Georgia milk production 

regularly serves the Class I demand and 

reduces the need for additional milk to 

serve the region from longer distances 

and at higher costs. Unfortunately, the 

witness explained, many of these 

Georgia milk movements have no Class 

I differential value gain and cause the 

cooperative to incur substantial 

transportation costs. DPDCs, the witness 

testified, would provide much-needed 

relief to cooperatives and their local 

dairy farmer-members who provide 

consistent milk supplies. The witness 

noted Proposals 3, 4, and 5 would not 

change pooling provisions on any of the 

three FMMOs and would continue to 

allow diversions on pounds on which a 

DPDC is requested. The witness 

supported this provision because there 

are times during the week, month, and 

year when milk production is not 

delivered to pool distributing plants 

within the local milkshed. However, 

milk still needs to be marketed, and it 

is sometimes necessary to divert 

production to a non-pool plant, 

according to the witness, and those 

producers still expect to receive the 

FMMO blend price. 

This DFA witness spoke to the 

difficulty in recovering transportation 

costs through over-order premiums as 

opposed to the FMMO system. The 

witness testified that for transparency 

and fairness, buyers prefer to have costs 

come through the FMMO system and 

FMMO price announcements. 

Finally, the DFA witness testified to 

the urgency of a decision on the 

proposals to provide cost recovery to 

cooperatives handlers and their dairy 

farmer-members. According to the 

witness, dairy farmers are going out of 

business every day, even with higher 

milk prices in 2022. The witness 

expects there will be as many going out 

of business in 2023 as there were in 

2022. Many farms are relying on the 

possibility of additional transportation 

assistance in the form of TCBF and 

DPDC payments to their cooperatives. 

The witness concluded that any delay 

would cause closure of more businesses, 

which would place more burden on the 

remaining local farms. 

A Georgia DFA producer-member 

testified on current dairy market 

conditions in the region. The witnessed 

expressed support of updating the 

Appalachian and Southeast FMMOs’ 

TCBF provisions and implementing a 

similar program (DPDCs) for locally 

produced milk in the Appalachian, 

Florida, and Southeast FMMOs. 

The witness further elaborated on the 

rise in on-farm input costs that farms in 

the region face. According to the 

witness, the largest cost increases from 

2021 to 2022 included nitrogen fertilizer 

(289 percent), diesel fuel (89 percent), 

corn (93 percent), interest (80 percent), 

and medicine and supplies (70 percent). 

The dairy farmer witness went on to 

explain that not only have the dairy 

farm’s input costs risen, but so have the 

cost to haul milk. The witness explained 

the two plants closest to their dairy farm 

closed and now the milk must travel 

nearly 6 times as far, 292 miles, to a 

plant in Orlando, FL. The witness said 

that the cost to haul milk went from 

$1.32 per cwt in 2021 to between $2.37 

and $2.45 per cwt in 2022. The witness 

claimed these cost increases have 

tightened margins and impeded the 

dairy farm’s ability to grow. 

The witness said the southeastern 

U.S. has the most significant milk 

deficit in the country, and it is 

exacerbated with the simultaneous rise 

in population and decline in dairy farm 

and milk production numbers. The 

witness testified the financial costs of 

importing supplemental milk and 

increasing hauls to fluid milk plants 

(due to plant closures) are primarily the 

burden of the region’s dairy farmers, 

through their cooperatives, to ensure the 

market’s Class I demand is met. 

According to the witness, adoption of 

Proposals 1 through 5 would help 

correct this imbalance by providing 

transportation assistance reflective of 

current market conditions. 

Finally, the witness closed by urging 

USDA to implement updates to the 

transportation credit programs 

expediently. The witness cited 

weakening projected price relative to 

rising input costs as the primary driver 

for expediting the process. 

A Missouri DFA dairy farmer member 

testified in support of Proposals 1 

through 5. The witness said because 

their farm is located within the 

Southeast FMMO marketing area, it is 

not eligible for TCBF payments. The 

witness explained that dairy farmers 

(mostly small businesses) in the state 

have struggled in recent years. The 

witness shared data showing how milk 

production in Missouri declined nearly 

50 percent, and the number of dairy 

herds decreased nearly 70 percent from 

2006 to 2022. 

The witness claims that with fewer 

dairy farms, there is a bigger burden on 

those still in business to supply the 

market. As a result of plant closings, the 

witness said their milk must travel 

further to find a market. The witness 

testified their annual hauling costs 

increased, on average, $9,000 in the 

most recent two-year period. With input 

costs rising across the board—feed, fuel, 

fertilizer, crop inputs, and labor—the 

witness testified to a financial strain 

faced on their farm and other similar 

operations in the region. The witness 

opined the proposals should be 

considered on an expedited basis, as 

this issue is of immediate importance. 

A North Carolina dairy farmer 

representing MDVA testified in support 

of Proposals 1 through 5. The witness 

said their hauling costs have increased 

roughly 50 percent in the past decade 

and their local market has shifted 

farther away from Charleston, South 

Carolina, to Asheville, North Carolina. 

The witness explained there are times 

their milk and other MDVA members’ 

milk is not delivered to its closet plant 

because the cooperative is managing the 

milk movements of both the members’ 

local supply and the supplemental 

supply it procures to ensure the region’s 

Class I demand is met. In these 

instances, the extra hauling cost is borne 

by all cooperative members through a 


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hauling subsidy paid for by all 

members. The witness asserted that 

adoption of the DPDC would provide 

financial help to the cooperatives and 

their members. 

The witness claimed that the current 

Class I differentials and current TCBF 

provisions do not generate enough 

dollars to cover the true cost of moving 

milk. According to the witness, dairy 

farmers in the southeastern region, 

many of whom are not eligible for a 

TCBF payment, are doubly burdened. 

Members not only pay the higher 

transportation costs to ship their milk to 

a plant, said the witness, but they also 

share the transportation costs of 

procuring needed supplemental milk. 

The witness urged the rulemaking be 

conducted on an emergency basis to 

provide much needed cost relief to the 

region’s cooperative handlers and their 

dairy farmer members. 

A Tennessee dairy farmer-member 

representing the Appalachian Dairy 

Farmers Cooperative (ADFC), a member 

of DCMA, testified in support of 

Proposals 3, 4, and 5. The witness 

testified 97 percent of the 71 dairy 

farmer-members of ADFC producers are 

small dairies, as are nearly all other 

dairies in the area. The witness said the 

area has lost 80 percent of its dairies in 

the past 20 years, including 70 members 

of ADFC in the past 5 years. 

The witness stated that, while not 

only having to pay to transport their 

own milk, ADFC dairy farmer-members 

also bear the transportation cost of 

bringing in supplemental milk to ensure 

Class I demand is met. These costs have 

significantly increased in part, the 

witness said, because it is difficult to 

find haulers. The witness estimated the 

cost to produce milk represents about 80 

percent of their milk check, and hauling 

costs (which have doubled in the last 

five years) account for an additional 8 

percent. 

The witness testified USDA should 

treat the issues before it is urgent, and 

use expedited emergency hearing 

procedures. 

In its post hearing brief, DCMA 

summarized its arguments supporting 

Proposals 3, 4, and 5 implementing 

DPDCs in the Appalachian, Florida, and 

Southeast orders, to reimburse handlers 

for a portion of the cost of delivering inarea and nearby milk. DCMA reiterated 

in its post-hearing brief that, for the 

Appalachian and Southeast orders, the 

respective marketing areas are 

considered in-area sources of milk. 

DCMA argued in its brief that those 

sources are not eligible for TCBF but 

should be eligible for DPDC. 

In its post hearing brief, DCMA 

argued it is not possible to obtain 

transportation relief in the southeast 

area without adoption of the proposed 

DPDC. DCMA synthesized points made 

in its and other witness’ testimonies that 

cooperatives are unable to obtain 

reimbursement from the market. 

According to the brief, the main 

alternative, over-order premiums, are 

difficult to maintain and challenging to 

increase. On the other hand, DCMA 

argued, incorporating a program for 

transportation costs within FMMO 

provisions would treat all suppliers and 

buyers equitably. Their brief indicated 

cooperatives and handlers are generally 

more able to pass through Class I costs 

to buyers that are specifically outlined 

on FMMO price announcements as 

would be the case under their proposals. 

DCMA concluded in its brief that 

adoption of DPDCs would provide their 

customers with the price transparency 

they prefer through rates published on 

FMMO price announcements, assuring 

them of uniform raw milk costs with 

competing Class I handlers while 

enabling cooperatives that provide the 

market with Class I milk to receive 

transportation cost reimbursement 

reflective of current market conditions. 

In its post-hearing brief, Select Milk 

Producers, Inc. (Select), a DCMA 

member cooperative, emphasized 

support for the FMMO system and its 

role in promoting efficient milk 

movements, producer operations, and 

milk procurement. The brief reiterated 

support of the transportation credit 

system in the Southeast due to unique 

conditions and that program provisions 

should be updated. Select indicated 

support for considering the regulatory 

changes on an emergency basis, and 

therefore omitting a recommended 

decision, as transportation credit 

regulations do not directly impact milk 

prices. While Proposals 3, 4, and 5 

would include additions to their 

respective Orders, they are operationally 

and methodologically similar to existing 

transportation credit provisions and 

therefore have little economic and 

regulatory impact, according to the 

brief. 

The dairy farmer proponent of 

Proposal 11 submitted a post-hearing 

brief opposing Proposals 1 through 5. In 

the brief, the farmer opined that doing 

nothing would lead to a better outcome 

than adopting the proposals. The dairy 

farmer argued the distance milk travels 

should not be treated as a performance 

standard and receive special treatment. 

If changes are to be made, however, the 

farmer insisted on the uniform 

treatment of all milk. 

A witness from Prairie Farms testified 

in opposition to the proposed DPDC 

because payments would only apply to 

out-of-area milk from a select list of 

counties, instead of all out-of-area 

counties that regularly deliver to pool 

distributing plants. The witness claimed 

giving privilege to a few counties in 

Georgia, Virginia, and West Virginia, as 

written in Proposals 3 through 5, is not 

fair and equitable, especially when yearround deliveries of out-of-area milk is 

necessary to meet the fluid milk needs 

of the southeastern FMMOs. 

In its post-hearing brief, Prairie Farms 

summarized its opposition to Proposals 

3, 4, and 5 and maintained the record 

contains abundant evidence showing a 

growing milk deficit persisting in the 

southeastern U.S. The record 

demonstrates that pool distributing 

plants in the southeastern FMMOs need 

out-of-area milk on a year-round basis, 

but Proposals 3, 4, and 5 do not offer 

any assistance in obtaining year-round 

transportation assistance on out-of-area 

milk. They believe qualifying some outof-area counties to participate in DPDC, 

but not others, even if they consistently 

supply milk to pool distributing plants 

in the region, is discriminatory. 

A Prairie Farms witness testified in 

support of Proposals 6 through 10. 

According to the witness, Prairie Farms 

is a Capper-Volstead cooperative with 

682 dairy farmer members in Illinois, 

Indiana, Iowa, Kentucky, Michigan, 

Minnesota, Missouri, Ohio, and 

Wisconsin, and also markets milk for 

non-cooperative members in Texas. 

Prairie Farms operates Class I, II and III 

plants throughout the central U.S., 

including nine plants regulated on the 

Appalachian and Southeast FMMOs. 

The witness asserted the milk supply 

in the southeast region has been 

declining for many years, while 

population has increased, resulting in 

milk being imported from outside the 

region to meet demand. The witness 

explained this region was historically 

short in certain seasons, but now faces 

a year-round shortfall. Describing the 

lack of flexibility of the current TCBF 

program, the witness emphasized the 

importance of simplicity to allow the 

system to better adjust to future supply 

and demand changes. 

The witness cited USDA data on milk 

production in the southeastern states in 

1997 and 2021, showing that production 

has declined in greater proportion 

compared to the decline in 

consumption. The witness concluded 

that the data shows the 11 Southeastern 

states currently produce 73.3 percent of 

their fluid milk needs, down 

significantly from 1997. 

The witness continued by showing 

the shortfall of milk in the region that 

currently exists in the spring flush 

months of March, April, and May. 


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However, as the current system exists, 

the witness said, if a handler pools too 

much of a producer’s milk on the 

Appalachian and Southeast orders in 

the spring, they are not eligible to claim 

a TCBF payment on that producer’s 

milk in the fall, despite the market’s 

need for the milk in the spring. The 

witness supported eliminating the 

location and delivery criteria in the 

current TCBF provisions, as contained 

in Proposals 6 and 7, that currently 

prevent handlers from qualifying for a 

fall TCBF payment for producers whose 

milk is pooled in the spring. The change 

proposed by Prairie Farms would allow 

handlers to receive a TCBF payment on 

milk shipments from these producers. 

The witness provided examples of 

origin to destination locations milk 

travels as incentivized (or 

disincentivized) by the existing 

transportation credit system. One 

example showed a delivery traveling 21 

miles further than necessary, to receive 

approximately $300 more in a TCBF 

payment. A second example showed 

milk traveling 21 miles farther increased 

the TCBF payment by nearly $700. The 

witness contended that without the 

current pool qualification provisions, 

there would not be financial incentive 

for these inefficient movements to 

occur. 

According to the witness, removing 

the current TCBF location qualification 

provisions would allow producer milk 

located in the marketing area to be 

eligible for TCBF payments using the 

same calculations as milk from outside 

the marketing area. The witness testified 

transportation credits available only on 

milk produced outside the Appalachian 

and Southeast FMMOS does not 

incentivize efficient in-area milk 

movements. Rather, the witness said it 

would be more equitable and 

incentivize efficient milk movements for 

all milk delivered to pool distributing 

plants, regardless of where it originated, 

to be eligible for TCBF payments. This, 

the witness stated, is especially true as 

the milk supply shrinks in the Southeast 

and the population increases. 

Regarding Proposals 8, 9, and 10, the 

Prairie Farms witness explained the 

proposed Assembly Performance Credits 

(APC) would compensate handlers for 

assembly, dispatch, and delivery costs 

incurred on all producer milk received 

at pool distributing plants. According to 

the witness, the proposed $0.50 APC 

assessment is based on the proponents’ 

internal data on the costs of supplying 

milk to the Appalachian, Southeast, and 

Central FMMO pool distributing plants, 

and could be adjusted at the discretion 

of the market administrator. According 

to the witness, the APC is fair and 

equitable for both handlers and 

producers since a uniform assessment 

rate is applied for the Class I milk, and 

a uniform credit is received on the 

producer milk delivered to the 

distributing plants, regardless of origin. 

The witness explained how the APC 

would offset some milk dispatch costs, 

which include day-to-day variations in 

storage capacity and demand on the 

plant side. As APC payments would not 

change depending on mileage, the 

witness said there would not be an 

incentive to maximize distance. 

The witness also addressed the 

impact of rising costs on Prairie Farms’ 

members. According to the witness, 

Prairie Farms pays it members FMMO 

blend prices; therefore, rising costs that 

are decoupled from FMMO pricing 

ultimately reduce the cooperative 

earnings and, consequently, the 

patronage to their member producers 

and other cooperative members that 

supply Prairie Farms plants. The 

witness spoke to the difficulty in 

recouping these additional costs 

through the marketplace, largely 

because customers claim a lack of 

visibility and confidence in over-order 

premiums. 

In closing, the witness testified that 

the combination of the year-round 

uniformly applied APCs and seasonal 

TCBF payments applied to all in-area 

and out-of-area milk will promote 

efficient producer milk deliveries. The 

Prairie Farms witness said the APC 

should be viewed as a marketwide 

benefit because it would increase 

returns to cooperatives and their 

members, which will assist in 

maintaining and growing the local milk 

supply, thus resulting in less reliance on 

supplemental milk supplies to meet 

Class I demand. 

The witness stated that Prairie Farms’ 

preference is for USDA to adopt APCs 

instead of DPDCs. However, the witness 

testified that an acceptable alternative 

would be expanding the list of out-ofarea counties eligible for DPDCs to 

address their concern for handlers 

acquiring out-of-area milk on a yearround basis to supply the Class I market. 

In testimony, the witness supported 

including the same restrictions on 

diversions for in-area milk as those 

contained in the TCBF provisions, or 

removing diversion restrictions in both 

programs. Prairie Farms requested the 

rulemaking be conducted on an 

expedited basis as the milk supply 

issues of the southeastern FMMOs are 

critical. 

In its post-hearing brief, DCMA 

argued in opposition to Proposals 6 

through 10, stating the proposals would 

not address the marketing challenges in 

the Southeastern FMMOs and are not 

supported by a substantial number of 

producers in the Southeastern 

marketing areas. DCMA argued the 

record does not contain cost 

justification or analysis supporting any 

of the changes contained in Proposals 6 

through 10. DCMA stated that if location 

and delivery eligibility provisions were 

eliminated, as contained in Proposals 6 

and 7, TCBF payments would be 

drastically reduced due to lack of funds. 

