[Federal Register Volume 60, Number 106 (Friday, June 2, 1995)]
[Rules and Regulations]
[Pages 29436-29453]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-13160]




[[Page 29435]]

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Part III





Department of Agriculture





_______________________________________________________________________



Agricultural Marketing Service



_______________________________________________________________________



7 CFR Parts 1007, 1093, 1094, 1096, and 1108



Milk Marketing Orders: Georgia et al.; Final Rule

Federal Register / Vol. 60, No. 106 / Friday, June 2, 1995 / Rules 
and Regulations
[[Page 29436]] 

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1007, 1093, 1094, 1096, and 1108

[Docket Nos. AO-366-A36, et al.; DA-93-21]


Milk in the Southeast Marketing Area; Order Amending and Merging 
Orders

------------------------------------------------------------------------
  7 CFR part                Marketing area                 Docket No.   
------------------------------------------------------------------------
1007.........  Georgia................................  AO-366-A36      
1093.........  Alabama-West Florida...................  AO-386-A14      
1094.........  New Orleans-Mississippi................  AO-103-A56      
1096.........  Greater Louisiana......................  AO-257-A43      
1108.........  Central Arkansas.......................  AO-243-A46      
------------------------------------------------------------------------

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This final rule combines five Federal milk order marketing 
areas with unregulated counties in Arkansas, Georgia, Mississippi, and 
Tennessee to form the Southeast marketing area. It is based on industry 
proposals to merge the individual marketing areas so as to more 
equitably divide the markets' proceeds in what essentially has become a 
single, large market with significantly overlapping sales and 
procurement areas. More than two-thirds of the affected dairy farmers 
participating in a referendum voted in favor of the merged order.

EFFECTIVE DATE: July 1, 1995.

FOR FURTHER INFORMATION CONTACT: Nicholas Memoli, Marketing Specialist, 
USDA/AMS/Dairy Division, Order Formulation Branch, Room 2971, South 
Building, PO Box 96456, Washington, DC 20090-6456, (202) 690-1932.

SUPPLEMENTARY INFORMATION: This administrative rule is governed by the 
provisions of sections 556 and 557 of Title 5 of the United States Code 
and therefore is excluded from the requirements of Executive Order 
12866.
    The Regulatory Flexibility Act (5 U.S.C. 601-612) requires the 
Agency to examine the impact of a proposed rule on small entities. 
Pursuant to 5 U.S.C. 605(b), the Administrator of the Agricultural 
Marketing Service has certified that this rule will not have a 
significant economic impact on a substantial number of small entities. 
The amendments will promote orderly marketing of milk by producers and 
regulated handlers.
    This final rule was reviewed under Executive Order 12778, Civil 
Justice Reform. This action is not intended to have a retroactive 
effect and will not preempt any state or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.
    The Agricultural Marketing Agreement Act of 1937, as amended (7 
U.S.C. 601-674), provides that administrative proceedings must be 
exhausted before parties may file suit in court. Under section 
608c(15)(A) of the Act, any handler subject to an order may file with 
the Secretary a petition stating that the order, any provision of the 
order, or any obligation imposed in connection with the order is not in 
accordance with the law and requesting a modification of an order or to 
be exempted from the order. A handler is afforded the opportunity for a 
hearing on the petition. After a hearing, the Secretary would rule on 
the petition. The Act provides that the district court of the United 
States in any district in which the handler is an inhabitant, or has 
its principal place of business, has jurisdiction in equity to review 
the Secretary's ruling on the petition, provided a bill in equity is 
filed not later than 20 days after the entry of the ruling.
    Prior documents in this proceeding:
    Notice of Hearing: Issued September 3, 1993; published September 
10, 1993 (58 FR 47653).
    Supplemental Notice of Hearing: Issued October 13, 1993; published 
October 15, 1993 (58 FR 53436).
    Extension of Time for Filing Briefs: Issued January 24, 1994; 
published February 3, 1994 (59 FR 5132).
    Recommended Decision: Issued November 21, 1994; published November 
29, 1994 (59 FR 61070).
    Extension of Time for Filing Exceptions: Issued December 27, 1994; 
published January 3, 1995 (60 FR 65).
    Final Decision: Issued May 3, 1995; published May 10, 1995 (60 FR 
25014).
Findings and Determinations

    The following findings and determinations supplement those that 
were made when the orders were first issued and when they were amended. 
The previous findings and determinations are hereby ratified and 
confirmed, except where they may conflict with those set forth herein.
    (a) Findings. A public hearing was held upon certain proposed 
amendments to the tentative marketing agreements and to the orders 
regulating the handling of milk in the aforesaid marketing areas. The 
hearing was held pursuant to the provisions of the Agricultural 
Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), and the 
applicable rules of practice and procedure (7 CFR part 900).
    Upon the basis of the evidence introduced at such hearing and the 
record thereof, it is found that:
    (1) The Southeast order, which amends and merges the aforesaid 
orders, and all of the terms and conditions thereof, will tend to 
effectuate the declared policy of the Act;
    (2) The parity prices of milk, as determined pursuant to section 2 
of the Act, are not reasonable in view of the price of feeds, available 
supplies of feeds, and other economic conditions which affect market 
supply and demand for milk in the aforesaid marketing areas. The 
minimum prices specified in the order as hereby amended are such prices 
as will reflect the aforesaid factors, insure a sufficient quantity of 
pure and wholesome milk, and be in the public interest; and
    (3) The Southeast order regulates the handling of milk in the same 
manner as, and is applicable only to persons in the respective classes 
of industrial or commercial activity specified in, marketing agreements 
upon which a hearing has been held;
    (4) All milk and milk products handled by handlers, as defined in 
the Southeast order, are in the current of interstate commerce or 
directly burden, obstruct, or affect interstate commerce in milk or its 
products; and
    (5) It is hereby found that the necessary expense of the market 
administrator for the maintenance and functioning of such agency will 
require each handler to pay, as its pro rata share of such expense, 5 
cents per hundredweight or such lesser amount as the Secretary may 
prescribe, with respect to milk specified in Sec. 1007.85.
    (b) Determinations. It is hereby determined that:
    (1) The refusal or failure of handlers (excluding cooperative 
associations specified in section 8c(9) of the Act) of more than 50 
percent of the milk marketed within the Southeast marketing area to 
sign a proposed marketing agreement tends to prevent the effectuation 
of the declared policy of the Act;
    (2) The issuance of this order is the only practical means pursuant 
to the declared policy of the Act of advancing the interests of 
producers as defined in the order; and
    (3) The issuance of this order was approved by at least two-thirds 
of the producers who during the representative period of March 1995 
were engaged in the production of milk for sale in the marketing area. 
[[Page 29437]] 

List of Subjects in 7 CFR Part 1007

    Milk marketing orders.

Order Relative to Handling

    It is therefore ordered that on and after the effective date 
hereof, the handling of milk in the Georgia, Alabama-West Florida, New 
Orleans-Mississippi, Greater Louisiana, and Central Arkansas marketing 
areas (parts 1007, 1093, 1094, 1096, and 1108, respectively) shall be 
amended and merged into one order. Parts 1093, 1094, 1096, and 1108 are 
vacated and reserved for future assignment. The handling of milk in the 
Southeast marketing area shall be in conformity to and in compliance 
with the following terms and conditions:
    1. Part 1007 is revised to read as follows:

PART 1007--MILK IN THE SOUTHEAST MARKETING AREA
Subpart--Order Regulating Handling

General Provisions

Sec.
1007.1  General provisions.