According to DCMA, adoption of 

Proposals 6 and 7 would double the 

volume of eligible pounds and would 

likely result in a payment of less than 

10 percent of actual costs. DCMA 

continued in its brief that even if 

Proposals 6 and 7 incorporated the new 

assessment rate and updated the MRF as 

proposed, the pro rata percentage would 

result in a very low payment. DCMA 

argued the proponent of Proposals 6 and 

7 had not analyzed the impact of the 

proposals, and, as a result, the record 

lacks support for their adoption. 

DCMA’s post-hearing brief similarly 

opposed Proposals 8 through 10, 

arguing the proponent provided no 

substantial cost-justification for the 

proposed $0.50 assessment rate. DCMA 

wrote that the proponent’s testimony 

regarding wide variances in assembly, 

dispatch, and delivery costs was not 

supported by any detailed costs. 

Further, DCMA wrote the record lacks 

analysis and justification for the 

proposed assessment and APC payment 

calculation credit. DCMA argued that by 

directing new revenues to all producer 

milk irrespective of its location, the APC 

proposals continue the disparate 

treatment of in-area versus out-of-area 

milk supplies, and do not recognize the 

unique costs and challenges of in-area 

milk deliveries. DCMA argued a 

substantial proportion of the new 

revenues generated by the APC credit 

would be allocated to out-of-area 

producers and not toward supporting 

the delivery of local in-area producer 

milk. 

A Tennessee dairy farmer testified in 

support of Proposal 11 which would 

prohibit milk diverted from a pool 

distributing plant from receiving any 

form of transportation credit. The 

witness discussed milk diversions as 

milk associated with a pool plant, but 

not received at a pool distributing plant 

on a particular day. According to the 

witness, in the deficit market of the 

Southeast, diversions are another 

revenue-source for the cost of moving 

milk, similar to transportation credits. 

The witness opined a handler’s ability 

to divert milk should be as limited as 

possible. 


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The witness testified changes should 

be made to the Southeast order to make 

the value of milk at the plant more 

transparent and reflective of the true 

cost. To achieve this, the witness 

proposed an aggregated, audited 

publication of the price plants pay for 

milk in the region. The witness 

advocated for publication of over-order 

premiums so dairy farmers could use 

that information when negotiating with 

handlers. 

According to the witness, when 

transportation credits were adopted in 

1996, they were intended to be used for 

supplemental milk; however, now they 

are used to regularly supply the market. 

The witness said that while a handler 

can collect transportation credits to haul 

milk, payments do not reflect the full 

cost of the haul. The remainder of the 

cost, according to the witness, is 

deducted from the local producer’s milk 

check which ultimately leads to less 

local milk production and greater 

reliance on more costly supplemental 

milk deliveries. 

A witness representing the Milk 

Innovation Group (MIG), a group 

consisting of fluid processors and 

producers (Anderson Erickson Dairy, 

Aurora Organic Dairy, Danone North 

America, Fairlife, HP Hood, Organic 

Valley/CROPP Cooperative, and 

Shamrock Foods), testified regarding the 

proposed APCs. The witness said MIG 

members support allocating more Class 

I dollars to producers that are supplying 

the Class I plants to keep a local milk 

supply for their plants. 

The MIG witness expressed concern 

over efforts to increase minimum 

regulated Class I prices through any 

transportation cost-related assessment 

on Class I milk as fluid milk sales 

continue to rapidly decline. While the 

witness opposed the APC $0.50 per cwt 

assessment on Class I milk, they were 

supportive of the APC concept which 

they believe would better align the Class 

I supply chain since it is funded out of 

the pool, not an additional payment on 

top of the pool that would artificially 

raise Class I prices. The witness cited 

current Upper Midwest FMMO 

assembly credit provisions as a possible 

alternative. 

MIG’s post-hearing brief reiterated its 

opposition to Proposals 6, 7, and 8 due 

to the price-enhancing nature of the 

provisions while fluid milk sales 

continue to decline. MIG maintained 

FMMOs do not and cannot serve to 

enhance producer prices, but rather 

operate to set the minimum price 

necessary to avoid disorderly marketing 

and ensure a sufficient supply of fluid 

milk. MIG concluded that proponents of 

Proposals 6 through 8 fail to consider 

consumers when they seek to increase 

Class I prices without justification, 

especially during a time of rapid 

inflation. 

In its post-hearing brief, DCMA 

rejected MIG’s argument to fund a 

transportation assistance program out of 

existing marketwide pool revenues. 

DCMA argued that type of funding 

mechanism would not support the costs 

to produce milk for or move milk to the 

region’s pool distributing plants. 

According to DCMA, re-shuffling 

existing pool revenues would have no 

effect and provide no actual cost 

assistance. DCMA concluded that new 

revenues are needed to target the cost of 

delivering milk to the demand points in 

the marketing areas, as offered in 

DCMA’s proposals. 

Comments and Exceptions 

The recommended decision provided 

a 60-day comment period which ended 

September 18, 2023. Five comments 

were filed in response to the 

recommended decision. Two comments 

were outside the scope of this decision. 

Three comments are addressed in the 

applicable sections of this final 

decision. 

Discussion and Findings 

The purpose of this proceeding is 

consideration of changes to the 

transportation credit provisions of the 

Appalachian and Southeast FMMOs for 

supplemental milk, and adoption of 

distributing plant delivery credits 

(DPDC) or assembly performance credits 

(APCs) for milk deliveries to pool 

distributing plants in the Appalachian, 

Florida, and Southeast FMMOs. 

The Appalachian and Southeast 

FMMOs currently contain 

transportation credit provisions for 

supplemental Class I milk deliveries. 

The provisions were first adopted 

through a 1996 proceeding (62 FR 

39738) to address the need for 

supplemental milk to meet the Class I 

needs of the two FMMOs. These 

transportation credit provisions provide 

payments to handlers to cover a portion 

of the cost of hauling supplemental milk 

supplies into the Appalachian and 

Southeast marketing areas during 

months when these deliveries are most 

needed to ensure Class I demand is met 

(January, February, and July through 

December). The provisions were 

amended in 2006 (71 FR 62377) and 

2008 (73 FR 14153) to, among other 

things, adopt a mileage rate factor. The 

MRF is adjusted monthly by changes in 

the price of diesel fuel to ensure current 

fuels costs are reflected in payments on 

eligible shipments, amend the 

qualification requirements for 

supplemental milk and increase the 

maximum TCBF assessment rates. The 

Florida FMMO currently has no 

transportation credit provisions. 

The current transportation credit 

provisions are tailored to distinguish 

between producers who regularly 

supply the market and those primarily 

delivering milk when the market is most 

at deficit (considered supplemental 

suppliers). Under the current 

provisions, only milk from producers 

who are located outside of the 

marketing areas and are not regular 

suppliers to the market are eligible to 

receive transportation credits. Producer 

milk received at a pool distributing 

plant eligible for a transportation credit 

under the orders is defined as bulk milk 

received directly from a dairy farmer 

who: (1) not more than 50 percent of the 

dairy farmer’s milk production, in 

aggregate, is received as producer milk 

during the immediately preceding 

months of March through May of each 

order; and (2) produced milk on a farm 

not located within the specified 

marketing areas of either order. Milk 

deliveries from producers located 

outside the marketing area who are 

consistent suppliers to the market or 

from producers located inside the 

marketing areas are not eligible to 

receive transportation credits. 

The policy objective of the AMAA is 

‘‘. . . to establish and maintain such 

orderly marketing conditions for 

agricultural commodities in interstate 

commerce . . .’’ (7 U.S.C. 602(1)). The 

AMAA further instructs the Secretary to 

maintain ‘‘. . . an orderly flow of the 

supply thereof to market throughout its 

normal marketing season to avoid 

unreasonable fluctuations in supplies 

and prices.’’ (7 U.S.C. 602(4)). In the 

Appalachian and Southeast FMMOs, 

this policy objective is achieved, in part, 

through transportation credit provisions 

that ensure an adequate fluid (Class I) 

milk supply. 

The record reveals that all three 

orders (Appalachian, Florida, and 

Southeast) lack in-area milk production 

to meet the region’s Class I demand. 

Record evidence illustrates this longstanding regional issue which the 

current transportation credits aim to 

address through economic incentives for 

supplemental milk deliveries to the 

region’s pool distributing plants when 

most needed. While the current 

transportation credit provisions have 

been successful in ensuring Class I 

demand is met, the record reveals the 

reimbursement levels do not reflect the 

current transportation cost environment. 

As a result, handlers and cooperatives 

who provide the marketwide service of 

delivering milk to the Class I market 


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1Assuming 49,700-pound tanker. 

2Upper Midwest Federal Milk Marketing Order 

Statistics. 

incur transportation costs that they 

cannot recover. 

The 2006 Final Decision (79 FR 

12985) details the region’s milk deficit 

at that time and recommended changes 

to existing transportation credit 

provisions to account for reasonable 

transportation cost reimbursement for 

supplemental milk deliveries to Class I 

plants in the region. Record evidence 

from the current proceeding reveals the 

region’s milk deficit has continued to 

worsen. According to the record, the 

number of licensed dairy farms located 

within the Appalachian, Florida, and 

Southeast FMMOs have declined 

approximately 38, 50, and 57 percent, 

respectively, from 2017 to 2022. Data 

shows 2021 in-area milk production in 

the Appalachian, Florida, and Southeast 

FMMOs represented 54, 82, and 44 

percent of their respective milksheds. 

Put another way, in 2021, 54 percent of 

the milk pooled on the Appalachian 

FMMO was produced within the 

geographic boundaries of the order. 

Consequently, a significant volume, 46 

percent, of the Order’s needs had to be 

met from milk produced outside the 

marketing area. 

An objective of the FMMO system is 

meeting Class I demand, and the record 

reveals a consistent lack of in-area milk 

production to meet demand. In the 

Appalachian FMMO, from 2019 to 2021, 

the average daily in-area milk 

production deficit ranged from 3.3 to 4.9 

million pounds below pool distributing 

plant demand. In other words, on an 

average day, pool distributing plants 

needed anywhere from 3.3 to 4.9 

million pounds of milk (67 to 99 tanker 

loads) from outside the marketing area 

to meet pool distributing plant demand. 

The same daily deficit in the Florida 

FMMO ranged from 100,000 pounds to 

1.4 million pounds (2 to 28 

tankerloads), and 3.8 to 6.5 million 

pounds (77 to 131 tankerloads) in the 

Southeast FMMO.1

The record also reveals that while 

handlers and cooperatives are delivering 

supplemental milk to meet pool 

distributing plant demand, they are not 

able to recoup a significant portion of 

the transportation costs incurred. 

Cooperative witnesses testified they 

perform this service despite the 

financial loss because the consequences 

of not fulfilling the market’s Class I 

needs outweigh the loss from 

transportation costs. They spoke of the 

importance of meeting pool distributing 

plant demand to ensure these plants 

remain an open and available market 

outlet for local producers. 

Cooperative handler witnesses 

testified that their efforts to ensure Class 

I market needs are met come at a cost 

to the cooperative and its members. The 

inability to recover the additional 

transportation costs through 

negotiations with milk buyers was a 

common theme of the testimony. The 

record shows that not only are local 

producers paying directly for the 

increased transportation costs of their 

milk, but the cooperative often charges 

a hauling fee to offset the additional cost 

of bringing in supplemental supplies, 

which is not covered by either the 

current transportation credit provisions 

nor the differences in Class I differential 

zones between the supply and demand 

counties. 

The record reveals a significant 

reduction in the number of Class I 

plants in each of the Southeastern 

orders and an increase in the distance 

milk travels to a Class I plant. According 

to record data, in January 2000, there 

were 73 Class I plants located in the 3 

marketing areas (pool distributing plants 

and partially regulated distributing 

plants). By December 2022, the record 

reveals only 39 plants, a reduction of 46 

percent. Consequently, as testified to by 

several cooperatives and in-area 

producer witnesses, the average miles 

traveled and transportation costs for 

both in-area and supplemental milk 

movements have increased. 

As highlighted above, the record 

evidence clearly demonstrates the 

continued milk deficit problem in the 

three Southeastern orders and its impact 

on producers, cooperatives, and 

handlers serving the markets. The 

overarching issue in this proceeding, 

which all the proposals seek to tackle, 

is how to best address the chronic milk 

deficit problem. Under consideration in 

this proceeding are two different 

approaches. The first, offered by DCMA, 

would amend the current TCBF 

provisions of the Appalachian and 

Southeast FMMOs for supplemental 

milk to reflect current cost factors 

(Proposals 1 and 2) and simultaneously 

adopt DPDCs in all three Southeastern 

orders to aid in moving year-round, 

consistent milk supplies located within 

and nearby the marketing areas to meet 

Class I demand (Proposals 3 through 5). 

Taken together, these proposals would 

offer partial transportation cost 

reimbursement for most milk deliveries 

to pool distributing plants in the region. 

The second approach, offered by 

Prairie Farms, Inc., would adopt new 

year-round APCs in all three 

southeastern orders (Proposals 6 

through 8) for all milk deliveries to pool 

distributing plants in the region, while 

also making changes to the current 

TCBF provisions to remove location and 

delivery eligibility criteria (Proposals 9 

and 10). In practice, this would make 

the same milk deliveries eligible for 

both APC and TCBF payments. 

As explained in the summary of 

testimony, all milk deliveries to a pool 

distributing plant would be eligible to 

receive an APC. The payment rate 

would be determined by the 

assessments collected on all Class I milk 

pooled during the month (proposed to 

be $0.50 per cwt), divided by all milk 

deliveries to pool distributing plants. 

The resulting per cwt payment would 

not be tied to mileage but would offer 

partial reimbursement to handlers and 

cooperatives for the assembly, dispatch, 

and delivery costs of moving milk to 

meet Class I demand. 

Proponents argued the APC is a better 

method of cost reimbursement 

compared to DPDC because it would not 

encourage inefficient milk movements 

that could occur with mileage-based 

cost reimbursement. They also likened 

the proposed APCs to assembly credits 

currently in the Upper Midwest (UMW) 

FMMO, which they contended are 

sufficient to attract milk away from pool 

supply plants to pool distributing 

plants. 

The record of this proceeding does 

not contain adequate evidence to 

support adoption of an APC. The 

hearing evidence does not contain data 

demonstrating how the $0.50 per cwt 

proposed assessment rate is 

representative of any of the costs 

(assembly, dispatch, and delivery) the 

APC is purported to offset. Furthermore, 

while proponents referenced use of an 

assembly credit in the UMW order, 

marketing conditions in the three 

southeastern orders are vastly different. 

The UMW order has abundant milk 

supplies locally to meet Class I demand, 

with a 2022 average Class I utilization 

rate of 7 percent.2 In contrast, the 

average 2022 Class I utilization rates of 

producer milk were 70 percent, 83 

percent, and 72 percent, in the 

Appalachian, Florida, and Southeast 

orders, respectively. While the UMW 

assembly credit provisions offer 

financial incentives for milk movements 

from pool supply plants to pool 

distributing plants, the abundance of 

milk produced, and relatively low 

percentage of Class I use in the 

marketing area, does not necessitate 

long hauls like those regularly occurring 

in the three orders at issue in this 

proceeding. 

As documented in this hearing record, 

the market conditions in the 


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gasdiesel/. 

southeastern region are vastly different 

than other regions of the country. Local 

milk supplies cannot meet Class I 

demand, necessitating the procurement 

of significant supplemental supplies 

from outside the marketing areas. While 

proponents assert the APC would 

provide full cost reimbursement for the 

first 50–60 miles traveled, the proposal 

does not address the reality that 

supplemental milk supplies travel over 

700 miles, on average, to meet Class I 

demand. The record does not indicate 

that a non-mileage-based reimbursement 

mechanism, such as proposed through 

the APC, would ensure Class I demand 

would be met. Accordingly, Proposals 6, 

7 and 8 continue to not be 

recommended for adoption. 

Regarding the current TCBF 

provisions, it is appropriate from time to 

time to evaluate whether the provisions 

continue to meet their purpose, and if 

so, reflect the current transportation cost 

environment. The TCBF provisions have 

existed for over 25 years to assist with 

moving milk to pool distributing plants 

in the milk deficit Southeastern 

FMMOs. This decision finds the milk 

supply/demand imbalance in the 

Appalachian and Southeast orders 

continues to persist and the TCBF 

provisions of those two orders continue 

to provide necessary transportation cost 

assistance to ensure Class I needs are 

met. 

Witnesses from multiple DCMA 

member cooperatives testified that 

while TCBF payments help offset some 

of the cost to procure supplemental milk 

supplies, they have been unable to 

recoup the remaining transportation 

cost from the market and are therefore 

incurring significant financial losses. 

Hearing evidence indicates current 

transportation credits cover 

approximately 58 percent of actual 

costs, assuming assessments collected 

do not necessitate prorating claims. 

However, in the Southeast FMMO 

where payments are often prorated, 

hearing evidence suggests costs covered 

were as low as 40 percent in 2021. The 

cooperative witnesses questioned their 

ability to continue to provide adequate 

supplemental milk supplies in the 

future without some financial relief in 

the form of updated provisions to better 

reflect actual costs. 

Ensuring Class I demand is met is 

essential to the FMMO system in 

meeting its objective of maintaining 

orderly marketing conditions. The 

record reveals a significant decrease in 

the number of pool-distributing plants 

operating in the region that provide 

market access to local producers. 

Provisions that do not encourage 

sufficient milk supplies to meet Class I 

needs may hasten more plant closures, 

jeopardizing the delicate balance of 

orderly marketing in the region. 

Therefore, given the continued 

demonstrated need for supplemental 

supplies in the Appalachian and 

Southeast orders, this decision finds it 

appropriate for handlers providing the 

marketwide service of obtaining 

supplemental milk to receive adequate 

transportation cost reimbursement, 

reflective of current market conditions. 

Accordingly, this decision continues to 

propose amendments to the TCBF 

provisions to reflect current 

transportation cost factors and increase 

the assessment rates charged in order to 

generate funds needed, as described in 

Proposals 1 and 2. 

TCBF provisions using a MRF with a 

fuel cost adjustor were adopted in 2006 

and have not been updated since their 

adoption. Hearing evidence shows that 

in the 16 subsequent years, 

transportation costs have increased and 

are no longer adequately reflected in the 

provisions. The three main components 

that determine a transportation credit 

payment are: mileage rate factor, 

reimbursable miles, and eligible milk. 

This decision continues to propose 

changes to the mileage rate and 

reimbursable miles components, as well 

as the mandatory payment months and 

maximum assessment rates. 

Mileage Rate Factor 

The MRF contains five components, 

four of which this decision continues to 

recommend be amended: reference 

diesel fuel price, reference haul cost, 

reference truck fuel use, and reference 

load size. The average diesel fuel cost 

factor was not proposed to be amended 

in this proceeding and will remain the 

simple average for the most recent four 

weeks of diesel prices for the Lower 

Atlantic and Gulf Coast Districts, as 

announced by the U.S. Department of 

Energy, Energy Information 

Administration. 

Reference Diesel Fuel Price 

The current transportation credit 

provisions contain a reference diesel 

fuel price of $1.42 per gallon, which 

was adopted in 2006 and represented 

relatively stable EIA-announced 

regional diesel fuel prices between 

October and November 2003 (79 FR 

12995). Since that time, the record 

indicates diesel fuel prices have 

increased. In the three most recent years 

(2020–2022), the annual average price of 

diesel in the Lower Atlantic region was 

$2.480, $3.174, and $4.920 per gallon.3

Similar cost increases were also seen in 

the Gulf Coast region. Proponents 

advanced a reference diesel fuel price of 

$2.26 per gallon, representing the EIA 

average of the two regions during May 

through early November 2020. EIAannounced diesel fuel prices were 

relatively stable during this time and 

correspond to the DCMA-surveyed 

supplemental hauling costs entered into 

evidence and used to justify the 

proposed base haul rate. 

This decision continues to propose a 

reference diesel fuel price of $2.26 per 

gallon. As the milage rate calculation 

accounts for current fuel costs through 

the average fuel cost calculation, it is 

appropriate to update the reference 

diesel fuel price to reflect more current 

marketing conditions. Moreover, as will 

be discussed, this time period 

corresponds to the non-fuel related costs 

that would be reimbursed through the 

proposed base haul rate. 

Reference Haul Cost 

Evidence reveals non-fuel costs, such 

as, but not limited to, purchasing and 

maintaining equipment, labor, benefits, 

and overhead, which are represented in 

the reference haul cost (currently $1.91 

per loaded mile), have increased 

substantially. While monthly variability 

in diesel fuel prices is captured in the 

mileage rate factor, changes in non-fuel 

related costs are not captured and have 

not been updated since 2006, which was 

based on 2003 data (79 FR 12985, 

12995). The proponents propose 

increasing the base haul rate to $3.67 

per loaded mile. DCMA member costs 

were entered into the record based on a 

survey of costs for 2,951 supplemental 

loads that were charged to its 

cooperative members from September 

through October 2020. During that time, 

the survey average base haul rate per 

loaded mile was $3.67, representing an 

average distance of 818 miles and an 

average load size was 49,700. Several 

witnesses testified to the increases in 

transportation costs, a large portion 

being non-fuel related costs. 

Based on record evidence this 

decision continues to propose a base 

haul rate of $3.67 per loaded mile. This 

rate more accurately reflects current 

costs incurred to deliver supplemental 

milk to the southeastern region. 

Ensuring adequate transportation cost 

relief is appropriate to ensure Class I 

demand of the region continues to be 

met. 

Reference Truck Fuel Use 

The reference truck fuel use 

assumption (adopted in 2006), which 

represents the average number of miles 

traveled per gallon of fuel use in 


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transporting milk, is currently 5.5. 

Record evidence indicates truck fuel 

economy has improved. Evidence 

indicates the most current published 

Department of Transportation 

combination truck fuel economy data 

(2019) shows an average MPG fuel use 

of 6.0478. Proponents entered 

additional information on fuel economy 

gains through 2022 to estimate a current 

fuel economy rate of 6.1770 MPG and 

proposed a rate of 6.2 MPG. This 

decision continues to propose a 6.2 

MPG fuel consumption rate. This 

slightly higher rate would result in a 

lower TCBF payment, promoting 

efficiencies and discouraging 

uneconomic movements of milk. 

Reference Load Size 

The current TCBF reference load size 

is 48,000 pounds. However, data 

entered into the record indicates tanker 

load sizes have increased. DCMA survey 

data indicate an average load size on 

supplemental milk supplies was 49,700 

pounds. This decision continues to find 

49,700 pounds a reasonable reference 

load size. Slightly higher reference truck 

fuel use (6.2 MPG) and reference load 

size (49,700 pounds) assumptions 

would serve as precautionary measures 

to decrease the likelihood TCBF 

payments would be in excess of actual 

costs incurred. 

Reimbursable Miles 

Also under consideration in this 

proceeding is amending the miles 

eligible to receive a TCBF payment. 

Currently, the first 85 miles of a 

supplemental milk shipment is not 

eligible for a TCBF payment. Proponents 

seek to change the ineligibility to a 

percentage basis, 15 percent of the miles 

shipped, making 85 percent of miles 

eligible for a TCBF payment. DCMA 

survey data indicate an average haul on 

its supplemental milk shipments of 818 

miles. Under current TCBF provisions, 

the first 85 miles did not receive a TCBF 

payment, meaning those average 

supplemental loads received payment 

on 733 miles, or 89.6 percent of miles 

traveled. A closer haul, for example 409 

miles, would receive payment on 324 

miles (79 percent of miles traveled). 

Under the proposed changes, both 

scenarios would receive payment on 85 

percent of miles traveled. 

The analysis indicates a flat 85-mile 

exemption penalizes shorter milk hauls, 

which should instead be encouraged as 

the more efficient movement. Moving to 

a percentage exemption would establish 

more equitable treatment of long and 

short hauls, and consequently 

encourage more efficient supplemental 

milk deliveries. Therefore, this decision 

continues to propose a 15 percent 

mileage exemption, which could be 

adjusted by the market administrator if 

requested and found appropriate after 

an investigation. 

Below is an example of the TCBF 

MRF calculation given the 

recommended provisions discussed 

above: 

EIA Weekly Retail On-Highway Diesel Fuel Prices 2

Lower 

Atlantic 

Gulf 

Coast 

3/27/2023 ..................................................................................................................................................... 4.087 3.882 

4/3/2023 ....................................................................................................................................................... 4.078 3.887 

4/10/2023 ..................................................................................................................................................... 4.055 3.883 

4/17/2023 ..................................................................................................................................................... 4.056 3.876 

Monthly average diesel fuel price: 3 ............................................................................................................ $3.976 per gallon. 

Reference diesel fuel price: ......................................................................................................................... ¥ 2.260 per gallon. 

Fuel price difference: 4 ................................................................................................................................. 1.716 per gallon. 

Reference truck fuel use: ............................................................................................................................ ÷ 6.2 miles per gallon. 

Fuel cost adjustment factor: 5 ...................................................................................................................... 0.277 per loaded mile. 

Reference haul cost: .................................................................................................................................... + 3.670 per loaded mile. 

Fuel-adjusted haul cost: 6 ............................................................................................................................ 3.947 per loaded mile. 

Reference load size: .................................................................................................................................... ÷ 497 cwt. 

May 2023 Mileage Rate Factor: 7 ................................................................................................................ 0.00794 dollars per cwt per 

mile. 

1As announced on April 19, 2023, with the Announcement of Advanced Class Prices. 

2 Dollars per gallon. Reported every Monday by the Energy Information Administration of the U.S. Department of Energy. 

3 Calculated by rounding down to three decimal places the average of the four most recent weeks of retail on-highway diesel fuel prices for the 

Lower Atlantic and Gulf Coast EIA regions combined prior to the Advanced Class Price announcement. 4 Calculated by subtracting the reference diesel fuel price of $2.26 per gallon from the calculated average diesel fuel price for the month. 

5 Calculated by dividing the fuel price difference by 6.2 miles per gallon fuel use and rounding down to three decimal places. 

6 Calculated by adding fuel cost adjustment factor for the month to the reference haul cost of $3.67 per loaded mile. 

7 Calculated by dividing the fuel-adjusted haul cost by the number of hundredweights (cwt’s) on the reference load size (49,700 pounds = 497 

cwt’s) and rounding down to five decimal places. 

Payment Months 

Testimony was received regarding a 

proposal to change February from a 

mandatory to a discretionary TCBF 

payment month. Under current 

provisions, TCBF payments are 

mandatory for the months of January, 

February, and July through December. 

Payments may be made for the month of 

June, if requested by stakeholders and 

found appropriate by the market 

administrator to ensure an adequate 

supply of milk for fluid use. Proponents 

contend making February a 

discretionary payment month would 

allow TCBF monies to be used when 

supplemental milk supplies are most 

needed. Data entered into the record 

demonstrate how payments from the 

TCBF in the Southeast FMMO often 

exceed assessments, resulting in 

payment proration for a significant 

number of payment months. This 

decision continues to propose February 

as a discretionary payment month to 

allow funds that would have been paid 

during the month to instead be available 

to pay in later months, thus lowering 

the frequency and/or degree of prorated 

payments. Stakeholders would have the 


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ability to petition the market 

administrator to make February a 

payment month if determined TCBF 

monies were needed to ensure an 

adequate Class I supply. 

TCBF Assessment Rates 

If there are often insufficient funds to 

pay TCBF claims, the provisions fall 

short of providing for more orderly milk 

supplies to meet Class I needs. The 

maximum allowable TCBF assessment 

rates in the Appalachian and Southeast 

FMMOs are $0.15 and $0.30 per cwt, 

respectively. The assessments are 

collected every month on Class I pooled 

milk. Both FMMOs use the same 

formulas for determining payments. 

The record reveals under the current 

TCBF provisions, the assessments 

collected in the Southeast FMMO are 

routinely prorated because of the larger 

volumes and greater distances 

supplemental milk travels to supply its 

Class I demand. The lowest proration in 

the past 14 years was in October 2022, 

when Southeast FMMO TCBF payments 

were prorated to 25.9 percent of claims 

because of lack of funds, despite the 

assessment level being set at its 

maximum, $0.30 per cwt. 

Conversely, in the Appalachian 

FMMO, where in-area production 

supplies a higher percentage of Class I 

demand and less supplemental milk is 

needed, the current assessment level is 

$0.07 per cwt, which is less than the 

maximum allowable rate of $0.15 per 

cwt. This rate has been adequate to 

make full payment on eligible milk 

shipments in recent years. 

Analysis of the proposed provisions 

indicate adoption would result in higher 

payments from the TCBF. The record 

indicates the assessment levels needed 

to pay claims based on the proposed 

TCBF provisions could be as high as 

$0.18 per cwt and $0.88 per cwt in the 

Appalachian and Southeast FMMOs, 

respectively. Therefore, this decision 

continues to propose an increase in the 

maximum allowable TCBF assessment 

rates to ensure adequate funds and 

reduce the need to prorate payments. 

Specifically, this decision proposes to 

adopt a maximum TCBF assessment 

rates of $0.30 per cwt and $0.60 per cwt 

in the Appalachian and Southeast 

FMMOs, respectively. The rates should 

ensure adequate funds to make full 

payments on eligible shipments, or 

lessen the instances of prorated 

payments, particularly in the regularly 

short Southeast. There was no 

opposition at the hearing to the 

proposed assessments rates; further data 

supports these maximum rates as 

reasonable starting points. The market 

administrator maintains the authority to 

evaluate collections and lower 

assessment rates if warranted. 

Comments and exceptions submitted 

by DCMA supported the changes to the 

TCBF provisions contained in the 

recommended decision and explained 

above. A second commentor from 

Maryland also supported the TCBF 

amendments. Therefore, this decision 

makes no changes to the original 

recommendation. 

Distributing Plant Delivery Credits 

Promoting efficient, orderly milk 

movements to make certain Class I 

demand is met is an objective of the 

FMMO program. The hearing record 

details the unique marketing conditions 

of the southeastern region and the 

difficulty in obtaining supplies to meet 

Class I demand. As detailed above, the 

situation is not new; the region has used 

transportation assistance provisions for 

supplemental milk supplies to ensure 

Class I demand is met for decades. Just 

as handlers delivering supplemental 

milk to meet Class I demand provide a 

marketwide service, the same is true of 

handlers ensuring regular milk supplies 

are delivered to Class I plants in the 

milk deficit southeastern region. 

Currently, no provisions within the 

Appalachian, Florida, or Southeast 

FMMOs provide transportation 

assistance for the region’s regular 

supply, even though this supply is a 

vital piece of meeting Class I demand. 

As discussed in detail previously, plant 

closures, the reduction of in-area milk 

production, and higher transportation 

costs which have impacted the region’s 

supplemental milk supplies have also 

impacted its regular milk supplies. 

Without some transportation cost 

assistance, the record indicates the milk 

supply deficit in the region will 

continue, most likely at an accelerated 

rate, putting more pressure on 

supplemental supplies to meet Class I 

demand. This is not only costly but puts 

increased pressure and strain on local 

dairy farmers, as revealed in the hearing 

record. Finding available supplemental 

supplies depends on many factors, such 

as the availability of milk in other 

markets, driver and truck availability for 

longer, supplemental hauls, and 

transportation costs. 

Cooperative handler witnesses 

testified regarding the difficulty of 

obtaining and maintaining over-order 

premiums to recoup increased 

transportation costs. Consequently, as 

described in the hearing record, 

cooperative producer-members whose 

milk is a regular supply to the market 

are bearing the cost burden of the 

marketwide service provided by their 

cooperative through an additional 

deduction on their milk check. 

Both cooperative handlers and 

independent Class I handlers testified 

the most efficient deliveries to meet 

Class I demand are from more local milk 

supplies. As the FMMOs seek to provide 

for efficient milk movements, such 

deliveries should be encouraged. The 

entire market benefits from ensuring 

Class I demand is met and the 

responsibility for bearing the cost 

should not fall solely to the handlers, 

primarily cooperative handlers, who 

provide this marketwide service. 

The hearing record clearly 

demonstrates the unique supply/ 

demand imbalance in the southeast 

region. Similar market conditions do not 

exist in the eight FMMOs outside the 

region. Consequently, the marketing 

conditions of the southeastern region 

warrant unique provisions to ensure 

Class I demand is met. 

The record reveals that milk from 

both within and nearby the marketing 

areas is considered part of the region’s 

consistent, regular supply. Accordingly, 

this decision continues to recommend 

transportation assistance for milk that 

serves the region’s Class I demand yearround basis on the Appalachian, 

Florida, and Southeast FMMOs. 

Therefore, this decision continues to 

propose adoption of Proposals 3 and 5, 

with slight modification, and Proposal 

4. 

Comments and exceptions, filed 

separately by DCMA and Prairie Farms, 

expressed support for the DPDC as 

contained in the recommended 

decision. Their comments mentioned 

clarification on several items that are 

discussed below. 

There are four main components of 

the proposed DPDC provisions, which 

will be addressed below: eligibility, 

payment rates, assessment levels, and 

allowance for market administrator 

discretion. Taken together, these 

provisions should assist in efficient, 

more orderly deliveries of year-round 

Class I milk supplies of the marketing 

areas. 

Proposals 3, 4, and 5, as proposed by 

DCMA, would allow DPDC payments on 

milk deliveries from counties where 

DCMA members procure year-round 

milk supplies. For the Appalachian 

FMMO, this would be counties 

comprising the marketing areas of the 

Appalachian and Southeast FMMOs, 

plus specified counties in Virginia and 

West Virginia. For the Florida FMMO, 

DPDC eligible milk shipments could 

come from the counties comprising the 

Florida FMMO and specified counties 

in Georgia. In the Southeast FMMO, 

DPDC eligible milk shipments could 


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come from the counties comprising the 

Southeast and Appalachian marketing 

areas. 