Definitions

1007.2  Southeast marketing area.
1007.3  Route disposition.
1007.4  Plant.
1007.5  Distributing plant.
1007.6  Supply plant.
1007.7  Pool plant.
1007.8  Nonpool plant.
1007.9  Handler.
1007.10  Producer-handler.
1007.11  [Reserved]
1007.12  Producer.
1007.13  Producer milk.
1007.14  Other source milk.
1007.15  Fluid milk product.
1007.16  Fluid cream product.
1007.17  Filled milk.
1007.18  Cooperative association.
1007.19  Commercial food processing establishment.

Handler Reports

1007.30  Reports of receipts and utilization.
1007.31  Payroll reports.
1007.32  Other reports.

Classification of Milk

1007.40  Classes of utilization.
1007.41  Shrinkage.
1007.42  Classification of transfers and diversions.
1007.43  General classification rules.
1007.44  Classification of producer milk.
1007.45  Market administrator's reports and announcements concerning 
classification.

Class Prices

1007.50  Class prices.
1007.51  Basic formula price.
1007.52  Plant location adjustments for handlers.
1007.53  Announcement of class prices.
1007.54  Equivalent price.

Uniform Prices

1007.60  Handler's value of milk for computing the uniform price.
1007.61  Computation of uniform price (including weighted average 
price and uniform prices for base and excess milk).
1007.62  Announcement of uniform prices and butterfat differential.

Payments for Milk

1007.70  Producer-settlement fund.
1007.71  Payments to the producer-settlement fund.
1007.72  Payments from the producer-settlement fund.
1007.73  Payments to producers and to cooperative associations.
1007.74  Butterfat differential.
1007.75  Plant location adjustments for producers and on nonpool 
milk.
1007.76  Payments by a handler operating a partially regulated 
distributing plant.
1007.77  Adjustment of accounts.
1007.78  Charges on overdue accounts.

Administrative Assessment and Marketing Service Deduction

1007.85  Assessment for order administration.
1007.86  Deduction for marketing services.

Base-Excess Plan

1007.90  Base milk.
1007.91  Excess milk.
1007.92  Computation of base for each producer.
1007.93  Base rules.
1007.94  Announcement of established bases.

    Authority: 7 U.S.C. 601-674.

Subpart--Order Regulating Handling

General Provisions


Sec. 1007.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
apply to and are hereby made a part of this order.
Definitions


Sec. 1007.2  Southeast marketing area.

    The Southeast marketing area, hereinafter called the marketing 
area, means all territory within the bounds of the following Alabama, 
Florida, Georgia, Mississippi, Tennessee, and Arkansas counties and 
Louisiana parishes, including all piers, docks, and wharves connected 
therewith and all craft moored thereat, and all territory occupied by 
government (municipal, State, or Federal) reservations, installations, 
institutions, or other similar establishments if any part thereof is 
within any of the listed counties or parishes:

Zone 1

Arkansas Counties

    Baxter, Clay, Fulton, Greene, Izard, Lawrence, Randolph, and 
Sharp.

Tennessee Counties

    Cheatham, Clay, Davidson, Dickson, Fentress, Henry, Houston, 
Jackson, Lake, Macon, Montgomery, Obion, Overton, Pickett, 
Robertson, Smith, Stewart, Sumner, Trousdale, Weakley, and Wilson.

Zone 2

Arkansas Counties

     Newton, Searcy, and Stone.

Tennessee Counties

    Bedford, Benton, Bledsoe, Cannon, Carroll, Chester, Coffee, 
Crockett, DeKalb, Decatur, Dyer, Gibson, Grundy, Henderson, Hickman, 
Humphreys, Lewis, Madison, Marshall, Maury, Perry, Putnam, 
Rutherford, Van Buren, Warren, White, and Williamson.

Zone 3

Arkansas Counties

    Cleburne, Craighead, Independence, Jackson, Johnson, 
Mississippi, Poinsett, Pope, and Van Buren.

Tennessee Counties

    Lauderdale, Tipton, and Haywood.

Zone 4

Arkansas Counties

    Conway, Crittenden, Cross, Faulkner, Garland, Lee, Lonoke, 
Monroe, Montgomery, Perry, Polk, Prairie, Pulaski, Saline, St. 
Francis, White, Woodruff, and Yell.

Tennessee Counties

    Fayette, Franklin, Giles, Hardeman, Hardin, Lawrence, Lincoln, 
McNairy, Moore, Shelby, and Wayne.

Zone 5

Alabama Counties

    Colbert, De Kalb, Franklin, Jackson, Lauderdale, Lawrence, 
Limestone, Madison, Marshall, and Morgan.

Arkansas Counties

    Arkansas, Clark, Grant, Hot Spring, Howard, Jefferson, Phillips, 
Pike, and Sevier.

Georgia Counties

    Gilmer, Towns, and Union.

Mississippi Counties

    Alcorn, Benton, Coahoma, DeSoto, Itawamba, Lafayette, Lee, 
Marshall, Panola, Pontotoc, Prentiss, Quitman, Tate, Tippah, 
Tishomingo, Tunica, and Union.

Zone 6

Alabama Counties

    Blount, Cherokee, Cullman, Etowah, Fayette, Lamar, Marion, 
Walker, and Winston.

Arkansas Counties

    Bradley, Calhoun, Cleveland, Dallas, Desha, Drew, Hempstead, 
Lincoln, Little River, Nevada, and Ouachita.

Georgia Counties

    Bartow, Cherokee, Dawson, Floyd, Gordon, Habersham, Lumpkin, 
Pickens, Rabun, and White. [[Page 29438]] 

Mississippi Counties

    Bolivar, Calhoun, Chickasaw, Grenada, Monroe, Sunflower, 
Tallahatchie, and Yalobusha.

Zone 7

Alabama Counties

    Bibb, Calhoun, Clay, Cleburne, Jefferson, Pickens, Randolph, 
Shelby, St. Clair, Talladega, and Tuscaloosa.

Arkansas Counties

    Ashley, Chicot, Columbia, Lafayette, Miller, and Union.

Georgia Counties

    Banks, Barrow, Butts, Carroll, Clarke, Clayton, Cobb, Coweta, De 
Kalb, Douglas, Elbert, Fayette, Forsyth, Franklin, Fulton, Greene, 
Gwinnett, Hall, Haralson, Hart, Heard, Henry, Jackson, Jasper, 
Lincoln, Madison, Morgan, Newton, Oconee, Oglethorpe, Paulding, 
Polk, Putnam, Rockdale, Spalding, Stephens, Taliaferro, Walton, and 
Wilkes.

Mississippi Counties

    Attala, Carroll, Choctaw, Clay, Holmes, Humphreys, Leflore, 
Lowndes, Montgomery, Noxubee, Oktibbeha, Washington, Webster, and 
Winston.

Zone 8

Alabama Counties

    Chambers, Chilton, Coosa, Greene, Hale, Lee, Perry, Sumter 
(north of U.S. 80), and Tallapoosa.

Georgia Counties

    Baldwin, Bibb, Burke, Columbia, Crawford, Glascock, Hancock, 
Harris, Jefferson, Jones, Lamar, McDuffie, Meriwether, Monroe, 
Muscogee, Pike, Richmond, Talbot, Taylor, Troup, Twiggs, Upson, 
Warren, Washington, and Wilkinson.

Louisiana Parishes

    Bienville, Bossier, Caddo, Claiborne, East Carroll, Jackson, 
Lincoln, Morehouse, Ouachita, Richland, Union, Webster, and West 
Carroll.

Mississippi Counties

    Issaquena, Kemper, Leake, Madison, Neshoba, Sharkey, and Yazoo.

Zone 9

Alabama Counties

    Autauga, Bullock, Dallas, Elmore, Lowndes, Macon, Marengo, 
Montgomery, Russell, Sumter (south of U.S. 80), and Wilcox.

Georgia Counties

    Bleckley, Bulloch, Candler, Chattahoochee, Crisp, Dodge, Dooly, 
Effingham, Emanuel, Evans, Houston, Jenkins, Johnson, Laurens, 
Macon, Marion, Montgomery, Peach, Pulaski, Schley, Screven, Stewart, 
Sumter, Tattnall, Telfair, Toombs, Treutlen, Webster, Wheeler, and 
Wilcox.

Louisiana Parishes

    Caldwell, De Soto, Franklin, Madison, Natchitoches (north of 
State Highway 6 and U.S. 84), Red River, Tensas, and Winn.

Mississippi Counties

    Claiborne, Clarke, Copiah, Hinds, Jasper, Lauderdale, Newton, 
Rankin, Scott, Simpson, Smith, and Warren.

Zone 10

Alabama Counties

    Barbour, Butler, Choctaw, Clarke, Coffee, Conecuh, Covington, 
Crenshaw, Dale, Escambia, Geneva, Henry, Houston, Monroe, Pike, and 
Washington.

Georgia Counties

    Appling, Atkinson, Bacon, Baker, Ben Hill, Berrien, Brantley, 
Brooks, Bryan, Calhoun, Camden, Charlton, Chatham, Clay, Clinch, 
Coffee, Colquitt, Cook, Decatur, Dougherty, Early, Echols, Glynn, 
Grady, Irwin, Jeff Davis, Lanier, Lee, Liberty, Long, Lowndes, 
McIntosh, Miller, Mitchell, Pierce, Quitman, Randolph, Seminole, 
Terrell, Thomas, Tift, Turner, Ware, Wayne, and Worth.

Louisiana Parishes

    Avoyelles, Catahoula, Concordia, Grant, La Salle, Natchitoches 
(south of State Highway 6 and U.S. 84), Rapides, Sabine, and Vernon.

Mississippi Counties

    Adams, Amite, Covington, Forrest, Franklin, Greene, Jefferson, 
Jefferson Davis, Jones, Lamar, Lawrence, Lincoln, Marion, Perry, 
Pike, Walthall, Wayne, and Wilkinson.

Zone 11

Alabama Counties

    Baldwin and Mobile (more than 20 miles from the Mobile city 
hall).

Florida Counties

    Escambia, Okaloosa, Santa Rosa, and Walton.

Louisiana Parishes

    Allen, Beauregard, East Feliciana, Evangeline, Pointe Coupee, 
St. Helena, St. Landry, St. Tammany, Tangipahoa, Washington, and 
West Feliciana.

Mississippi Counties
    George, Hancock, Harrison, Jackson, Pearl River, and Stone.

Zone 12

Alabama Counties

    Mobile (within 20 miles of the Mobile city hall).

Louisiana Parishes

    Acadia, Ascension, Assumption, Calcasieu, Cameron, East Baton 
Rouge, Iberia, Iberville, Jefferson, Jefferson Davis, Lafayette, 
Lafourche, Livingston, Orleans, Plaquemines, St. Bernard, St. 
Charles, St. James, St. John the Baptist, St. Martin, St. Mary, 
Terrebonne, Vermilion, and West Baton Rouge.


Sec. 1007.3  Route disposition.

    Route disposition means a delivery to a retail or wholesale outlet 
(except a plant), either directly or through any distribution facility 
(including disposition from a plant store, vendor or vending machine) 
of a fluid milk product classified as Class I milk. Packaged fluid milk 
products that are transferred to a distributing plant from a plant with 
route disposition in the marketing area and which are classified as 
Class I under Sec. 1007.40(a) shall be considered as route disposition 
from the transferor plant, rather than the transferee plant, for the 
single purpose of qualifying it as a pool plant under Sec. 1007.7(a).


Sec. 1007.4  Plant.

    Plant means the land, buildings, facilities, and equipment 
constituting a single operating unit or establishment at which milk or 
milk products, including filled milk, are received, processed, or 
packaged. Separate facilities without stationary storage tanks that are 
used only as a reload point for transferring bulk milk from one tank 
truck to another or separate facilities used only as a distribution 
point for storing packaged fluid milk products in transit for route 
disposition shall not be a plant under this definition.


Sec. 1007.5  Distributing plant.

    Distributing plant means a plant that is approved by a duly 
constituted regulatory agency for the handling of Grade A milk and at 
which fluid milk products are processed or packaged and from which 
there is route disposition in the marketing area during the month.


Sec. 1007.6  Supply plant.

    Supply plant means a plant that is approved by a duly constituted 
regulatory agency for the handling of Grade A milk and from which fluid 
milk products are transferred during the month to a pool distributing 
plant.


Sec. 1007.7   Pool plant.

    Pool plant means a plant specified in paragraphs (a), (b), (c) or 
(d) of this section, or a unit of plants as specified in paragraph (e) 
of this section, but excluding a plant specified in paragraph (g) of 
this section. The pooling standards described in paragraphs (a) through 
(c) of this section are subject to modification pursuant to paragraph 
(f) of this section:
    (a) A distributing plant from which during the month:
    (1) Total route disposition, except filled milk, is equal to 50 
percent or more of the total quantity of Grade A fluid milk products, 
except filled milk, physically received at such plant or diverted 
therefrom pursuant to Sec. 1007.13; and [[Page 29439]] 
    (2) Route disposition, except filled milk, in the marketing area is 
at least the lesser of a daily average of 1,500 pounds or 10 percent of 
the total quantity of fluid milk products, except filled milk, 
physically received or diverted therefrom pursuant to Sec. 1007.13.
    (b) A supply plant from which during each of the months of July 
through November 60 percent (40 percent during each of the months of 
December through June) of the total quantity of Grade A milk that is 
received during the month from dairy farmers (including producer milk 
diverted from the plant pursuant to Sec. 1007.13 but excluding milk 
diverted to such plant) and handlers described in Sec. 1007.9(c) is 
transferred to pool distributing plants.
    (c) A plant located within the Southeast marketing area that is 
operated by a cooperative association if pool plant status under this 
paragraph is requested for such plant by the cooperative association 
and during the month producer milk of members of such cooperative 
association is delivered directly from farms to pool distributing 
plants or is transferred to such plants as a fluid milk product from 
the cooperative's plant. Such deliveries, in excess of receipts by 
transfer from pool distributing plants, must equal not less than 60 
percent of the total producer milk of such cooperative association in 
each of the months of July through November, and 40 percent of such 
milk in each of the months of December through June. The plant's pool 
plant status shall be subject to the following conditions:
    (1) The plant does not qualify as a pool plant under paragraphs (a) 
or (b) of this section or under the provisions of another Federal order 
applicable to a distributing plant or a supply plant; and
    (2) The plant is approved by a duly constituted regulatory agency 
to handle Grade A milk.
    (d) A plant located within the marketing area (other than a 
producer-handler plant or a governmental agency plant) that meets the 
qualifications described in paragraph (a) of this section regardless of 
its quantity of route disposition in any other Federal order marketing 
area.
    (e) Two or more plants operated by the same handler and that are 
located within the Southeast marketing area may qualify for pool status 
as a unit by meeting the total and in-area route disposition 
requirements specified in paragraph (a) of this section and the 
following additional requirements:
    (1) At least one of the plants in the unit must qualify as a pool 
plant pursuant to paragraph (a) of this section;
    (2) Other plants in the unit must process only Class I or Class II 
products and must be located in a pricing zone providing the same or a 
lower Class I price than the price applicable at the distributing plant 
included in the unit pursuant to paragraph (e)(1) of this section; and
    (3) A written request to form a unit, or to add or remove plants 
from a unit, must be filed with the market administrator prior to the 
first day of the month for which it is to be effective.
    (f) The applicable percentages in paragraphs (a) through (c) of 
this section may be increased or decreased up to 10 percentage points 
by the market administrator if, following a written request for such a 
revision, the market administrator finds that such revision is 
necessary to assure orderly marketing and efficient handling of milk in 
the marketing area. Before making such a finding, the market 
administrator shall investigate the need for the revision by conducting 
an investigation and conferring with the Director of the Dairy 
Division. If the investigation shows that a revision might be 
appropriate, the market administrator shall issue a notice stating that 
the revision is being considered and inviting written data, views, and 
arguments. Any decision to revise an applicable percentage must be 
issued in writing seven days before the effective date.
    (g) The term pool plant shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) An exempt plant as defined in Sec. 1007.8(e);
    (3) A plant qualified pursuant to paragraph (a) of this section 
which is not located within the Southeast marketing area, meets the 
pooling requirements of another Federal order, and has had greater 
sales in such other Federal order marketing area for three consecutive 
months, including the current month;
    (4) A plant qualified pursuant to paragraph (a) of this section 
which is located in another order's marketing area and which is 
required to be regulated under such other order because of its location 
within the other order's marketing area; and
    (5) A plant qualified pursuant to paragraph (b) of this section 
which also meets the pooling requirements of another Federal order and 
from which greater qualifying shipments are made to plants regulated 
under such other order than are made to plants regulated under this 
part, or such plant has automatic pooling status under such other 
order.