As raised by Prairie Farms in 

testimony and post-hearing brief, there 

are additional nearby counties from 

which the cooperative procures yearround Class I milk supplies for the 

Southeast FMMO that would not be 

eligible for DPDC payments under the 

DCMA proposals. While Prairie Farms 

offered APCs as an alternative, they 

indicated the DPDC provisions would 

be acceptable if they were modified to 

include deliveries from adjacent states. 

The record of this proceeding 

supports extending eligibility to some 

additional counties to provide equitable 

transportation cost assistance for milk 

shipments that are part of the yearround supply. However, the need for 

equitable treatment must be balanced 

with preventing milk further from the 

marketing area from becoming eligible 

for DPDC payments as it would 

undermine the transportation assistance 

the provisions are attempting to provide 

for local, more efficient milk deliveries. 

While this decision continues to 

recommend elimination of the TCBF 85- 

mile exemption and moving to a 

percentage deduction, the record 

indicates 85 miles has been accepted by 

the industry as representing the local 

haul that is the producer’s 

responsibility. Based on evidence in the 

record, this decision continues to find it 

reasonable that milk deliveries serving 

the Class I needs of the Appalachian 

and Southeast FMMOs from counties 

within 85 miles of the respective 

marketing area boundaries be eligible 

for DPDC payments. The additional 

counties eligible under this expanded 

mileage range should increase the 

producer milk receipts eligible to 

receive a DPDC payment to include a 

majority of the year-round milk supplies 

of the two marketing areas and promote 

more orderly, efficient marketing of 

those deliveries. 

Under the DPDC provisions originally 

proposed by DCMA, an analysis 

indicates approximately 76, 99, and 44 

percent of the producer milk receipts 

delivered to pool plants would be 

eligible to receive DPDCs in the 

Appalachian, Florida, and Southeast 

FMMOs. The DPDC provisions 

recommended in this decision, 

including the additional counties for the 

Appalachian and Southeast FMMOs, 

would increase the eligible producer 

milk receipts to 86 and 56 percent, 

respectively. 

Specifically, for the Appalachian 

FMMO, milk from counties within the 

Appalachian and Southeast marketing 

areas, plus specified counties generally 

within 85 miles of the marketing area 

boundary would be eligible to receive a 

DPDC. Therefore, this decision 

continues to recommend a modified 

Proposal 3. 

Prairie Farms filed a comment in 

support of using the 85-mile range as 

appropriate for determining counties 

located outside the marketing areas that 

are eligible for DPDCs and an acceptable 

alternative for their proposed APCs. 

Under the modified DPDC, as 

proposed in this decision, milk 

eligibility would extend to milk 

shipments originating from the 

following counties and cities: 

Illinois: Alexander, Bond, Champaign, 

Christian, Clark, Clay, Clinton, Coles, 

Crawford, Cumberland, Douglas, Edgar, 

Edwards, Effingham, Fayette, Franklin, 

Gallatin, Hamilton, Hardin, Jackson, 

Jasper, Jefferson, Johnson, Lawrence, 

Macon, Marion, Massac, Monroe, 

Montgomery, Moultrie, Perry, Piatt, 

Pope, Pulaski, Randolph, Richland, St. 

Clair, Saline, Shelby, Union, Vermilion, 

Wabash, Washington, Wayne, White, 

and Williamson. 

Indiana: Bartholomew, Boone, Brown, 

Clay, Clinton, Dearborn, Decatur, 

Delaware, Fayette, Fountain, Franklin, 

Hamilton, Hancock, Hendricks, Henry, 

Jackson, Jefferson, Jennings, Johnson, 

Lawrence, Madison, Marion, Monroe, 

Montgomery, Morgan, Ohio, Owen, 

Parke, Putnam, Randolph, Ripley, Rush, 

Shelby, Switzerland, Tippecanoe, 

Tipton, Union, Vermillion, Vigo, 

Warren, and Wayne. 

Kentucky: Boone, Boyd, Bracken, 

Campbell, Floyd, Grant, Greenup, 

Harrison, Johnson, Kenton, Lawrence, 

Lewis, Magoffin, Martin, Mason, 

Pendleton, Pike, and Robertson. 

Maryland: Allegany, Frederick, 

Garrett, Montgomery, and Washington. 

Ohio: Adams, Athens, Brown, Butler, 

Clark, Clermont, Clinton, Darke, 

Fairfield, Fayette, Franklin, Gallia, 

Greene, Hamilton, Highland, Hocking, 

Jackson, Lawrence, Madison, Meigs, 

Miami, Montgomery, Morgan, Perry, 

Pickaway, Pike, Preble, Ross, Scioto, 

Vinton, Warren, and Washington. 

Pennsylvania: Bedford, Fayette, 

Franklin, Fulton, Greene, and Somerset. 

Virginia counties: Albemarle, Amelia, 

Appomattox, Arlington, Brunswick, 

Buckingham, Caroline, Charles City, 

Charlotte, Chesterfield, Clarke, 

Culpeper, Cumberland, Dinwiddie, 

Essex, Fairfax, Fauquier, Fluvanna, 

Frederick, Gloucester, Goochland, 

Greene, Greensville, Halifax, Hanover, 

Henrico, Isle Of Wight, James City, King 

And Queen, King George, King William, 

Lancaster, Loudoun, Louisa, Lunenburg, 

Madison, Mathews, Mecklenburg, 

Middlesex, Nelson, New Kent, 

Northumberland, Nottoway, Orange, 

Page, Powhatan, Prince Edward, Prince 

George, Prince William, Rappahannock, 

Richmond, Shenandoah, Southampton, 

Spotsylvania, Stafford, Surry, Sussex, 

Warren, Westmoreland, and York. 

Virginia cities: Alexandria City, 

Charlottesville City, Chesapeake City, 

Colonial Heights City, Emporia City, 

Fairfax City, Falls Church City, Franklin 

City, Fredericksburg City, Hampton 

City, Hopewell City, Manassas City, 

Manassas Park City, Newport News 

City, Norfolk City, Petersburg City, 

Poquoson City, Portsmouth City, 

Richmond City, Suffolk City, Virginia 

Beach City, Williamsburg City, and 

Winchester City. 

West Virginia: Barbour, Berkeley, 

Boone, Braxton, Cabell, Calhoun, Clay, 

Doddridge, Fayette, Gilmer, Grant, 

Greenbrier, Hampshire, Hardy, 

Harrison, Jackson, Jefferson, Kanawha, 

Lewis, Lincoln, Logan, Marion, Mason, 

Mineral, Mingo, Monongalia, Monroe, 

Morgan, Nicholas, Pendleton, Pleasants, 

Pocahontas, Preston, Putnam, Raleigh, 

Randolph, Ritchie, Roane, Summers, 

Taylor, Tucker, Tyler, Upshur, Wayne, 

Webster, Wetzel, Wirt, Wood, and 

Wyoming. 

For the Southeast FMMO, milk from 

counties within the Southeast and 

Appalachian marketing areas, plus 

specified counties generally within 85 

miles of the marketing area boundary 

would be eligible to receive a DPDC. 

Therefore, this decision continues to 

recommend a modified Proposal 5 to 

extend eligibility to milk shipments 

originating from the following counties 

and cities: 

Illinois: Alexander, Bond, Clay, 

Clinton, Crawford, Edwards, Effingham, 

Fayette, Franklin, Gallatin, Hamilton, 

Hardin, Jackson, Jasper, Jefferson, 

Johnson, Lawrence, Marion, Massac, 

Monroe, Montgomery, Perry, Pope, 

Pulaski, Randolph, Richland, St. Clair, 

Saline, Union, Washington, Wayne, 

White, Williamson, Calhoun, Greene, 

Jersey, Macoupin, Madison, and 

Wabash. 

Kansas: Allen, Anderson, Bourbon, 

Chautauqua, Cherokee, Coffey, 

Crawford, Douglas, Elk, Franklin, 

Greenwood, Jefferson, Johnson, Labette, 

Leavenworth, Linn, Lyon, Miami, 

Montgomery, Neosho, Osage, Shawnee, 

Wabaunsee, Wilson, Woodson, and 

Wyandotte. 

Missouri: Audrain, Bates, Benton, 

Boone, Callaway, Camden, Cass, Clay, 

Cole, Cooper, Franklin, Gasconade, 

Henry, Hickory, Howard, Jackson, 

Jefferson, Johnson, Lafayette, Lincoln, 

Maries, Miller, Moniteau, Montgomery, 

Morgan, Osage, Pettis, Phelps, Pike, 

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Ste Genevieve, St Louis, St. Louis City, 

Saline, and Warren. 

Oklahoma: Adair, Atoka, Bryan, 

Cherokee, Choctaw, Coal, Craig, Creek, 

Delaware, Haskell, Hughes, Latimer, Le 

Flore, McCurtain, Mcintosh, Mayes, 

Muskogee, Nowata, Okfuskee, 

Okmulgee, Osage, Ottawa, Pawnee, 

Pittsburg, Pushmataha, Rogers, 

Sequoyah, Tulsa, Wagoner, and 

Washington. 

Texas: Anderson, Angelina, Bowie, 

Camp, Cass, Chambers, Cherokee, Delta, 

Fannin, Franklin, Galveston, Gregg, 

Hardin, Harris, Harrison, Henderson, 

Hopkins, Houston, Hunt, Jasper, 

Jefferson, Kaufman, Lamar, Liberty, 

Marion, Montgomery, Morris, 

Nacogdoches, Newton, Orange, Panola, 

Polk, Rains, Red River, Rusk, Sabine, 

San Augustine, San Jacinto, Shelby, 

Smith, Titus, Trinity, Tyler, Upshur, 

Van Zandt, Walker, and Wood. 

The record does not reflect there are 

additional counties that supply yearround Class I milk to the Florida 

marketing area, other than the Georgia 

counties DCMA proposed be included. 

Therefore, this decision continues to 

propose adoption of Proposal 4 without 

modification. 

This decision also continues to 

recommend that handlers and 

cooperatives sourcing year-round milk 

supplies to meet Class I needs from 

additional counties in the states listed 

above could request eligibility for 

DPDC. If the market administrator finds 

those counties provide milk to the Class 

I market on a year-round basis, they 

would be eligible to receive a DPDC. 

Accounting for the eligibility expansion 

to the counties listed above and 

providing flexibility for additional 

counties within those states to be 

eligible, if requested and approved, 

should address the objections presented 

by Prairie Farms at the hearing. 

DCMA witnesses testified that it was 

not the intention of its proposals to 

allow the milk outside the marketing 

area that is eligible for the DPDC to also 

receive payment from the TCBF. This 

decision continues to recommend 

limitations in the eligibility 

requirements for the TCBF so producer 

milk originating from the counties listed 

above that are outside of the 

Appalachian and Southeast FMMO are 

only eligible to receive either a DPDC or 

TCBF payment. 

Proposals 3, 4 and 5 also contain a 

provision allowing milk shipments from 

pool supply plants to pool distributing 

plants to be eligible for DPDC payments. 

The record reflects that a pool supply 

plant on the Appalachian order 

assembles milk from smaller farms at 

the plant and then ships the assembled 

larger tanker load of milk to pool 

distributing plants regulated by the 

order. This supply plant provides milk 

shipments to meet the demands of the 

Appalachian order’s pool distributing 

plants and should be eligible for a DPDC 

for the transportation cost incurred 

between the two plants. While 

testimony was only offered regarding a 

pool supply plant on the Appalachian 

FMMO, the DCMA proposals contain 

the same provision for the Southeast 

and Florida FMMOs. As this decision 

seeks to provide transportation 

assistance to handlers providing the 

marketwide service of meeting Class I 

demand in all three FMMOs, it is 

appropriate to allow these deliveries 

from pool supply plants to pool 

distributing plants to be eligible for 

DPDC payments. 

In DCMA’s comments and exceptions, 

filed in response to the recommended 

decision, DCMA requested clarification 

of eligibility for TCBF and DPDC 

payments for the additional counties 

included in the recommended decision. 

DCMA sought clarification on whether 

deliveries from a farm in one of the 

listed counties outside of the marketing 

areas are eligible for both TCBF and 

DPDC payments in a given year if all 

other eligibility criteria are met. If a 

farm is eligible for both credits, DCMA 

inquired as to who determines which 

credit applies. Additionally, DCMA 

sought guidance on situations in which 

farms could be eligible for both credits 

in different FMMOs. 

Similarly, comments and exceptions 

filed by Prairie Farms requested 

clarification as to whether a producer 

located in the listed counties outside the 

Southeast and Appalachian FMMOs 

would be eligible for a TCBF payment 

and a DPDC in the same months, but not 

for both credits on the same milk. 

The current TCBF provisions in the 

Appalachian and Southeast FMMOs 

have a qualifying period each year 

during the months of March, April, and 

May. The language in 1005.82(c)(2)(i) 

and 1007.82(c)(2)(i) outline the 

requirements for a dairy farmer to 

qualify as a supplemental supplier and 

thus be eligible for payments from the 

TCBF in each respective FMMO. To be 

eligible for a TCBF payment, the dairy 

farmer must not be a producer under the 

order for more than 45 days during the 

three-month qualifying period or not 

more than 50 percent of the production 

of the dairy farmer can be producer milk 

under the Order during the three-month 

period. The producer milk of a producer 

located in a county eligible for a DPDC 

outside of the Appalachian and 

Southeast FMMO marketing areas 

would be eligible for the current TCBF 

if the producer meets the above 

requirements. If the producer fails to 

meet the requirements for TCBF 

eligibility (e.g., more than 50 percent 

production is producer milk in either 

the Appalachian or Southeast Order), 

then the producer’s milk would be 

eligible for payment from the DPDC 

from the respective order. 

The qualification for payment from 

the DPDC in each individual FMMO 

stands on its own. Therefore, a producer 

located in a county eligible for the 

Appalachian and Southeast FMMO 

DPDCs and located outside of the 

marketing areas could receive payments 

from both DPDC funds on different milk 

shipments. 

In its comment, DCMA also requested 

clarification on the location of a supply 

plant for DPDC eligibility, including for 

farms and supply plants in the 

additional counties included in the 

recommended decision. The 

recommended decision proposed order 

language specified that only milk 

transferred from a pool supply plant 

regulated on that specific FMMO may 

be eligible for a DPDC. The pool supply 

plant provisions in each of the three 

FMMOs (§§ 1005.7(c) and (d), 

§§ 1006.7(c) and (d), and §§ 1007.7(c) 

and (d)) specify the eligibility 

requirements to qualify as a supply 

plant in each order. The inclusion of the 

additional counties located outside of 

the marketing areas for DPDC eligibility 

has no impact on pool supply plant 

qualifications. Producer milk must be 

physically received at the pool supply 

plant then transferred to a pool 

distributing plant to be eligible for 

DPDC payment. The location of 

producers would have no impact on the 

plant’s eligibility unless the market 

administrator determines such 

transactions are encouraging 

uneconomic movements of milk. 

This decision also slightly amends the 

computation of DPDC eligible miles. 

The recommended order language 

contained in the recommended decision 

determines eligible milk as the distance 

between the shipping farm and the 

receiving plant. Upon further review, 

this decision finds it more appropriate 

to lessen the administrative burden by 

using the distance between the county 

seat and the receiving plant to 

determine eligible milk. A DCMA 

witness testified at the hearing that 

using either the farm location or the 

county seat would be appropriate. The 

proposed order language has been 

modified to reflect this change. 

Similar to the recommended TCBF 

provisions, this decision continues to 

recommend DPDCs provide 

reimbursement on 85 percent of the 


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delivery mileage. The proposed 

regulations would allow the market 

administrator to adjust the mileage 

range to between 75 and 95 percent if 

requested by stakeholders and 

warranted by market conditions. Such 

an adjustment could be warranted, for 

example, if the combination of Class I 

differential adjustments and DPDC 

payments were found to be reimbursing 

in excess of transportation costs. 

Granting the market administrator 

authority to adjust the mileage rate 

would provide a safeguard against 

payments in excess of costs. 

This decision continues to propose 

adoption of DPDC payment rates 

identical to the TCBF, which have been 

detailed above. The record indicates the 

similarity in transportation cost factors 

between supplemental and year-round 

supplies. Therefore, this decision 

continues to find it appropriate to 

recommend identical payment 

provisions. 

The record contains information 

regarding the funding needed to make 

DPDC payments on eligible year-round 

milk supplies. Establishing maximum 

assessment rates and allowing the 

market administrator flexibility to lower 

those rates is an efficient way to 

administer the provisions, as has been 

demonstrated in the administration of 

the current Appalachian TCBF. As such, 

this decision continues to propose to 

adopt DPDC maximum assessments of 

$0.60, $0.85, and $0.50 per cwt, in the 

Appalachian, Florida, and Southeast 

FMMOs, respectively. 

In its comments and exceptions, 

Prairie Farms requested the initial 

assessment rate be set at the maximum 

of $0.60 rather than an initial 

assessment rate of $0.55, as proposed in 

the recommended decision for the 

Southeast FMMO. In contrast, DCMA 

supported the initial assessment rate in 

the recommended decision in its 

comments to the recommended 

decision. 