Sec. 1007.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant 
to the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is not an other order plant, a producer-handler plant, or an 
exempt plant, from which there is route disposition in consumer-type 
packages or dispenser units in the marketing area during the month.
    (d) Unregulated supply plant means a supply plant that does not 
qualify as a pool supply plant and is not an other order plant, a 
producer-handler plant, or an exempt plant.
    (e) Exempt plant means a plant:
    (1) Operated by a governmental agency from which fluid milk 
products are distributed in the marketing area. Such plant shall be 
exempt from all provisions of this part; or
    (2) Which has monthly route disposition of 100,000 pounds or less 
during the month. Such plant will be exempt from the pricing and 
pooling provisions of this order, but the handler will be required to 
file periodic reports as prescribed by the market administrator to 
enable determination of the exempt status of such handler.
Sec. 1007.9  Handler.

    Handler means:
    (a) Any person who operates one or more pool plants;
    (b) Any cooperative with respect to producer milk which it causes 
to be diverted pursuant to Sec. 1007.13 for the account of such 
cooperative association;
    (c) Any cooperative association with respect to milk that it 
receives for its account from the farm of a producer for delivery to a 
pool plant of another handler in a tank truck owned and operated by, or 
under the control of, such cooperative association, unless both the 
cooperative association and the operator of the pool plant notify the 
market administrator prior to the time that such milk is delivered to 
the pool plant that the plant operator will be the handler of such milk 
and will purchase such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples. Milk for which the cooperative association is the handler 
pursuant to this paragraph shall [[Page 29440]] be deemed to have been 
received by the cooperative association at the location of the pool 
plant to which such milk is delivered;
    (d) Any person who operates a partially regulated distributing 
plant;
    (e) A producer-handler;
    (f) Any person who operates an other order plant described in 
Sec. 1007.8(a);
    (g) Any person who operates an unregulated supply plant; and
    (h) Any person who operates an exempt plant.


Sec. 1007.10  Producer-handler.

    Producer-handler means a person who:
    (a) Operates a dairy farm and a distributing plant from which there 
is monthly route disposition in excess of 100,000 pounds per month;
    (b) Receives no Class I milk from sources other than his/her own 
farm production and pool plants;
    (c) Disposes of no other source milk as Class I milk; and
    (d) Provides proof satisfactory to the market administrator that 
the care and management of the dairy animals and other resources 
necessary to produce all Class I milk handled (excluding receipts from 
pool plants) and the operation of the processing and packaging business 
are his/her personal enterprise and personal risk.


Sec. 1007.11  [Reserved]


Sec. 1007.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk approved by a duly constituted 
regulatory agency for fluid consumption as Grade A milk and whose milk 
is:
    (1) Received at a pool plant directly from such producer;
    (2) Received by a handler described in Sec. 1007.9(c); or
    (3) Diverted from a pool plant in accordance with Sec. 1007.13.
    (b) Producer shall not include:
    (1) A producer-handler as defined in any order (including this 
part) issued pursuant to the Act;
    (2) Any person with respect to milk produced by such person whose 
milk is delivered to an exempt plant, excluding producer milk diverted 
to such exempt plant pursuant to Sec. 1007.13;
    (3) Any person with respect to milk produced by such person which 
is diverted to a pool plant from an other order plant if the other 
order plant designates such person as a producer under that order and 
such milk is allocated to Class II or Class III utilization pursuant to 
Sec. 1007.44(a)(8)(iii) and the corresponding step of Sec. 1007.44(b); 
or
    (4) Any person with respect to milk produced by such person which 
is reported as diverted to an other order plant if any portion of such 
person's milk so moved is assigned to Class I under the provisions of 
such other order.


Sec. 1007.13  Producer milk.

    Producer milk means the skim milk and butterfat contained in milk 
of a producer that is:
    (a) Received at a pool plant directly from such producer by the 
operator of the plant;
    (b) Received by a handler described in Sec. 1007.9(c);
    (c) Diverted from a pool plant to the pool plant of another 
handler. Milk so diverted shall be deemed to have been received at the 
location of the plant to which diverted; or
    (d) Diverted by the operator of a pool plant or cooperative 
association to a nonpool plant that is not a producer-handler plant, 
subject to the following conditions:
    (1) In any month of December through June, not less than four days' 
production of the producer whose milk is diverted is physically 
received at a pool plant during the month;
    (2) In any month of July through November, not less than ten days' 
production of the producer whose milk is diverted is physically 
received at a pool plant during the month;
    (3) The total quantity of milk so diverted during the month by a 
cooperative association shall not exceed 33 percent during the months 
of July through November, or 50 percent during the months of December 
through June, of the producer milk that the cooperative association 
caused to be delivered to, and physically received at, pool plants 
during the month;
    (4) The operator of a pool plant that is not a cooperative 
association may divert any milk that is not under the control of a 
cooperative association that diverts milk during the month pursuant to 
paragraph (d) of this section. The total quantity of milk so diverted 
during the month shall not exceed 33 percent during the months of July 
through November, or 50 percent during the months of December through 
June, of the producer milk physically received at such plant (or such 
unit of plants in the case of plants that pool as a unit pursuant to 
Sec. 1007.7(d)) during the month;
    (5) Any milk diverted in excess of the limits prescribed in 
paragraphs (d)(3) and (4) of this section shall not be producer milk. 
The diverting handler shall designate the dairy farmer deliveries that 
will not be producer milk pursuant to paragraphs (d)(3) and (4) of this 
section. If the handler fails to make such designation, no milk 
diverted by such handler shall be producer milk;
    (6) To the extent that it would result in nonpool status for the 
plant from which diverted, milk diverted for the account of a 
cooperative association from the pool plant of another handler shall 
not be producer milk;
    (7) The cooperative association shall designate the dairy farm 
deliveries that are not producer milk pursuant to paragraph (d)(6) of 
this section. If the cooperative association fails to make such 
designation, no milk diverted by it to a nonpool plant shall be 
producer milk;
    (8) Diverted milk shall be priced at the location of the plant to 
which diverted; and
    (9) The market administrator may increase or decrease the 
applicable percentages in paragraphs (d) (3) and (4) of this section by 
up to 10 percentage points, and may increase or decrease the 10-day and 
4-day delivery requirements in paragraphs (d) (1) and (2) of this 
section by 50 percent if, following a written request for such a 
revision, the market administrator finds that such revision is 
necessary to assure orderly marketing and efficient handling of milk in 
the marketing area. Before making such a finding, the market 
administrator shall investigate the need for the revision by conducting 
an investigation and conferring with the Director of the Dairy 
Division. If the investigation shows that a revision might be 
appropriate, the market administrator shall issue a notice stating that 
the revision is being considered and inviting written data, views, and 
arguments. Any decision to revise an applicable percentage must be 
issued in writing seven days before the effective date.