After evaluating the record evidence, 

this decision finds the expanded area 

eligible for the DPDC from DCMA’s 

original proposal will likely increase the 

volume of eligible milk. Thus, a higher 

assessment rate may be needed initially 

to cover eligible claims, especially in 

the Southeast FMMO where milk 

deficits are more pronounced. To 

provide consistency between the DPDC 

provisions of the three orders, the 

assessment rate should be set at the 

maximum level for the first month. 

Accordingly, this decision recommends 

the initial assessment rate for the DPDC 

be increased to the maximum rate for all 

three FMMOs. The initial assessment 

rates are therefore removed from the 

proposed order language. 

Included in its comment, DCMA 

requested DPDC assessment rates be 

announced and published monthly by 

the market administrator in the same 

manner and schedule as the TCBF. AMS 

agrees with this request. The 

assessments for both the DPDC and 

TCBF will be specified on the monthly 

price announcements released by the 

market administrator. 

In its comment, DCMA additionally 

filed a request to correct 

§ 1006.84(f)(1)(iv) to be consistent with 

Appalachian and Southeast FMMO 

proposed provisions, specifically 

replacing ‘‘the difference’’ with ‘‘any 

positive difference’’ in the 

recommended provisions of the Florida 

DPDC. AMS agrees this discrepancy was 

an error; accordingly, AMS is making 

the corresponding correction to section 

1006.84(f)(1)(iv) in this final decision. 

Finally, this decision continues to 

propose inclusion of DPDC provisions 

to authorize the market administrator to 

monitor milk movements and DPDC 

claims to disqualify shipments from 

eligibility if, after an investigation, it 

was determined the shipments indicate 

persistent and pervasive uneconomic 

milk movements. Uneconomic milk 

movements run counter to the program’s 

objectives to provide for more orderly 

marketing and encourage efficient milk 

movements. Such movements should be 

discouraged and should not receive the 

benefit of transportation cost assistance 

offered through DPDCs. Therefore, this 

decision continues to recommend the 

proposed oversight provisions. 

In summary, the chronic milk supply 

problem in the Appalachian, Florida, 

and Southeast orders is well 

documented and this decision continues 

to recommend adoption of a series of 

amendments and new provisions to 

provide transportation assistance to 

handlers who provide the marketwide 

service of meeting the markets’ Class I 

demand. Through these 

recommendations, most milk delivered 

to a pool distributing plant (both 

supplemental and year-round supplies) 

would be eligible for one type of 

transportation payment. This decision 

does not support adoption of Proposal 9 

and 10 that would remove the location 

and delivery eligibility requirements of 

the current TCBF provisions, thus 

making milk eligible to receive both 

credits. Accordingly, Proposals 9 and 10 

are not recommended for adoption. 

This decision does not recommend 

adoption of Proposal 11 which would 

prohibit diversions on milk receiving 

any form of transportation assistance 

from the Appalachian, Florida, and 

Southeast FMMOs. The Appalachian 

and Southeast FMMOs already contain 

this prohibition on milk receiving TCBF 

payments. This rulemaking is 

considering whether to extend the 

prohibition to milk receiving DPDCs. 

The record indicates that while a vast 

majority of the milk regulated by the 

three Southeastern FMMOs is delivered 

to pool plants, there are instances, even 

given the region’s chronic milk shortage, 

when milk is not needed by pool 

distributing plants and is instead 

delivered to nonpool plants. Witnesses 

for cooperatives who would be eligible 

to receive DPDC payments testified that 

the ability to pool diversions provides 

for the orderly disposition of year-round 

milk supplies regulated by the Orders. 

The record reveals that pool 

distributing plants’ demand fluctuates 

on a weekly, monthly, and annual basis 

for many reasons, such as weekends, 

holidays, or the closing of schools for 

the summer. Previous FMMO 

rulemakings that have amended or 

established diversion limits discuss the 

appropriateness of allowing for the milk 

of producers who are consistent and 

reliable suppliers serving the Class I 

needs of the market to be pooled and 

priced even when that milk is not 

immediately needed for Class I use. 

FMMOs allow milk diverted to nonpool 

plants to be pooled and priced by the 

Order, to ensure its orderly and efficient 

disposition. 

By design, the recommended DPDC 

provisions establish criteria for 

identifying consistent, year-round milk 

supplies eligible to receive a payment. 

This decision has discussed at length 

the need for transportation assistance in 

the region to ensure an adequate supply 

of Class I milk. Diversion limits are one 

feature that provides for the orderly 

disposition of this consistent supply of 

Class I milk. Prohibiting the diversion of 

milk receiving a DPDC would not 

provide for more orderly marketing and 

would interfere with the orderly 

disposition of the region’s consistent 

Class I milk supplies. Accordingly, this 

decision does not recommend adoption 

of Proposal 11. 

This decision does not find that 

adoption of Proposals 1, 2, 3, 4 and 5 

would have a negative competitive 

impact on pool distributing plant 

handlers in the three Southeastern 

Orders. If adopted, the proposed 

maximum assessment rates for the TCBF 

and DPDC combined would be $0.90, 

$0.85, and $1.10 per cwt, in the 

Appalachian, Florida, and Southeast 

FMMOs, respectively. These rates 

reflect correction of a clerical error in 

the recommended decision where the 

Florida and Southeast FMMO rates were 


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listed incorrectly. Evidence shows 

packaged milk coming into the region 

from common supply points would 

incur costs—a combination of 

applicable Class I differentials and 

transportation costs—in excess of the 

combined TCBF and DPDC assessments 

on Class I milk. Thus, adoption of the 

maximum assessment rates would not 

impact competitive relationships among 

handlers who supply the region with 

fluid milk products. 

To compare how the proposed 

assessments could impact the wholesale 

price of milk used in Class I products, 

the proposed change in assessment 

levels was analyzed. The difference in 

current assessment levels and the 

maximum assessment levels proposed 

in this decision is $0.83, $0.85, and 

$0.80 per cwt, in the Appalachian, 

Florida, and Southeast FMMOs, 

respectively. The differences per cwt 

converted to gallons are $0.071, $0.073, 

and $0.069 per cwt, in the Appalachian, 

Florida, and Southeast FMMOs, 

respectively. These assessment level 

and per gallon differences reflect 

correction of a clerical error in the 

recommended decision. The extent to 

which the increased Class I assessments 

would pass through to retail milk prices 

is unknown. Compared to average 

regional retail prices for conventional 

whole milk in 2022, retail prices would 

increase by 1 to 3 percent if the total 

increase were fully passed through. 

Some witness testimony and posthearing briefs argued that because of 

declining fluid milk sales, FMMOs 

should not be amended in a way that 

would raise consumer prices. While 

impact on consumers is important to 

consider, it must be balanced with the 

reality that supplying the southeastern 

U.S. with milk to meet consumer Class 

I demand is costly. This record details 

how transportation costs have increased 

and handlers and cooperatives 

supplying the Class I market have been 

unable to recoup those costs in the 

marketplace. FMMOs are not providing 

for orderly marketing if supplies of the 

Class I market—in this case cooperatives 

who supply more than 80 percent of the 

region’s milk—are asked to continue to 

serve the Class I market without any 

practical way to cover costs of moving 

milk to service the Class I market. Such 

a chronic situation, as documented by 

this hearing record, does not serve 

producers or consumers, if in the long 

run cooperative producers no longer 

service the Class I market and 

consumers are ultimately faced with 

increased costs due to the necessity of 

out-of-area milk being hauled longer 

distances to supply fluid milk in the 

grocery store. 

Emergency Procedures 

DCMA requested this rulemaking be 

conducted on an emergency basis, 

warranting omission of a recommended 

decision. Numerous witnesses testified 

regarding why the unique marketing 

conditions of the southeastern region, 

necessitating supplemental milk 

supplies from further distances in order 

to fill the gap between the region’s 

increasing Class I demand and declining 

in-area milk production, are cause for 

emergency rulemaking measures. As 

discussed previously this decision, the 

record indicates transportation costs for 

Class I milk deliveries in the 

southeastern region of the U.S. have 

risen significantly and are being borne 

primarily by the cooperatives that 

supply the market. 

The overarching issue in this 

proceeding is determining what 

combination of current and possibly 

new transportation assistance 

provisions would best address the 

chronic milk deficit problem in the 

region. In doing so, this decision 

continues to recommend modifications 

to the current TCBF provisions of the 

Appalachian and Southeast FMMOs to 

reflect the current transportation cost 

conditions for supplemental Class I milk 

deliveries into the marketing areas. This 

decision also finds it appropriate to 

establish new DPDCs in the 

Appalachian, Florida, and Southeast 

FMMOs to provide transportation cost 

assistance for milk deliveries within and 

nearby the marketing areas. In making 

this recommendation, the decision 

continues to recommend modifications 

to what was originally proposed by 

DCMA. The decision also denies 

adoption of four alternative proposals 

submitted by industry stakeholders. 

Rulings on Proposed Findings and 

Conclusions 

Briefs, proposed findings, and 

conclusions were filed on behalf of 

certain interested parties. These briefs, 

proposed findings, conclusions, and the 

evidence in the record were considered 

in making the findings and conclusions 

set forth above. To the extent that the 

suggested findings and conclusions filed 

by interested parties are inconsistent 

with the findings and conclusions set 

forth herein, the claims to make such 

findings or reach such conclusions are 

denied for the reasons previously stated 

in this decision. 

General Findings 

The findings and determinations 

hereinafter set forth supplement those 

that were made when the Appalachian, 

Florida, and Southeast orders were first 

issued and when they were amended. 

The previous findings and 

determinations are hereby ratified and 

confirmed, except where they may 

conflict with those set forth herein. 

The following findings are hereby 

made with respect to the aforenamed 

marketing agreements and orders: 

a. The tentative marketing agreements 

and the orders, as hereby proposed to be 

amended, and all of the terms and 

conditions thereof, will tend to 

effectuate the declared policy of the Act; 

b. The parity prices of milk as 

determined pursuant to section 2 of the 

Act are not reasonable with respect to 

the price of feeds, available supplies of 

feeds, and other economic conditions 

that affect market supply and demand 

for milk in the marketing area, and the 

minimum prices specified in the 

proposed marketing agreements and the 

orders are such prices as will reflect the 

aforesaid factors, ensure a sufficient 

quantity of pure and wholesome milk, 

and be in the public interest; and 

c. The proposed marketing 

agreements and the orders will regulate 

the handling of milk in the same 

manner as, and will be applicable only 

to persons in the respective classes of 

industrial and commercial activity 

specified in, the marketing agreements 

upon which a hearing has been held. 

d. All milk and milk products 

handled by handlers, as defined in the 

marketing agreements and the orders as 

hereby proposed to be amended, are in 

the current of interstate commerce or 

directly burden, obstruct, or affect 

interstate commerce in milk or its 

products. 

Recommended Marketing Agreements 

and Orders 

The recommended marketing 

agreements are not included in this 

decision because the regulatory 

provisions thereof would be the same as 

those contained in the orders, as hereby 

proposed to be amended. The following 

orders regulating the handling of milk in 

Appalachian, Florida, and Southeast 

marketing areas continue to be 

recommended as the detailed and 

appropriate means by which the 

foregoing conclusions may be carried 

out. 

Determination of Producer Approval 

and Representative Period 

March 2023 is hereby determined to 

be the representative period for the 

purpose of ascertaining whether the 

issuance of the orders, as amended and 

as hereby proposed to be amended the 

transportation credit balancing fund 

provisions for the Appalachian and 

Southeast Federal milk marketing 


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orders, and establishment of distributing 

plant delivery credits in the 

Appalachian, Florida, and Southeast 

Federal milk marketing orders, is 

approved or favored by producers, as 

defined under the terms of the orders (as 

amended and as hereby proposed to be 

amended), who during such 

representative period were engaged in 

the production of milk for sale within 

the aforesaid marketing areas. 

List of Subjects in 7 CFR Parts 1005, 

1006, and 1007 

Milk marketing orders. 

Erin Morris, 

Associate Administrator, Agricultural 

Marketing Service. 

Order Amending the Order Regulating 

the Handling of Milk in the 

Appalachian, Florida, and Southeast 

Marketing Areas 

(This order shall not become effective 

unless and until the requirements of 

§ 900.14 of the rules of practice and 

procedure governing proceedings to 

formulate marketing agreements and 

marketing orders have been met.) 

Findings and Determinations 

The findings and determinations 

hereinafter set forth supplement those 

that were made when the orders were 

first issued and when they were 

amended. The previous findings and 

determinations are hereby ratified and 

confirmed, except where they may 

conflict with those set forth herein. 

(a) Findings. A public hearing was 

held upon certain proposed 

amendments to the marketing agreement 

and to the orders regulating the 

handling of milk in the Appalachian, 

Florida, and Southeast marketing areas. 

The hearing was held pursuant to the 

provisions of the AMAA, as amended (7 

U.S.C. 601–674), and the applicable 

rules of practice and procedure 

governing the formulation of marketing 

agreements and marketing orders (7 CFR 

part 900). 

Upon the basis of the evidence 

introduced at such hearing and the 

record thereof, it is determined that: 

(1) The said orders as hereby 

amended, and all of the terms and 

conditions thereof, will tend to 

effectuate the declared policy of the 

AMAA; 

(2) The parity prices of milk, as 

determined pursuant to section 2 of the 

AMAA, are not reasonable in view of 

the price of feeds, available supplies of 

feeds, and other economic conditions 

which affect market supply and demand 

for milk in the aforesaid marketing area. 

The minimum prices specified in the 

orders as hereby amended are such 

prices as will reflect the aforesaid 

factors, ensure a sufficient quantity of 

pure and wholesome milk, and be in the 

public interest; and 

(3) The said orders as hereby 

amended regulate the handling of milk 

in the same manner as, and are 

applicable only to persons in the 

respective classes of industrial or 

commercial activity specified in, 

marketing agreements upon which a 

hearing has been held. 

Order Relative to Handling 

It is therefore ordered, that on and 

after the effective date hereof, the 

handling of milk in the Appalachian, 

Florida, and Southeast marketing areas 

shall be in conformity to and in 

compliance with the terms and 

conditions of the orders, as amended, 

and as hereby amended, as follows: 

PART 1005—MILK IN THE 

APPALACHIAN MARKETING AREA 

■ 1. The authority citation for part 1005 

continues to read as follows: 

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

■ 2. Amend § 1005.30 by: 

■ a. Redesignating paragraphs (a)(5) 

through (9) as paragraphs (a)(7) through 

(11); 

■ b. Adding new paragraphs (a)(5) and 

(6); 

■ c. Redesignating paragraph (c)(3) as 

(c)(4) and revising it; and 

■ d. Adding new paragraph (c)(3). 

The additions and revision read as 

follows: 

§ 1005.30 Reports of receipts and 

utilization. 

(a) * * * 

(5) Receipts of producer milk 

described in § 1005.84(e), including the 

identity of the individual producers 

whose milk is eligible for the 

distributing plant delivery credit 

pursuant to that paragraph and the date 

that such milk was received; 

(6) For handlers submitting 

distributing plant delivery credit 

requests, transfers of bulk 

unconcentrated milk to nonpool plants, 

including the dates that such milk was 

transferred; 

* * * * * 

(c) * * * 

(3) With respect to milk for which a 

cooperative association is requesting a 

distributing plant delivery credit 

pursuant to § 1005.84, all of the 

information required in paragraphs 

(a)(5) and (6) of this section. 

(4) With respect to milk for which a 

cooperative association is requesting a 

transportation credit pursuant to 

§ 1005.82, all of the information 

required in paragraphs (a)(7) through (9) 

of this section. 

* * * * * 

■ 3. Amend § 1005.32 by revising 

paragraph (a) to read as follows: 

§ 1005.32 Other reports. 

(a) On or before the 20th day after the 

end of each month, each handler 

described in § 1000.9(a) and (c) of this 

chapter shall report to the market 

administrator any adjustments to 

distributing plant delivery credit 

requests as reported pursuant to 

§ 1005.30(a)(5) and (6), and any 

adjustments to transportation credit 

requests as reported pursuant to 

§ 1005.30(a)(7) through (9). 

* * * * * 

■ 4. Amend § 1005.81 by revising the 

first sentence of paragraph (a) to read as 

follows: 

§ 1005.81 Payments to the transportation 

credit balancing fund. 

(a) On or before the 12th day after the 

end of the month (except as provided in 

§ 1000.90 of this chapter), each handler 

operating a pool plant and each handler 

specified in § 1000.9(c) of this chapter 

shall pay to the market administrator a 

transportation credit balancing fund 

assessment determined by multiplying 

the pounds of Class I producer milk 

assigned pursuant to § 1005.44 by $0.30 

per hundredweight or such lesser 

amount as the market administrator 

deems necessary to maintain a balance 

in the fund equal to the total 

transportation credits disbursed during 

the prior June–February period. * * * 

* * * * * 

■ 5. Amend § 1005.82 by: 

■ a. Revising the first sentence of 

paragraph (a)(1), the first sentence of 

paragraph (b), and paragraph (d)(3)(iii); 

and 

■ b. Adding paragraph (d)(3)(viii). 