Sec. 1007.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1007.40(b)(1) from any source other than producers, a handler 
described in Sec. 1007.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1007.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1007.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and 
[[Page 29441]] 
    (d) Receipts of any milk product (other than a fluid milk product 
or a product specified in Sec. 1007.40(b)(1)) for which the handler 
fails to establish a disposition.


Sec. 1007.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section, fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are 
not limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, 
and filled milk, including any such beverage products that are 
flavored, cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated skim milk, sweetened condensed milk or skim milk, formulas 
especially prepared for infant feeding or dietary use that are packaged 
in hermetically sealed containers, any product that contains by weight 
less than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.


Sec. 1007.16  Fluid cream product.

    Fluid cream product means cream (other than plastic cream or frozen 
cream), including sterilized cream, or a mixture of cream and milk or 
skim milk containing 9 percent or more butterfat, with or without the 
addition of other ingredients.


Sec. 1007.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat, so that the 
product (including stabilizers, emulsifiers, or flavoring) resembles 
milk or any other fluid milk product, and contains less than 6 percent 
nonmilk fat (or oil).


Sec. 1007.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines after application by the 
association:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act;'' 
and
    (b) To have full authority in the sale of milk of its members and 
be engaged in making collective sales of, or marketing, milk or milk 
products for its members.
Sec. 1007.19  Commercial food processing establishment.

    Commercial food processing establishment means any facility, other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is 
diverted, that uses such receipts as ingredients in food products, and 
has no disposition of fluid milk products or fluid cream products other 
than those that it received in consumer type packages. Producer milk 
diverted to commercial food processing establishments shall be subject 
to the same provisions relating to diversions to plants, including, but 
not limited to, provisions in Secs. 1007.13, 1007.41, and 1007.52.

Handler Reports


Sec. 1007.30  Reports of receipts and utilization.

    On or before the 5th day after the end of the month (if 
postmarked), or not later than the 7th day if the report is delivered 
in person to the office of the market administrator, each handler shall 
report for such month to the market administrator, in the detail and on 
forms prescribed by the market administrator, as follows:
    (a) Each handler, with respect to each of its pool plants, shall 
report the quantities of skim milk and butterfat contained in or 
represented by:
    (1) Receipts of producer milk, including producer milk diverted by 
the handler from the pool plant to other plants;
    (2) Receipts of milk from handlers described in Sec. 1007.9(c);
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk;
    (5) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1007.40(b)(1); and
    (6) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as 
prescribed for reports required by paragraph (a) of this section. 
Receipts of milk that would have been producer milk if the plant had 
been fully regulated shall be reported in lieu of producer milk. Such 
report shall show also the quantity of any reconstituted skim milk in 
route disposition in the marketing area.
    (c) Each handler described in Sec. 1007.9(b) and (c) shall report:
    (1) The quantities of skim milk and butterfat contained in receipts 
from producers; and
    (2) The utilization or disposition of all such receipts.
    (d) Each handler not specified in paragraphs (a) through (c) of 
this section shall report with respect to its receipts and utilization 
of milk, filled milk, and milk products in such manner as the market 
administrator may prescribe.


Sec. 1007.31  Payroll reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec. 1007.9(a), (b), and (c) shall report to the 
market administrator its producer payroll for such month, in detail 
prescribed by the market administrator, showing for each producer:
    (1) Such producer's name and address;
    (2) The total pounds of milk received from such producer, showing 
separately the pounds of milk received from the producer on each 
delivery day;
    (3) The average butterfat content of such milk; and
    (4) The price per hundredweight, the gross amount due, the amount 
and nature of any deduction, and the net amount paid.
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec. 1007.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in the same manner as prescribed for reports required 
by paragraph (a) of this section.


Sec. 1007.32  Other reports.

    (a) Each handler described in Sec. 1007.9(a), (b), and (c) shall 
report to the market administrator on or before the 7th day after the 
end of each month of February through May the aggregate quantity of 
base milk received from producers during the month, and on or before 
the 20th day after the end of each month of February through May the 
pounds of base milk received from each producer during the month. In 
the case of milk diverted to another plant, the handler shall also 
report the pounds of base milk of each producer assigned to the 
divertee plant.
    (b) In addition to the reports required pursuant to paragraph (a) 
of this section and Secs. 1007.30 and 1007.31, each 
[[Page 29442]] handler shall report such information as the market 
administrator deems necessary to verify or establish each handler's 
obligation under the order.

Classification of Milk


Sec. 1007.40  Classes of utilization.

    Except as provided in Sec. 1007.42, all skim milk and butterfat 
required to be reported pursuant to Sec. 1007.30 shall be classified as 
follows:
    (a) Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk shall be all skim milk and butterfat:
    (1) Disposed in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more 
nonmilk fat (or oil) that resembles a fluid cream product, except as 
otherwise provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processing establishment 
if the market administrator is permitted to audit the records of the 
commercial food processing establishment for the purpose of 
verification. Otherwise, such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream, sour half-and-half, 
sour cream mixtures containing nonmilk items, yogurt, and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which 
are processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk shall be all skim milk and butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheese of 
types that may be shredded, grated, or crumbled, and are not included 
in paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat, and butteroil;
    (iii) Any milk product in dry form except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) 
of this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, 
that are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping 
is not possible, or if the market administrator so requires, the 
handler must notify the market administrator on the next business day 
following such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1007.15 and the 
fluid cream product definition pursuant to Sec. 1007.16; and
    (7) In shrinkage assigned pursuant to Sec. 1007.41(a) to the 
receipts specified in Sec. 1007.41(a)(2) and in shrinkage specified in 
Sec. 1007.41 (b) and (c).
    (d) Class III-A milk shall be all skim milk and butterfat used to 
produce nonfat dry milk.


Sec. 1007.41  Shrinkage.

    For the purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1007.30, the market 
administrator shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and 
butterfat, respectively, at each pool plant to the respective 
quantities of skim milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b) (1) 
through (6) of this section which was received in the form of a bulk 
fluid milk product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, 
assigned pursuant to paragraph (a) of this section to the receipts 
specified in paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant);
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1007.9(c), except 
that if the operator of the plant to which the milk is delivered 
purchased such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples, the applicable percentage shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchased such milk on the basis of weights 
determined from its measurement at the farm and butterfat tests 
determined from farm bulk tank samples, the applicable percentage shall 
be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid [[Page 29443]] milk products received by transfer from 
other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the handler; and
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from unregulated 
supply plants, excluding the quantity for which Class II or Class III 
classification is requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amount of skim milk and butterfat to which 
percentages are applied in paragraphs (b) (1), (2), (4), (5), and (6) 
of this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1007.9 (b) or (c), but not in excess of 
0.5 percent of the skim milk and butterfat, respectively, in such milk. 
If the operator of the plant to which the milk is delivered purchases 
such milk on the basis of weights determined from its measurement at 
the farm and butterfat tests determined from farm bulk tank samples, 
the applicable percentage under this paragraph for the cooperative 
association shall be zero.


Sec. 1007.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or 
transferred in the form of a bulk fluid cream product from a pool plant 
to another pool plant shall be classified as Class I milk unless the 
operators of both plants request the same classification in another 
class. In either case, the classification shall be subject to the 
following conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant after the computations 
pursuant to Sec. 1007.44(a)(12) and the corresponding step of 
Sec. 1007.44(b). The amount of skim milk or butterfat classified in 
each class shall include the assigned utilization of skim milk or 
butterfat in transfers of concentrated fluid milk products.
    (2) If the transferor-plant received during the month other source 
milk to be allocated pursuant to Sec. 1007.44(a)(7) or the 
corresponding step of Sec. 1007.44(b), the skim milk or butterfat so 
transferred shall be classified so as to allocate the least possible 
Class I utilization to such other source milk; and
    (3) If the transferor-plant received during the month other source 
milk to be allocated pursuant to Sec. 1007.44(a) (11) or (12) or the 
corresponding steps of Sec. 1007.44(b), the skim milk or butterfat so 
transferred, up to the total of the skim milk and butterfat, 
respectively, in such receipts of other source milk, shall not be 
classified as Class I milk to a greater extent than would be the case 
if the other source milk had been received at the transferee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product 
or transferred in the form of a bulk fluid cream product from a pool 
plant to an other order plant shall be classified in the following 
manner. Such classification shall apply only to the skim milk or 
butterfat that is in excess of any receipts at the pool plant from the 
other plant of skim milk and butterfat, respectively, in fluid milk 
products and bulk fluid cream products, respectively, that are in the 
same category as described in paragraph (b) (1), (2), or (3) of this 
section.
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product 
under the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be 
classified as Class II or Class III milk to the extent of such 
utilization available for such classification pursuant to the 
allocation provisions of the other order;
    (4) If information concerning the classes to which such transfers 
or diversions were allocated under the other order is not available to 
the market administrator for the purpose of establishing classification 
under this paragraph, classification shall be Class I subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to the class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification shall be in accordance with the 
provisions of Sec. 1007.40.
    (c) Transfers and diversions to producer-handlers and to exempt 
plants. Skim milk or butterfat that is transferred or diverted from a 
pool plant to a producer-handler under another Federal order or to an 
exempt plant shall be classified:
    (1) As Class I milk if transferred or diverted to a producer-
handler;
    (2) As Class I milk if transferred to an exempt plant in the form 
of a packaged fluid milk product;
    (3) In accordance with the utilization assigned to it by the market 
administrator if transferred or diverted in the form of a bulk fluid 
milk product or a bulk fluid cream product to an exempt plant. For this 
purpose, the transferee's utilization of skim milk and butterfat in 
each class, in series beginning with Class III, shall be assigned to 
the extent possible to its receipts of skim milk and butterfat, 
respectively, in bulk fluid cream products, pro rata to each source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant, a producer-
handler plant, or an exempt plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or transferred in the form of a bulk fluid 
cream product, unless the following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (A) and (B) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (A) The transferor-handler or divertor-handler claims such 
classification in such handler's report of receipts and utilization 
filed pursuant Sec. 1007.30 for the month within which such transaction 
occurred; and
    (B) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification [[Page 29444]] purposes if 
requested by the market administrator;
    (ii) Route disposition in the marketing area of each Federal order 
from the nonpool plant and transfers of packaged fluid milk products 
from such nonpool plant to plants fully regulated thereunder shall be 
assigned to the extent possible in the following sequence:
    (A) Pro rata to receipts of packaged fluid milk products at such 
nonpool plants from pool plants;
    (B) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plants from other order plants;
    (C) Pro rata to receipts of bulk fluid milk products at such 
nonpool plant from pool plants; and
    (D) Pro rata to any remaining unassigned receipts of bulk fluid 
milk products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent 
possible pro rata to any remaining unassigned receipts of packaged 
fluid milk products at such nonpool plant from pool plants and other 
order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant 
to a plant regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the 
transferee-plant, shall be classified to the extent possible in the 
following sequence:
    (A) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (B) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (A) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (B) To such nonpool plant's receipts of Grade A milk from plants 
not fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then 
to Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream 
products transferred from such nonpool plant to a plant not fully 
regulated under any Federal milk order shall be classified on the basis 
of the second plant's utilization using the same assignment priorities 
at the second plant that are set forth in this paragraph.
    (e) Transfers by a handler described in Sec. 1007.9(c) to pool 
plants. Skim milk and butterfat transferred in the form of bulk milk by 
a handler described in Sec. 1007.9(c) to another handler's pool plant 
shall be classified pursuant to Sec. 1007.44 pro rata with producer 
milk received at the transferee-handler's plant.


Sec. 1007.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1007.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1007.30 and shall compute separately for each pool plant, and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1007.9 (b) or (c) that was not received at a 
pool plant, the pounds of skim milk and butterfat, respectively, in 
each class in accordance with Secs. 1007.40, 1007.41, and 1007.42. The 
combined pounds of skim milk and butterfat so determined in each class 
for a handler described in Sec. 1007.9 (b) or (c) shall be such 
handler's classification of producer milk;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by the 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids;
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1007.9 (b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association;
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on 
a pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignment 
under Sec. 1007.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1007.44 on a 
pro rata basis, unless a specific use of such receipts is established 
by the handler; and
    (e) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III use at the plant.
Sec. 1007.44  Classification of producer milk.