The revisions and addition read as 

follows: 

§ 1005.82 Payments from the 

transportation credit balancing fund. 

(a) * * * 

(1) On or before the 13th day (except 

as provided in § 1000.90 of this chapter) 

after the end of each of the months of 

January and July through December and 

any other month in which 

transportation credits are in effect 

pursuant to paragraph (b) of this section, 

the market administrator shall pay to 

each handler that received, and reported 

pursuant to § 1005.30(a)(7), bulk milk 

transferred from a plant fully regulated 

under another Federal order as 

described in paragraph (c)(1) of this 

section or that received, and reported 


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pursuant to § 1005.30(a)(8), milk 

directly from producers’ farms as 

specified in paragraph (c)(2) of this 

section, a preliminary amount 

determined pursuant to paragraph (d) of 

this section to the extent that funds are 

available in the transportation credit 

balancing fund. * * * 

* * * * * 

(b) The market administrator may 

extend the period during which 

transportation credits are in effect (i.e., 

the transportation credit period) to the 

month of February or June if a written 

request to do so is received fifteen (15) 

days prior to the beginning of the month 

for which the request is made and, after 

conducting an independent 

investigation, finds that such extension 

is necessary to assure the market of an 

adequate supply of milk for fluid 

use. * * * 

* * * * * 

(d) * * * 

(3) * * * 

(iii) Subtract 15 percent (15%) of the 

miles from the mileage so determined; 

* * * * * 

(viii) The market administrator may 

revise the factor described in paragraph 

(d)(3)(iii) of this section (the mileage 

adjustment factor) if a written request to 

do so is received fifteen (15) days prior 

to the beginning of the month for which 

the request is made and, after 

conducting an independent 

investigation, finds that such revision is 

necessary to assure orderly marketing, 

efficient handling of milk in the 

marketing area, and an adequate supply 

of milk for fluid use. The market 

administrator may increase the mileage 

adjustment factor by as much as ten 

percentage points, up to twenty-five 

percent (25%) or decrease it by as much 

as ten percentage points, to a minimum 

of five percent (5%). Before making 

such a finding, the market administrator 

shall notify all handlers in the market 

that a revision is being considered and 

invite written data, comments, and 

arguments. Any decision to revise the 

mileage rate factor must be issued in 

writing prior to the first day of the 

month for which the revision is to be 

effective. 

■ 6. Amend § 1005.83 by revising 

paragraphs (a)(2) through (5) to read as 

follows: 

§ 1005.83 Mileage rate for the 

transportation credit balancing fund. 

(a) * * * 

(2) From the result in paragraph (a)(1) 

in this section subtract $2.26 per gallon; 

(3) Divide the result in paragraph 

(a)(2) of this section by 6.2, and round 

down to three decimal places to 

compute the fuel cost adjustment factor; 

(4) Add the result in paragraph (a)(3) 

of this section to $3.67; 

(5) Divide the result in paragraph 

(a)(4) of this section by 497; 

* * * * * 

■ 7. Add § 1005.84 before the 

undesignated center heading 

‘‘Administrative Assessment and 

Marketing Service Deduction’’ to read as 

follows: 

§ 1005.84 Distributing plant delivery 

credits. 

(a) Distributing plant delivery credit 

fund. The market administrator shall 

maintain a separate fund known as the 

Distributing Plant Delivery Credit Fund 

into which shall be deposited the 

payments made by handlers pursuant to 

paragraph (b) of this section and out of 

which shall be made the payments due 

handlers pursuant to paragraph (d) of 

this section. Payments due a handler 

shall be offset against payments due 

from the handler. 

(b) Payments to the distributing plant 

delivery credit fund. On or before the 

12th day after the end of the month 

(except as provided in § 1000.90 of this 

chapter), each handler operating a pool 

plant and each handler specified in 

§ 1000.9(c) of this chapter shall pay to 

the market administrator a distributing 

plant delivery credit fund assessment 

determined by multiplying the pounds 

of Class I producer milk assigned 

pursuant to § 1005.44 by a per 

hundredweight assessment rate of $0.60 

or such lesser amount as the market 

administrator deems necessary to 

maintain a balance in the fund equal to 

the total distributing plant delivery 

credit disbursed during the prior 

calendar year. If the distributing plant 

delivery credit fund is in an overfunded 

position, the market administrator may 

completely waive the distributing plant 

delivery credit assessment for one or 

more months. In determining the 

distributing plant delivery credit 

assessment rate, in the event that during 

any month of that previous calendar 

year the fund balance was insufficient to 

cover the amount of credits that were 

due, the assessment should be based 

upon the amount of credits that would 

have been disbursed had the fund 

balance been sufficient. 

(c) Assessment rate announcement. 

The market administrator shall 

announce publicly on or before the 23rd 

day of the month (except as provided in 

§ 1000.90 of this chapter), the 

assessment rate per hundredweight 

pursuant to paragraph (b) of this section 

for the following month. 

(d) Payments from the distributing 

plant delivery credit fund. Payments 

from the distributing plant delivery 

credit fund to handlers and cooperative 

associations requesting distributing 

plant delivery credits shall be made as 

follows: 

(1) On or before the 13th day (except 

as provided in § 1000.90 of this chapter) 

after the end of each month, the market 

administrator shall pay to each handler 

that received, and reported pursuant to 

§ 1005.30(a)(5), bulk unconcentrated 

milk directly from producers’ farms, or 

receipts of bulk unconcentrated milk by 

transfer from a pool supply plant as 

defined in § 1005.7(c) or (d), a 

preliminary amount determined 

pursuant to paragraph (f) of this section 

to the extent that funds are available in 

the distributing plant delivery credit 

fund. If an insufficient balance exists to 

pay all of the credits computed pursuant 

to this section, the market administrator 

shall distribute the balance available in 

the distributing plant delivery credit 

fund by reducing payments pro rata 

using the percentage derived by 

dividing the balance in the fund by the 

total credits that are due for the month. 

The credits resulting from this initial 

proration shall be subject to audit 

adjustment pursuant to paragraph (d)(3) 

of this section. 

(2) The market administrator shall 

accept adjusted requests for distributing 

plant delivery credits on or before the 

20th day of the month following the 

month for which such credits were 

requested pursuant to § 1005.32(a). After 

such date, a preliminary audit will be 

conducted by the market administrator, 

who will recalculate any necessary 

proration of distributing plant delivery 

credit payments for the preceding 

month pursuant to the process provided 

in paragraph (d)(1) of this section. 

Handlers will be promptly notified of an 

overpayment of credits based upon this 

final computation and remedial 

payments to or from the distributing 

plant delivery credit fund will be made 

on or before the next payment date for 

the following month. 

(3) Distributing plant delivery credits 

paid pursuant to paragraphs (d)(1) and 

(2) of this section shall be subject to 

final verification by the market 

administrator pursuant to § 1000.77 of 

this chapter. Adjusted payments to or 

from the distributing plant delivery 

credit fund will remain subject to the 

final proration established pursuant to 

paragraph (d)(2) of this section. 

(4) In the event that a qualified 

cooperative association is the 

responsible party for whose account 

such milk is received and written 

documentation of this fact is provided 

to the market administrator pursuant to 

§ 1005.30(c)(3) prior to the date payment 

is due, the distributing plant delivery 


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credits for such milk computed 

pursuant to this section shall be made 

to such cooperative association rather 

than to the operator of the pool plant at 

which the milk was received. 

(5) The market administrator shall 

provide monthly, to producers who are 

not members of a qualified cooperative 

association, a statement of the amount 

per hundredweight of distributing plant 

delivery credit which the distributing 

plant handler receiving their milk is 

entitled to claim. 

(e) Eligible milk. Distributing plant 

delivery credits shall apply to the 

following milk: 

(1) Bulk unconcentrated fluid milk 

received directly from dairy farms at a 

pool distributing plant as producer milk 

subject to the following conditions: 

(i) The farm on which the milk was 

produced is located within the specified 

marketing areas of the order in this part 

or the marketing area of Federal Order 

1007 (7 CFR part 1007). 

(ii) The farm on which the milk was 

produced is located in the following 

counties: 

(A) Illinois: Alexander, Bond, 

Champaign, Christian, Clark, Clay, 

Clinton, Coles, Crawford, Cumberland, 

Douglas, Edgar, Edwards, Effingham, 

Fayette, Franklin, Gallatin, Hamilton, 

Hardin, Jackson, Jasper, Jefferson, 

Johnson, Lawrence, Macon, Marion, 

Massac, Monroe, Montgomery, Moultrie, 

Perry, Piatt, Pope, Pulaski, Randolph, 

Richland, St Clair, Saline, Shelby, 

Union, Vermilion, Wabash, Washington, 

Wayne, White, and Williamson. 

(B) Indiana: Bartholomew, Boone, 

Brown, Clay, Clinton, Dearborn, 

Decatur, Delaware, Fayette, Fountain, 

Franklin, Hamilton, Hancock, 

Hendricks, Henry, Jackson, Jefferson, 

Jennings, Johnson, Lawrence, Madison, 

Marion, Monroe, Montgomery, Morgan, 

Ohio, Owen, Parke, Putnam, Randolph, 

Ripley, Rush, Shelby, Switzerland, 

Tippecanoe, Tipton, Union, Vermillion, 

Vigo, Warren, and Wayne. 

(C) Kentucky: Boone, Boyd, Bracken, 

Campbell, Floyd, Grant, Greenup, 

Harrison, Johnson, Kenton, Lawrence, 

Lewis, Magoffin, Martin, Mason, 

Pendleton, Pike, and Robertson. 

(D) Maryland: Allegany, Frederick, 

Garrett, Montgomery, and Washington. 

(E) Ohio: Adams, Athens, Brown, 

Butler, Clark, Clermont, Clinton, Darke, 

Fairfield, Fayette, Franklin, Gallia, 

Greene, Hamilton, Highland, Hocking, 

Jackson, Lawrence, Madison, Meigs, 

Miami, Montgomery, Morgan, Perry, 

Pickaway, Pike, Preble, Ross, Scioto, 

Vinton, Warren, Washington. 

(F) Pennsylvania: Bedford, Fayette, 

Franklin, Fulton, Greene, and Somerset. 

(G) Virginia counties: Albemarle, 

Amelia, Appomattox, Arlington, 

Brunswick, Buckingham, Caroline, 

Charles City, Charlotte, Chesterfield, 

Clarke, Culpeper, Cumberland, 

Dinwiddie, Essex, Fairfax, Fauquier, 

Fluvanna, Frederick, Gloucester, 

Goochland, Greene, Greensville, 

Halifax, Hanover, Henrico, Isle Of 

Wight, James City, King And Queen, 

King George, King William, Lancaster, 

Loudoun, Louisa, Lunenburg, Madison, 

Mathews, Mecklenburg, Middlesex, 

Nelson, New Kent, Northumberland, 

Nottoway, Orange, Page, Powhatan, 

Prince Edward, Prince George, Prince 

William, Rappahannock, Richmond, 

Shenandoah, Southampton, 

Spotsylvania, Stafford, Surry, Sussex, 

Warren, Westmoreland, York. 

(H) Virginia cities: Alexandria City, 

Charlottesville City, Chesapeake City, 

Colonial Heights City, Emporia City, 

Fairfax City, Falls Church City, Franklin 

City, Fredericksburg City, Hampton 

City, Hopewell City, Manassas City, 

Manassas Park City, Newport News 

City, Norfolk City, Petersburg City, 

Poquoson City, Portsmouth City, 

Richmond City, Suffolk City, Virginia 

Beach City, Williamsburg City, and 

Winchester City. 

(I) West Virginia: Barbour, Berkeley, 

Boone, Braxton, Cabell, Calhoun, Clay, 

Doddridge, Fayette, Gilmer, Grant, 

Greenbrier, Hampshire, Hardy, 

Harrison, Jackson, Jefferson, Kanawha, 

Lewis, Lincoln, Logan, Marion, Mason, 

Mineral, Mingo, Monongalia, Monroe, 

Morgan, Nicholas, Pendleton, Pleasants, 

Pocahontas, Preston, Putnam, Raleigh, 

Randolph, Ritchie, Roane, Summers, 

Taylor, Tucker, Tyler, Upshur, Wayne, 

Webster, Wetzel, Wirt, Wood, and 

Wyoming. 

(iii) The market administrator may 

include additional counties from the 

states listed in paragraph (e)(1)(ii) of this 

section upon the request of a pool 

handler and provision of satisfactory 

proof that the county is a source of 

regular supply of milk to order 

distributing plants. 

(iv) Producer milk eligible for a 

payment under this section cannot be 

eligible for payment from the 

transportation credit balancing fund as 

specified in § 1005.82(c)(2). 

(v) The quantity of milk described 

herein shall be reduced by the quantity 

of any bulk unconcentrated fluid milk 

products transferred from a pool 

distributing plant to a nonpool plant or 

transferred to a pool supply plant on the 

same calendar day as producer milk was 

received at such plant for which a 

distributing plant delivery credit is 

requested. 

(2) Bulk unconcentrated fluid milk 

transferred from a pool plant regulated 

pursuant to § 1005.7(c) or (d) to a pool 

distributing plant regulated pursuant to 

§ 1005.7(a) or (b). The quantity of milk 

described herein shall be reduced by the 

quantity of any bulk unconcentrated 

fluid milk products transferred from a 

pool distributing plant to a nonpool 

plant or transferred to a pool supply 

plant on the same calendar day as milk 

was received by transfer from a pool 

supply plant at such pool distributing 

plant for which a distributing plant 

delivery credit is requested. 

(f) Credit computation. Distributing 

plant delivery credits shall be computed 

as follows: 

(1) With respect to milk delivered 

directly from the farm to a distributing 

plant: 

(i) Determine the shortest hard-surface 

highway distance between the shipping 

farm’s county seat and the receiving 

plant and multiply the miles by an 

adjustment rate of not greater than 

ninety-five percent (95%) and not less 

than seventy-five percent (75%); 

(ii) Subtract the Class I price specified 

in § 1000.50(a) of this chapter for the 

county in which the shipping farm is 

located from the Class I price applicable 

for the county in which the receiving 

pool distributing plant is located; 

(iii) Multiply the adjusted miles so 

computed in paragraph (f)(1)(i) of this 

section by the monthly mileage rate 

factor for the month computed pursuant 

to paragraph (h) of this section; 

(iv) Subtract any positive difference in 

Class I prices computed in paragraph 

(f)(1)(ii) of this section from the rate 

determined in paragraph (f)(1)(iii) of 

this section; 

(v) Multiply the remainder computed 

in paragraph (f)(1)(iv) of this section by 

the hundredweight of milk described in 

paragraph (e)(1) of this section. 

(2) With respect to milk delivered 

from a pool supply plant to a 

distributing plant: 

(i) Determine the shortest hard-surface 

highway distance between the 

transferring pool plant and the receiving 

plant, and multiply the miles by an 

adjustment rate not greater than ninetyfive percent (95%) and not less than 

seventy-five percent (75%); 

(ii) Subtract the Class I price specified 

in § 1000.50(a) of this chapter for the 

transferring pool plant from the Class I 

price applicable for the county in which 

the receiving pool distributing plant is 

located; 

(iii) Multiply the adjusted miles so 

computed in paragraph (f)(2)(i) of this 

section by the mileage rate factor for the 

month computed pursuant to paragraph 

(h) of this section; 


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(iv) Subtract any positive difference in 

Class I prices computed in paragraph 

(f)(2)(ii) of this section from the rate 

determined in paragraph (f)(2)(iii) of 

this section; 

(v) Multiply the remainder computed 

in paragraph (f)(2)(iv) of this section by 

the hundredweight of milk described in 

paragraph (e)(2) of this section. 

(g) Mileage percentage rate 

adjustment. The monthly percentage 

rate adjustment within the range of 

permissible percentage adjustments 

provided in paragraphs (f)(1)(i) and 

(f)(2)(i) of this section shall be 

determined by the market administrator, 

and publicly announced prior to the 

month for which effective. In 

determining the percentage adjustment 

to the actual mileages of milk delivered 

from farms and milk transferred from 

pool plants the market administrator 

shall evaluate the general supply and 

demand for milk in the marketing area, 

any previous occurrences of sustained 

uneconomic movements of milk, and 

the balances in the distributing plant 

delivery credit fund. The adjustment 

percentage pursuant to paragraphs 

(f)(1)(i) and (f)(2)(i) of this section to the 

actual miles used for computing 

distributing plant delivery credits and 

announced by the market administrator 

shall always be the same percentage. 

(h) Mileage rate for the distributing 

plant delivery credit fund. The mileage 

rate for the distributing plant delivery 

credit fund shall be the mileage rate 

computed by the market administrator 

pursuant to § 1005.83. 