    For each month the market administrator shall determine for each 
handler described in Sec. 1007.9(a) for each pool plant of the handler 
separately the classification of producer milk and milk received from a 
handler described in Sec. 1007.9(c), by allocating the handler's 
receipts of skim milk and butterfat to the utilization of such receipts 
by such handler as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1007.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
disposed of to such plant by handlers fully regulated under any Federal 
milk order is classified and priced as Class I milk and is not used as 
an offset for any other payment obligation under any order;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was 
subject to the provisions of this paragraph or comparable provisions of 
another Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products [[Page 29445]] received 
in packaged form from an other order plant, except that to be 
subtracted pursuant to paragraph (a)(7)(vi) of this section, as 
follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1007.40(b)(1) that were 
received in packaged form from other plants, but not in excess of the 
pounds of skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1007.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the 
pounds of skim milk remaining in Class II. This paragraph shall apply 
only if the pool plant was subject to the provisions of this paragraph 
or comparable provisions of another Federal milk order in the 
immediately preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is 
used to produce, or added to, any product specified in Sec. 1007.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1007.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II;
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1007.40(b)(1) that were not subtracted pursuant to paragraphs 
(a)(4), (a)(5), and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under any Federal milk order and from an exempt distributing 
plant;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is fully regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-
plant;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products 
from an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii) (A) through (C) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased a like 
amount. In such case, the pounds of skim milk remaining in each class 
at this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount;
    (A) Multiply by 1.25 the sum of the pounds of skim milk remaining 
in Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
milk from a handler described in Sec. 1007.9(c), fluid milk products 
from pool plants of other handlers, and bulk fluid milk products from 
other order plants that were not subtracted pursuant to paragraph 
(a)(7)(vi) of this section; and
    (C) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; 
and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid 
milk products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class 
II or Class III classification is requested by the operator of the 
other order plant and the handler, but not in excess of the pounds of 
skim milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1007.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5), and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11) (i) and (ii) 
of this section, subtract from the pounds of skim milk remaining in 
each class at the plant, pro rata to the total pounds of skim milk 
remaining in Class I and in Class II and Class III combined at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler), with the quantity prorated to 
Class II and Class III combined being subtracted first from Class III 
and then from Class II, the pounds of skim milk in receipts of fluid 
milk products from an unregulated supply plant that were not subtracted 
pursuant to paragraphs (a)(2)(i), (a)(7)(v), (a)(8)(i), and (a)(8)(ii) 
of this section and that were not offset by transfers or diversions of 
fluid milk products to the same unregulated supply plant from which 
fluid milk products to be allocated at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to paragraph (a)(11) of this section 
exceed the pounds of skim milk remaining in such classes, the pounds of 
skim milk in Class II and Class III combined shall be increased 
[[Page 29446]] (increasing as necessary Class III and then Class II to 
the extent of available utilization in such classes at the nearest 
other pool plant of the handler, and then at each successively more 
distant pool plant of the handler) by an amount equal to such excess 
quantity to be subtracted, and the pounds of skim milk in Class I shall 
be decreased a like amount. In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like 
amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to paragraph (a)(11) of this section exceed the pounds of skim 
milk remaining in such class, the pounds of skim milk in Class I shall 
be increased by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class II and Class III 
combined shall be decreased by a like amount (decreasing as necessary 
Class III then Class II). In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like 
amount, beginning with the nearest plant at which Class I utilization 
is available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of 
bulk fluid milk products from an other order plant that are in excess 
of bulk fluid milk products transferred or diverted to such plant that 
were not subtracted pursuant to paragraphs (a)(7)(vi) and (8)(iii) of 
this section:
    (i) Subject to the provisions of paragraphs (a)(12) (ii), (iii) and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with 
the quantity prorated to Class II and Class III combined being 
subtracted first from Class III and then from Class II, with respect to 
whichever of the following quantities represents the lower proportion 
of Class I milk:
    (A) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1007.45(a); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from 
Class II and Class III combined exceeding the pounds of skim milk 
remaining in Class II and Class III at all such plants, the pounds of 
such excess shall be subtracted from the pounds remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and 
Class III combined shall be increased (increasing as necessary Class 
III and then Class II to the extent of available utilization in such 
classes at the nearest other pool plant of the handler, and then at 
each successively more distant pool plant of the handler) by an amount 
equal to such excess quantity to be subtracted, and the pounds of skim 
milk in Class I shall be decreased by a like amount. In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount; and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class I that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in Class I shall be increased by an amount 
equal to such excess quantity to be subtracted, and the pounds of skim 
milk in Class II and Class III combined shall be decreased by a like 
amount (decreasing as necessary Class III and then Class II). In such 
case the pounds of skim milk remaining in each class at this allocation 
step at the handler's other pool plants shall be adjusted in the 
reverse direction by a like amount beginning with the nearest plant at 
which Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1007.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk and milk received from 
a handler described in Sec. 1007.9(c), subtract such excess from the 
pounds of skim milk remaining in each class in series beginning with 
Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk and milk received from a handler 
described in Sec. 1007.9(c) in each class shall be the combined pounds 
of skim milk and butterfat remaining in each class after the 
computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.


Sec. 1007.45  Market administrator's reports and announcements 
concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1007.44(a)(12) and the 
corresponding step of Sec. 1007.44(b), estimate and publicly announce 
the utilization (to the nearest whole percentage) in each class during 
the month of skim milk and butterfat, respectively, in producer milk of 
all handlers. Such estimate shall be based upon the most current 
available data and shall be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Secs. 1007.43(d) and 1007.44 on the 
basis of such report (including any reclassification of inventories of 
bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the 
verification of such report.
    (c) Furnish each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order 
plant the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) On or before the 12th day after the end of each month, report 
to each cooperative association which so requests, the percentage of 
producer milk delivered by members of such association that was used in 
each class by each handler receiving such milk. For the purpose of this 
report the milk [[Page 29447]] so received shall be prorated to each 
class in accordance with the total utilization of producer milk by such 
handler.

Class Prices


Sec. 1007.50  Class prices.

    Subject to the provisions of Sec. 1007.52, the class prices for the 
month per hundredweight of milk containing 3.5% butterfat shall be as 
follows:
    (a) The Class I price shall be the basic formula price for the 
second preceding month plus $3.08.
    (b) The Class II price shall be the basic formula price for the 
second preceding month plus $.30.
    (c) The Class III price shall be the basic formula price for the 
month.
    (d) The Class III-A price for the month shall be the average 
Central States nonfat dry milk price for the month, as reported by the 
Department, less 12.5 cents, times an amount computed by subtracting 
from 9 an amount calculated by dividing 0.4 by such nonfat dry milk 
price, plus the butterfat differential value per hundredweight of 3.5 
percent milk and rounded to the nearest cent, and subject to the 
adjustments set forth in paragraph (c) of this section for the 
applicable month.


Sec. 1007.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1007.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula 
computed pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be 
computed, using price data determined pursuant to paragraph (b) of this 
section and annual yield factors, for the preceding month and 
separately for the current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese 
shall be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to 
paragraph (a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per 
hundredweight of milk used to manufacture butter-nonfat dry milk and 
the gross value per hundredweight of milk used to manufacture Cheddar 
cheese for the current month exceed or are less than the respective 
gross values for the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.


Sec. 1007.52  Plant location adjustments for handlers.

    (a) For milk received at a plant from producers or a handler 
described in Sec. 1007.9(c) and which is classified as Class I milk 
without movement in bulk form to a pool distributing plant at which a 
higher Class I price applies, the price specified in Sec. 1007.50(a) 
shall be adjusted by the amount stated in paragraphs (a) (1) through 
(6) of this section for the location of such plant:
    (1) For a plant located within one of the zones set forth in 
Sec. 1007.2, the adjustment (cents per hundredweight) shall be as 
follows:

Zone 1............................................  Minus 53.           
Zone 2............................................  Minus 48.           
Zone 3............................................  Minus 38.           
Zone 4............................................  Minus 31.           
Zone 5............................................  Minus 25.           
Zone 6............................................  Minus 10.           
Zone 7............................................  No adjustment.      
Zone 8............................................  Plus 10.            
Zone 9............................................  Plus 20.            
Zone 10...........................................  Plus 32.            
Zone 11...........................................  Plus 50.            
Zone 12...........................................  Plus 57.            
                                                                        