(i) Oversight of milk movements. The 

market administrator shall regularly 

monitor and evaluate the requests for 

distributing plant delivery credits to 

determine that such credits are not 

encouraging uneconomic movements of 

milk, and that the credits continue to 

assure orderly marketing and efficient 

handling of milk in the marketing area. 

In making such determinations, the 

market administrator will include in the 

evaluation the general supply and 

demand for milk. If the market 

administrator finds that uneconomic 

movements are occurring, and such 

movements are persistent and pervasive, 

or are not being made in a way that 

assures orderly marketing and efficient 

handling of milk in the marketing area, 

after good cause shown, the market 

administrator may disallow the 

payments of distributing plant delivery 

credit on such milk. Before making such 

a finding, the market administrator shall 

give the handler of such milk sufficient 

notice that an investigation is being 

considered and shall provide notice that 

the handler has the opportunity to 

explain why such movements were 

necessary, or the opportunity to correct 

such movements prior to the 

disallowance of any distributing plant 

delivery credits. Any disallowance of 

distributing plant delivery credit 

pursuant to this provision shall remain 

confidential between the market 

administrator and the handler. 

PART 1006—MILK IN THE FLORIDA 

MARKETING AREA 

■ 8. The authority citation for part 1006 

continues to read as follows: 

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

■ 9. Amend § 1006.30 by: 

■ a. Redesignating paragraphs (a)(5) and 

(6) as (a)(7) and (8); 

■ b. Adding new paragraphs (a)(5) and 

(6); and 

■ c. Adding paragraph (c)(3). 

The additions read as follows: 

§ 1006.30 Reports of receipts and 

utilization. 

(a) * * * 

(5) Receipts of producer milk 

described in § 1006.84(e), including the 

identity of the individual producers 

whose milk is eligible for the 

distributing plant delivery credit 

pursuant to that paragraph and the date 

that such milk was received; 

(6) For handlers submitting 

distributing plant delivery credit 

requests, transfers of bulk 

unconcentrated milk to nonpool plants, 

including the dates that such milk was 

transferred. 

* * * * * 

(c) * * * 

(3) With respect to milk for which a 

cooperative association is requesting a 

distributing plant delivery credit 

pursuant to § 1006.84, all of the 

information required in paragraphs 

(a)(5) and (6) of this section. 

* * * * * 

■ 10. Revise § 1006.32 to read as 

follows: 

§ 1006.32 Other reports. 

(a) On or before the 20th day after the 

end of each month, each handler 

described in § 1000.9(a) and (c) of this 

chapter shall report to the market 

administrator any adjustments to 

distributing plant delivery credit 

requests as reported pursuant to 

§ 1006.30(a)(5) and (6). 

(b) In addition to the reports required 

pursuant to §§ 1006.30 and 1006.31 and 

paragraph (a) of this section, each 

handler shall report any information the 

market administrator deems necessary 

to verify or establish each handler’s 

obligation under the order. 

■ 11. Add an undesignated center 

heading preceding the undesignated 

center heading ‘‘Administrative 

Assessment and Marketing Service 

Deduction’’ to read as follows: 

Marketwide Service Payments. 

■ 12. Add § 1006.84 preceding the 

undesignated center heading 

‘‘Administrative Assessment and 

Marketing Service Deduction’’ to read as 

follows: 

§ 1006.84 Distributing plant delivery 

credits. 

(a) Distributing plant delivery credit 

fund. The market administrator shall 

maintain a separate fund known as the 

Distributing Plant Delivery Credit Fund 

into which shall be deposited the 

payments made by handlers pursuant to 

paragraph (b) of this section and out of 

which shall be made the payments due 

handlers pursuant to § 1005.84(b) of this 

chapter. Payments due a handler shall 

be offset against payments due from the 

handler. 

(b) Payments to the distributing plant 

delivery credit fund. On or before the 

12th day after the end of the month 

(except as provided in § 1000.90 of this 

chapter), each handler operating a pool 

plant and each handler specified in 

§ 1000.9(c) of this chapter shall pay to 

the market administrator a distributing 

plant delivery credit fund assessment 

determined by multiplying the pounds 

of Class I producer milk assigned 

pursuant to § 1006.44 by a per 

hundredweight assessment rate of $0.85 

or such lesser amount as the market 

administrator deems necessary to 

maintain a balance in the fund equal to 

the total distributing plant delivery 

credit disbursed during the prior 

calendar year. If the distributing plant 

delivery credit fund is in an overfunded 

position, the market administrator may 

completely waive the distributing plant 

delivery credit assessment for one or 

more months. In determining the 

distributing plant delivery credit 

assessment rate, in the event that during 

any month of that previous calendar 

year the fund balance was insufficient to 

cover the amount of credits that were 

due, the assessment should be based 

upon the amount of credits that would 

have been disbursed had the fund 

balance been sufficient. 

(c) Assessment rate announcement. 

The market administrator shall 

announce publicly on or before the 23rd 

day of the month (except as provided in 

§ 1000.90 of this chapter) the assessment 

rate per hundredweight pursuant to 

paragraph (b) of this section for the 

following month. 

(d) Payments from the distributing 

plant delivery credit fund. Payments 

from the distributing plant delivery 

credit fund to handlers and cooperative 


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associations requesting distributing 

plant delivery credits shall be made as 

follows: 

(1) On or before the 13th day (except 

as provided in § 1000.90 of this chapter) 

after the end of each month, the market 

administrator shall pay to each handler 

that received, and reported pursuant to 

§ 1006.30(a)(5), bulk unconcentrated 

milk directly from producers’ farms, or 

receipts of bulk unconcentrated milk by 

transfer from a pool supply plant as 

defined in § 1006.7(c) or (d), a 

preliminary amount determined 

pursuant to paragraph (f) of this section 

to the extent that funds are available in 

the distributing plant delivery credit 

fund. If an insufficient balance exists to 

pay all of the credits computed pursuant 

to this section, the market administrator 

shall distribute the balance available in 

the distributing plant delivery credit 

fund by reducing payments pro rata 

using the percentage derived by 

dividing the balance in the fund by the 

total credits that are due for the month. 

The credits resulting from this initial 

proration shall be subject to audit 

adjustment pursuant to paragraph (d)(3) 

of this section. 

(2) The market administrator shall 

accept adjusted requests for distributing 

plant delivery credits on or before the 

20th day of the month following the 

month for which such credits were 

requested pursuant to § 1006.32(a). After 

such date, a preliminary audit will be 

conducted by the market administrator, 

who will recalculate any necessary 

proration of distributing plant delivery 

credit payments for the preceding 

month pursuant to the process provided 

in paragraph (d)(1) of this section. 

Handlers will be promptly notified of an 

overpayment of credits based upon this 

final computation and remedial 

payments to or from the distributing 

plant delivery credit fund will be made 

on or before the next payment date for 

the following month. 

(3) Distributing plant delivery credits 

paid pursuant to paragraphs (d)(1) and 

(2) of this section shall be subject to 

final verification by the market 

administrator pursuant to § 1000.77 of 

this chapter. Adjusted payments to or 

from the distributing plant delivery 

credit fund will remain subject to the 

final proration established pursuant to 

paragraph (d)(2) of this section. 

(4) In the event that a qualified 

cooperative association is the 

responsible party for whose account 

such milk is received and written 

documentation of this fact is provided 

to the market administrator pursuant to 

§ 1006.30(c)(3) prior to the date payment 

is due, the distributing plant delivery 

credits for such milk computed 

pursuant to this section shall be made 

to such cooperative association rather 

than to the operator of the pool plant at 

which the milk was received. 

(5) The market administrator shall 

provide monthly, to producers who are 

not members of a qualified cooperative 

association, a statement of the amount 

per hundredweight of distributing plant 

delivery credit which the distributing 

plant handler receiving their milk is 

entitled to claim. 

(e) Eligible milk. Distributing plant 

delivery credits shall apply to the 

following milk: 

(1) Bulk unconcentrated fluid milk 

received at a pool distributing plant as 

producer milk directly from dairy farms 

located within the marketing area; or 

located within the Georgia counties of 

Appling, Atkinson, Bacon, Baker, Ben 

Hill, Berrien, Brooks, Calhoun, 

Charlton, Chattahoochee, Clay, Clinch, 

Coffee, Cook, Colquitt, Crisp, Decatur, 

Dodge, Dooley, Dougherty, Early, 

Echols, Grady, Irwin, Lanier, Lee, 

Lowndes, Jeff Davis, Macon, Marion, 

Miller, Mitchell, Pierce, Pulaski, 

Quitman, Randolph, Schley, Seminole, 

Stewart, Sumter, Telfair, Terrel, 

Thomas, Tift, Turner, Ware, Webster, 

Wilcox, and Worth, and received at pool 

distributing plants. The quantity of milk 

described herein shall be reduced by the 

quantity of any bulk unconcentrated 

fluid milk products transferred from a 

pool distributing plant to a nonpool 

plant or transferred to a pool supply 

plant on the same calendar day as 

producer milk was received at such 

plant for which a distributing plant 

delivery credit is requested. 

(2) Bulk unconcentrated fluid milk 

transferred from a pool plant regulated 

pursuant to § 1006.7(c) or (d) to a pool 

distributing plant regulated pursuant to 

§ 1006.7(a) or (b). The quantity of milk 

described herein shall be reduced by the 

quantity of any bulk unconcentrated 

fluid milk products transferred from a 

pool distributing plant to a nonpool 

plant or transferred to a pool supply 

plant on the same calendar day as milk 

was received by transfer from a pool 

supply plant at such pool distributing 

plant for which a distributing plant 

delivery credit is requested. 

(f) Credit computation. Distributing 

plant delivery credits shall be computed 

as follows: 

(1) With respect to milk delivered 

directly from the farm to a distributing 

plant: 

(i) Determine the shortest hard-surface 

highway distance between the shipping 

farm’s county seat and the receiving 

plant and multiply the miles by an 

adjustment rate of not greater than 

ninety-five percent (95%) and not less 

than seventy-five percent (75%); 

(ii) Subtract the Class I price specified 

in § 1000.50(a) of this chapter for the 

county in which the shipping farm is 

located from the Class I price applicable 

for the county in which the receiving 

pool distributing plant is located; 

(iii) Multiply the adjusted miles so 

computed in (f)(1)(i) of this section by 

the monthly mileage rate factor for the 

month computed pursuant to paragraph 

(h) of this section; 

(iv) Subtract any positive difference in 

Class I prices computed in paragraph 

(f)(1)(ii) of this section from the rate 

determined in paragraph (f)(1)(iii) of 

this section; 

(v) Multiply the remainder computed 

in paragraph (f)(1(iv) of this section by 

the hundredweight of milk described in 

paragraph (e)(1) of this section; 

(2) With respect to milk delivered 

from a pool supply plant to a 

distributing plant: 

(i) Determine the shortest hard-surface 

highway distance between the 

transferring pool plant and the receiving 

plant, and multiply the miles by an 

adjustment rate of not greater than 

ninety-five percent (95%) and not less 

than seventy-five percent (75%); 

(ii) Subtract the Class I price specified 

in § 1000.50(a) of this chapter for the 

transferring pool plant from the Class I 

price applicable for the county in which 

the receiving pool distributing plant is 

located; 

(iii) Multiply the adjusted miles so 

computed in paragraph (f)(2)(i) of this 

section by the mileage rate factor for the 

month computed pursuant to paragraph 

(h) of this section; 

(iv) Subtract any positive difference in 

Class I prices computed in paragraph 

(f)(2)(ii) from the rate determined in 

paragraph (f)(2)(iii) of this section; 

(v) Multiply the remainder computed 

in paragraph (f)(2)(iv) of this section by 

the hundredweight of milk described in 

paragraph (e)(2) of this section. 

(g) Mileage percentage rate 

adjustment. The monthly percentage 

rate adjustment within the range of 

permissible percentage adjustments 

provided in paragraphs (f)(1)(i) and 

(f)(2)(i) of this section shall be 

determined by the market administrator, 

and publicly announced prior to the 

month for which effective. In 

determining the percentage adjustment 

to the actual mileages of milk delivered 

from farms and milk transferred from 

pool plants the market administrator 

shall evaluate the general supply and 

demand for milk in the marketing area, 

any previous occurrences of sustained 

uneconomic movements of milk, and 

the balances in the distributing plant 


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delivery credit fund. The adjustment 

percentage pursuant to paragraphs 

(f)(1)(i) and (f)(2)(i) to of this section the 

actual miles used for computing 

distributing plant credits and 

announced by the market administrator 

shall always be the same percentage. 

(h) Mileage rate for the distributing 

plant delivery credit fund. The market 

administrator shall compute a mileage 

rate factor each month as follows: 

(1) Compute the simple average 

rounded down to three decimal places 

for the most recent four (4) weeks of the 

Diesel Price per Gallon as reported by 

the Energy Information Administration 

of the United States Department of 

Energy for the Lower Atlantic and Gulf 

Coast Districts combined; 

(2) From the result in paragraph (h)(1) 

of this section subtract $2.26 per gallon; 

(3) Divide the result in paragraph 

(h)(2) of this section by 6.2, and round 

down to three decimal places to 

compute the fuel cost adjustment factor; 

(4) Add the result in paragraph (h)(3) 

of this section to $3.67; 

(5) Divide the result in paragraph 

(h)(4) of this section by 497; 

(6) Round the result in paragraph 

(h)(5) of this section down to five 

decimal places to compute the mileage 

rate. 

(i) Oversight of milk movements. The 

market administrator shall regularly 

monitor and evaluate the requests for 

distributing plant delivery credits to 

determine that such credits are not 

encouraging uneconomic movements of 

milk, and the credits continue to assure 

orderly marketing and efficient handling 

of milk in the marketing area. In making 

such determinations the market 

administrator will include in the 

evaluation the general supply and 

demands for milk. If the market 

administrator finds that uneconomic 

movements are occurring, and such 

movements are persistent and pervasive, 

or are not being made in a way that 

assures orderly marketing and efficient 

handling of milk in the marketing area, 

after good cause shown, the market 

administrator may disallow the 

payments of distributing plant delivery 

credit on such milk. Before making such 

a finding, the market administrator shall 

give the handler on such milk sufficient 

notice that an investigation is being 

considered and shall provide notice that 

the handler has the opportunity to 

explain why such movements were 

necessary, or the opportunity to correct 

such movements prior to the 

disallowance of any distributing plant 

delivery credits. Any disallowance of 

distributing plant delivery credit 

pursuant to this provision shall remain 

confidential between the market 

administrator and the handler. 

PART 1007—MILK IN THE SOUTHEAST 

MARKETING AREA 

■ 13. The authority citation for part 

1007 continues to read as follows: 

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

■ 14. Amend § 1007.30 by: 

■ a. Redesignating paragraphs (a)(5) 

through (9) as paragraphs (a)(7) through 

(11); 

■ b. Adding new paragraphs (a)(5) and 

(6); 

■ c. Redesignating paragraph (c)(3) as 

(c)(4) and revising it; and 

■ d. Adding new paragraph (c)(3). 

The revisions and additions read as 

follows. 

§ 1007.30 Reports of receipts and 

utilization. 

(a) * * * 

(5) Receipts of producer milk 

described in § 1007.84(e), including the 

identity of the individual producers 

whose milk is eligible for the 

distributing plant delivery credit 

pursuant to that paragraph and the date 

that such milk was received; 

(6) For handlers submitting 

distributing plant delivery credit 

requests, transfers of bulk 

unconcentrated milk to nonpool plants, 

including the dates that such milk was 

transferred; 

* * * * * 

(c) * * * 

(3) With respect to milk for which a 

cooperative association is requesting a 

distributing plant delivery credit 

pursuant to § 1007.84, all of the 

information required in paragraphs 

(a)(5) and (6) of this section. 

(4) With respect to milk for which a 

cooperative association is requesting a 

transportation credit pursuant to 

§ 1007.82, all of the information 

required in paragraphs (a)(7) through (9) 

of this section. 

* * * * * 

■ 15. Amend § 1007.32 by revising 

paragraph (a) to read as follows: 

§ 1007.32 Other reports. 

(a) On or before the 20th day after the 

end of each month, each handler 

described in § 1000.9(a) and (c) of this 

chapter shall report to the market 

administrator any adjustments to 

distributing plant delivery credit 

requests as reported pursuant to 

§ 1007.30(a)(5) and (6) and any 

adjustments to transportation credit 

requests as reported pursuant to 

§ 1007.30(a)(7) through (9) of this 

section. 

* * * * * 

■ 16. Amend § 1007.81 by revising the 

first sentence of paragraph (a) to read as 

follows: 

§ 1007.81 Payments to the transportation 

credit balancing fund. 

(a) On or before the 12th day after the 

end of the month (except as provided in 

§ 1000.90 of this chapter), each handler 

operating a pool plant and each handler 

specified in § 1000.9(c) of this chapter 

shall pay to the market administrator a 

transportation credit balancing fund 

assessment determined by multiplying 

the pounds of Class I producer milk 

assigned pursuant to § 1007.44 by $0.60 

per hundredweight or such lesser 

amount as the market administrator 

deems necessary to maintain a balance 

in the fund equal to the total 

transportation credits disbursed during 

the prior June through February period 

to reflect any changes in the current 

mileage rate versus the mileage rate(s) in 

effect during the prior June through 

February period. * * * 

* * * * * 

■ 17. Amend § 1007.82 by: 

■ a. Revising the first sentence of 

paragraph (a)(1), the first sentence of 

paragraph (b), and paragraph (d)(3)(iii); 

and 

■ b. Adding paragraph (d)(3)(viii). 

The revisions and addition read as 

follows: 

§ 1007.82 Payments from the 

transportation credit balancing fund. 

(a) * * * 

(1) On or before the 13th day (except 

as provided in § 1000.90) after the end 

of each of the months of January, and 

July through December and any other 

month in which transportation credits 

are in effect pursuant to paragraph (b) of 

this section, the market administrator 

shall pay to each handler that received, 

and reported pursuant to 

§ 1007.30(a)(7), bulk milk transferred 

from a plant fully regulated under 

another Federal order as described in 

paragraph (c)(1) of this section or that 

received, and reported pursuant to 

§ 1007.30(a)(8), milk directly from 

producers’ farms as specified in 

paragraph (c)(2) of this section, a 

preliminary amount determined 

pursuant to paragraph (d) of this section 

to the extent that funds are available in 

the transportation credit balancing fund. 

* * * 

(b) The market administrator may 

extend the period during which 

transportation credits are in effect (i.e., 

the transportation credit period) to the 

month of February or June if a written 

request to do so is received fifteen (15) 

days prior to the beginning of the month 

for which the request is made and, after 


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Federal Register / Vol. 88, No. 230 / Friday, December 1, 2023 / Proposed Rules 84063 

conducting an independent 

investigation, finds that such extension 

is necessary to assure the market of an 

adequate supply of milk for fluid use. 

* * * 

* * * * * 

(d) * * * 

(3) * * * 

(iii) Subtract 15 percent (15%) of the 

miles from the mileage so determined; 

* * * * * 

(viii) The market administrator may 

revise the factor described in (3)(iii) of 

this section (the mileage adjustment 

factor) if a written request to do so is 

received fifteen (15) days prior to the 

beginning of the month for which the 

request is made and, (15) days prior to 

the beginning of the month for which 

the request is made and, after 

conducting an independent 

investigation, finds that such revision is 

necessary to assure orderly marketing, 

efficient handling of milk in the 

marketing area, and an adequate supply 

of milk for fluid use. The market 

administrator may increase the mileage 

adjustment factor by as much as ten 

percentage points (10%) up to twentyfive percent (25%) or decrease it by as 

much as ten percentage points (10%), to 

a minimum of five percent (5%). Before 

making such a finding, the market 

administrator shall notify all handlers in 

the market that a revision is being 

considered and invite written data, 

comments, and arguments. Any 

decision to revise the mileage rate factor 

must be issued in writing prior to the 

first day of the month for which the 

revision is to be effective. 

■ 18. Amend § 1007.83 by revising 

paragraphs (a)(2) through (5) to read as 

follows: 

§ 1007.83 Mileage rate for the 

transportation credit balancing fund. 

(a) * * * 

(2) From the result in paragraph (a)(1) 

of this section subtract $2.26 per gallon; 

(3) Divide the result in paragraph 

(a)(2) of this section by 6.2, and round 

down to three decimal places to 

compute the fuel cost adjustment factor; 

(4) Add the result in paragraph (a)(3) 

of this section to $3.67; 

(5) Divide the result in paragraph 

(a)(4) of this section by 497; 

* * * * * 

■ 19. Add § 1007.84 before the 

undesignated center heading 

‘‘Administrative Assessment and 

Marketing Service Deduction’’ to read as 

follows: 

§ 1007.84 Distributing plant delivery 

credits. 

(a) Distributing plant delivery credit 

fund. The market administrator shall 

maintain a separate fund known as the 

Distributing Plant Delivery Credit Fund 

into which shall be deposited the 

payments made by handlers pursuant to 

paragraph (b) of this section and out of 

which shall be made the payments due 

handlers pursuant to paragraph (d) of 

this section. Payments due a handler 

shall be offset against payments due 

from the handler. 

(b) Payments to the distributing plant 

delivery credit fund. On or before the 

12th day after the end of the month 

(except as provided in § 1000.90 of this 

chapter), each handler operating a pool 

plant and each handler specified in 

§ 1000.9(c) of this chapter shall pay to 

the market administrator a distributing 

plant delivery credit fund assessment 

determined by multiplying the pounds 

of Class I producer milk assigned 

pursuant to § 1007.44 by a per 

hundredweight assessment rate of $0.50 

or such lesser amount as the market 

administrator deems necessary to 

maintain a balance in the fund equal to 

the total distributing plant delivery 

credit disbursed during the prior 

calendar year. If the distributing plant 

delivery credit fund is in an overfunded 

position, the market administrator may 

completely waive the distributing plant 

delivery credit assessment for one or 

more months. In determining the 

distributing plant delivery credit 

assessment rate, in the event that during 

any month of that previous calendar 

year the fund balance was insufficient to 

cover the amount of credits that were 

due, the assessment should be based 

upon the amount of credits that would 

have been disbursed had the fund 

balance been sufficient. 

(c) Assessment rate announcement. 

The market administrator shall 

announce publicly on or before the 23rd 

day of the month (except as provided in 

§ 1000.90 of this chapter), the 

assessment rate per hundredweight 

pursuant to paragraph (b) of this section 

for the following month. 

(d) Payments from the distributing 

plant delivery credit fund. Payments 

from the distributing plant delivery 

credit fund to handlers and cooperative 

associations requesting distributing 

plant delivery credits shall be made as 

follows: 

(1) On or before the 13th day (except 

as provided in § 1000.90 of this chapter) 

after the end of each month, the market 

administrator shall pay to each handler 

that received, and reported pursuant to 

§ 1007.30(a)(5), bulk unconcentrated 

milk directly from producers’ farms, or 

receipts of bulk unconcentrated milk by 

transfer from a pool supply plant as 

defined in § 1007.7(c) or (d), a 

preliminary amount determined 

pursuant to paragraph (f) of this section 

to the extent that funds are available in 

the distributing plant delivery credit 

fund. If an insufficient balance exists to 

pay all of the credits computed pursuant 

to this section, the market administrator 

shall distribute the balance available in 

the distributing plant delivery credit 

fund by reducing payments pro rata 

using the percentage derived by 

dividing the balance in the fund by the 

total credits that are due for the month. 

The credits resulting from this initial 

proration shall be subject to audit 

adjustment pursuant to paragraph (d)(3) 

of this section. 

(2) The market administrator shall 

accept adjusted requests for distributing 

plant delivery credits on or before the 

20th day of the month following the 

month for which such credits were 

requested pursuant to § 1007.32(a). After 

such date, a preliminary audit will be 

conducted by the market administrator, 

who will recalculate any necessary 

proration of distributing plant delivery 

credit payments for the preceding 

month pursuant to the process provided 

in paragraph (d)(1) of this section. 

Handlers will be promptly notified of an 

overpayment of credits based upon this 

final computation and remedial 

payments to or from the distributing 

plant delivery credit fund will be made 

on or before the next payment date for 

the following month. 

(3) Distributing plant delivery credits 

paid pursuant to paragraphs (d)(1) and 

(2) of this section shall be subject to 

final verification by the market 

administrator pursuant to § 1000.77 of 

this chapter. Adjusted payments to or 

from the distributing plant delivery 

credit fund will remain subject to the 

final proration established pursuant to 

paragraph (d)(2) of this section. 

(4) In the event that a qualified 

cooperative association is the 

responsible party for whose account 

such milk is received and written 

documentation of this fact is provided 

to the market administrator pursuant to 

§ 1007.30(c)(3) prior to the date payment 

is due, the distributing plant delivery 

credits for such milk computed 

pursuant to this section shall be made 

to such cooperative association rather 

than to the operator of the pool plant at 

which the milk was received. 

(5) The market administrator shall 

provide monthly to producers who are 

not members of a qualified cooperative 

association a statement of the amount 

per hundredweight of distributing plant 

delivery credit which the distributing 

plant handler receiving their milk is 

entitled to claim. 


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84064 Federal Register / Vol. 88, No. 230 / Friday, December 1, 2023 / Proposed Rules 

(e) Eligible milk. Distributing plant 

delivery credits shall apply to the 

following milk: 

(1) Bulk unconcentrated fluid milk 

received directly from dairy farms at a 

pool distributing plant as producer milk 

subject to the following conditions: 

(i) The farm on which the milk was 

produced is located within the specified 

marketing areas of the order in this part 

or the marketing area of Federal Order 

1005 (7 CFR part 1005). 

(ii) The farm on which the milk was 

produced is located in the following 

counties in the State of: 

(A) Illinois: Alexander, Bond, Clay, 

Clinton, Crawford, Edwards, Effingham, 

Fayette, Franklin, Gallatin, Hamilton, 

Hardin, Jackson, Jasper, Jefferson, 

Johnson, Lawrence, Marion, Massac, 

Monroe, Montgomery, Perry, Pope, 

Pulaski, Randolph, Richland, St Clair, 

Saline, Union, Washington, Wayne, 

White, Williamson, Calhoun, Greene, 

Jersey, Macoupin, Madison, and 

Wabash. 

(B) Kansas: Allen, Anderson, 

Bourbon, Chautauqua, Cherokee, Coffey, 

Crawford, Douglas, Elk, Franklin, 

Greenwood, Jefferson, Johnson, Labette, 

Leavenworth, Linn, Lyon, Miami, 

Montgomery, Neosho, Osage, Shawnee, 

Wabaunsee, Wilson, Woodson, and 

Wyandotte. 

(C) Missouri: Audrain, Bates, Benton, 

Boone, Callaway, Camden, Cass, Clay, 

Cole, Cooper, Franklin, Gasconade, 

Henry, Hickory, Howard, Jackson, 

Jefferson, Johnson, Lafayette, Lincoln, 

Maries, Miller, Moniteau, Montgomery, 

Morgan, Osage, Pettis, Phelps, Pike, 

Platte, Pulaski, Ray, St Charles, St Clair, 

Ste Genevieve, St Louis, St. Louis City, 

Saline, and Warren. 

(D) Oklahoma: Adair, Atoka, Bryan, 

Cherokee, Choctaw, Coal, Craig, Creek, 

Delaware, Haskell, Hughes, Latimer, Le 

Flore, McCurtain, Mcintosh, Mayes, 

Muskogee, Nowata, Okfuskee, 

Okmulgee, Osage, Ottawa, Pawnee, 

Pittsburg, Pushmataha, Rogers, 

Sequoyah, Tulsa, Wagoner, and 

Washington. 

(E) Texas: Anderson, Angelina, 

Bowie, Camp, Cass, Chambers, 

Cherokee, Delta, Fannin, Franklin, 

Galveston, Gregg, Hardin, Harris, 

Harrison, Henderson, Hopkins, 

Houston, Hunt, Jasper, Jefferson, 

Kaufman, Lamar, Liberty, Marion, 

Montgomery, Morris, Nacogdoches, 

Newton, Orange, Panola, Polk, Rains, 

Red River, Rusk, Sabine, San Augustine, 

San Jacinto, Shelby, Smith, Titus, 

Trinity, Tyler, Upshur, Van Zandt, 

Walker, and Wood. 

(iii) The Market Administrator may 

include additional counties from the 

states listed in paragraph (e)(1)(ii) of this 

section upon the request of a pool 

handler and provision of satisfactory 

proof that the county is a source of 

regular supply of milk to order 

distributing plants. 

(iv) Producer milk eligible for a 

payment under this section cannot be 

eligible for payment from the 

transportation credit balancing fund as 

specified in § 1007.82(c)(2). 

(v) The quantity of milk described 

herein shall be reduced by the quantity 

of any bulk unconcentrated fluid milk 

products transferred from a pool 

distributing plant to a nonpool plant or 

transferred to a pool supply plant on the 

same calendar day as producer milk was 

received at such plant for which a 

distributing plant delivery credit is 

requested. 

(2) Bulk unconcentrated fluid milk 

transferred from a pool supply plant 

regulated pursuant to § 1007.7(c) or (d) 

to a pool distributing plant regulated 

pursuant to § 1007.7(a) or (b). The 

quantity of milk described herein shall 

be reduced by the quantity of any bulk 

unconcentrated fluid milk products 

transferred from a pool distributing 

plant to a nonpool plant or transferred 

to a pool supply plant on the same 

calendar day as milk was received by 

transfer from a pool supply plant at 

such pool distributing plant for which a 

distributing plant delivery credit is 

requested. 

(f) Credit computation. Distributing 

plant delivery credits shall be computed 

as follows: 

(1) With respect to milk delivered 

directly from the farm to a distributing 

plant: 

(i) Determine the shortest hard-surface 

highway distance between the shipping 

farm’s county seat and the receiving 

plant, and multiply the miles by an 

adjustment rate of not greater than 

ninety-five percent (95%) and not less 

than seventy-five percent (75%); 

(ii) Subtract the Class I price specified 

in § 1000.50(a) of this chapter for the 

county in which the shipping farm is 

located from the Class I price applicable 

for the county in which the receiving 

pool distributing plant is located; 

(iii) Multiply the adjusted miles so 

computed in (f)(1)(i) of this section by 

the monthly mileage rate factor for the 

month computed pursuant to paragraph 

(h) of this section; 

(iv) Subtract any positive difference in 

Class I prices computed in paragraph 

(f)(1)(ii) of this section from the rate 

determined in paragraph (f)(1)(iii) of 

this section; 

(v) Multiply the remainder computed 

in paragraph (f)(1)(iv) of this section by 

the hundredweight of milk described in 

paragraph (e)(1) of this section; 

(2) With respect to milk delivered 

from a pool supply plant to a 

distributing plant: 

(i) Determine the shortest hard-surface 

highway distance between the 

transferring pool plant and the receiving 

plant, and multiply the miles by an 

adjustment rate of not greater than 

ninety-five (95%) percent and not less 

than seventy-five (75%) percent; 

(ii) Subtract the Class I price specified 

in § 1000.50(a) of this chapter for the 

transferring pool plant from the Class I 

price applicable for the county in which 

the receiving pool distributing plant is 

located; 

(iii) Multiply the adjusted miles so 

computed in paragraph (f)(2)(i) of this 

section by the mileage rate factor for the 

month computed pursuant to paragraph 

(h) of this section; 

(iv) Subtract any positive difference in 

Class I prices computed in paragraph 

(f)(2)(ii) of this section from the rate 

determined in paragraph (f)(2)(iii) of 

this section; 

(v) Multiply the remainder computed 

in paragraph (f)(2)(iv) of this section by 

the hundredweight of milk described in 

paragraph (e)(2) of this section; 

(g) Mileage percentage rate 

adjustment. The monthly percentage 

rate adjustment within the range of 

permissible percentage adjustments 

provided in paragraphs (f)(1)(i) and 

(f)(2)(i) of this section shall be 

determined by the market administrator, 

and publicly announced prior to the 

month for which effective. In 

determining the percentage adjustment 

to the actual mileages of milk delivered 

from farms and milk transferred from 

pool plants the market administrator 

shall evaluate the general supply and 

demand for milk in the marketing area, 

any previous occurrences of sustained 

uneconomic movements of milk, and 

the balances in the distributing plant 

delivery credit fund. The adjustment 

percentage pursuant to paragraphs (f)(1) 

and (2) of this section to the actual miles 

used for computing distributing plant 

delivery credits and announced by the 

market administrator shall always be the 

same percentage. 

(h) Mileage rate for the distributing 

plant delivery credit fund. The mileage 

rate for the distributing plant delivery 

credit fund shall be the mileage rate 

computed by the market administrator 

pursuant to § 1007.83. 

(i) Oversight of milk movements. The 

market administrator shall regularly 

monitor and evaluate the requests for 

distributing plant delivery credits to 

determine that such credits are not 

encouraging uneconomic movements of 

milk, and the credits continue to assure 

orderly marketing and efficient handling 


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of milk in the marketing area. In making 

such determinations the market 

administrator will include in the 

evaluation the general supply and 

demand for milk. If the market 

administrator finds that uneconomic 

movements are occurring, and such 

movements are persistent and pervasive, 

or are not being made in a way that 

assures orderly marketing and efficient 

handling of milk in the marketing area, 

after good cause shown, the market 

administrator may disallow the 

payments of distributing plant delivery 

credit on such milk. Before making such 

a finding, the market administrator shall 

give the handler on such milk sufficient 

notice that an investigation is being 

considered and shall provide notice that 

the handler has the opportunity to 

explain why such movements were 

necessary, or the opportunity to correct 

such movements prior to the 

disallowance of any distributing plant 

delivery credits. Any disallowance of 

distributing plant delivery credit 

pursuant to this provision shall remain 

confidential between the market 

administrator and the handler. 

[FR Doc. 2023–25879 Filed 11–30–23; 8:45 am] 

BILLING CODE 3410–02–P 


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