    (2) For a plant located in that portion of the Tennessee Valley 
marketing area that is within the State of Georgia, the adjustment 
shall be minus 25 cents.
    (3) For a plant located in the Missouri counties of Dunklin or 
Pemiscot, the adjustment shall be minus 53 cents.
    (4) For a plant located in the Texas counties of Bowie or Cass, the 
adjustment shall be zero.
    (5) For a plant located within another Federal order marketing 
area, other than in those counties specified in paragraphs (a) (2), 
(3), and (4) of this section, the adjustment shall be determined by 
subtracting the Class I differential price in Zone 7 of this order from 
the Class I differential price, adjusted for the plant's location, 
under such other Federal order.
    (6) For a plant located outside the areas described in paragraphs 
(a) (1) through (5) of this section, the adjustment shall be computed 
by multiplying 2.5 cents per 10 miles, or fraction thereof (by the 
shortest hard-surfaced highway distance as determined by the market 
[[Page 29448]] administrator), from the nearer of Shreveport, 
Louisiana; Little Rock, Arkansas; Memphis, Tennessee; Jackson, 
Tennessee; Nashville, Tennessee; or Atlanta, Georgia, and subtracting 
that figure from the location adjustment applicable at Shreveport, 
Little Rock, Memphis, Jackson, Nashville, or Atlanta, as the case may 
be.
    (b) For fluid milk products transferred in bulk form from a pool 
plant to a pool distributing plant at which a higher Class I price 
applies and which are classified as Class I milk, the Class I price 
shall be the Class I price at the transferee-plant subject to a 
location adjustment credit for the transferor-plant which shall be 
determined by the market administrator for skim milk and butterfat, 
respectively, as follows:
    (1) Subtract from the pounds of skim milk remaining in Class I at 
the transferee-plant after the computations pursuant to 
Sec. 1007.44(a)(12) plus the pounds of skim milk in receipts of 
concentrated fluid milk products from other pool plants that are 
assigned to Class I use, an amount equal to:
    (i) The pounds of skim milk in receipts of milk at the transferee-
plant from producers and handlers described in Sec. 1007.9(c); and
    (ii) The pounds of skim milk in receipts of packaged fluid milk 
products from other pool plants;
    (2) Assign any remaining pounds of skim milk in Class I at the 
transferee-plant to the skim milk in receipts of fluid milk products 
from other pool plants, first to the transferor-plants at which the 
highest Class I price applies and then to other plants in sequence 
beginning with the plant at which the next highest Class I price 
applies;
    (3) Compute the total amount of location adjustment credits to be 
assigned to transferor-plants by multiplying the hundredweight of skim 
milk assigned pursuant to paragraph (b)(2) of this section to each 
transferor-plant at which the Class I price is lower than the Class I 
price applicable at the transferor-plant and the transferee-plant, and 
add the resulting amounts;
    (4) Assign the total amount of location adjustment credits computed 
pursuant to paragraph (b)(3) of this section to those transferor-plants 
that transferred fluid milk products containing skim milk classified as 
Class I milk pursuant to Sec. 1007.42(a) and at which the applicable 
Class I price is less than the Class I price at the transferee-plant, 
in sequence beginning with the plant at which the highest Class I price 
applies. Subject to the availability of such credits, the credit 
assigned to each plant shall be equal to the hundredweight of such 
Class I skim milk multiplied by the adjustment rate determined pursuant 
to paragraph (b)(3) of this section for such plant. If the aggregate of 
this computation for all plants having the same adjustment as 
determined pursuant to paragraph (b)(3) of this section exceeds the 
credits that are available to those plants, such credits shall be 
prorated to the volume of skim milk in Class I in transfers from such 
plants; and
    (5) Location adjustment credit for butterfat shall be determined in 
accordance with the procedure outlined for skim milk in paragraphs (b) 
(1) through (4) of this section.
    (c) The market administrator shall determine and publicly announce 
the zone location of each plant of each handler. The market 
administrator shall notify the handler on or before the first day of 
any month in which a change in a plant location zone will apply.
    (d) The Class I price applicable to other source milk shall be 
adjusted at the rates set forth in paragraph (a) of this section, 
except that the adjusted Class I price shall not be less than the Class 
III price.


Sec. 1007.53  Announcement of class prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month the Class I price and Class II prices for the 
following month, and the Class III and Class III-A prices for the 
preceding month.


Sec. 1007.54  Equivalent price.

    If for any reason a price or pricing constituent required by this 
part for computing class prices or for other purposes is not available 
as prescribed in this part, the market administrator shall use a price 
or pricing constituent determined by the Secretary to be equivalent to 
the price or pricing constituent that is required.

Uniform Prices


Sec. 1007.60  Handler's value of milk for computing the uniform price.

    For the purpose of computing the uniform price, the market 
administrator shall determine for each month the value of milk of each 
handler with respect to each of the handler's pool plants and of each 
handler described in Sec. 1007.9 (b) and (c) with respect to milk that 
was not received at a pool plant as follows:
    (a) Multiply the pounds of producer milk and milk received from a 
handler described in Sec. 1007.9(c) that were classified in each class 
pursuant to Secs. 1007.43(a) and 1007.44(c) by the applicable class 
prices, and add the resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1007.44(a)(14) and the 
corresponding step of Sec. 1007.44(b) by the respective class prices, 
as adjusted by the butterfat differential specified in Sec. 1007.74, 
that are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim 
milk and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1007.44(a)(9) and the corresponding step of Sec. 1007.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat 
assigned to Class I pursuant to Sec. 1007.43(d) and the hundredweight 
of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1007.44(a)(7) (i) through (iv) and the corresponding step of 
Sec. 1007.44(b), excluding receipts of bulk fluid cream products from 
an other order plant and bulk concentrated fluid milk products from 
pool plants, other order plants, and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant 
and the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1007.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1007.44(b);
    (f) Add the amount obtained from multiplying the Class I price 
applicable at the location of the nearest unregulated supply plants 
from which an equivalent volume was received by the pounds of skim milk 
and butterfat in receipts of concentrated fluid milk products assigned 
to Class I pursuant to Sec. 1007.43(d) and Sec. 1007.44(a)(7)(i) and 
the pounds of skim milk and butterfat subtracted from Class I pursuant 
to Sec. 1007.44(a)(11) and the corresponding step of Sec. 1007.44(b), 
excluding such skim milk and butterfat in receipts of fluid milk 
products from an unregulated supply plant to the extent that an 
equivalent amount of skim milk or butterfat disposed of to such plant 
by handlers fully regulated under any Federal milk order is classified 
and priced as Class I milk and is not used as an offset for any other 
payment obligation under any order; [[Page 29449]] 
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the 
location of the pool plant and the Class III price) by the 
hundredweight of skim milk and butterfat contained in receipts of 
nonfluid milk products that are allocated to Class I use pursuant to 
Sec. 1007.43(d);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1007.76 (a)(5) or (c); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the 
previous month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated 
fluid milk products were made from bulk unconcentrated fluid milk 
products received at the plant during the prior month.


Sec. 1007.61  Computation of uniform price (including weighted average 
price and uniform prices for base and excess milk).

    (a) The market administrator shall compute the weighted average 
price for each month and the uniform price for each month of June 
through January per hundredweight of milk of 3.5 percent butterfat 
content as follows:
    (1) Combine into one total the values computed pursuant to 
Sec. 1007.60 for all handlers who filed the reports prescribed in 
Sec. 1007.30 for the month and who made payments pursuant to 
Sec. 1007.71 for the preceding month;
    (2) Add not less than one-half the unobligated balance in the 
producer-settlement fund;
    (3) Add an amount equal to the total value of the minus adjustments 
and subtract an amount equal to the total value of the plus adjustments 
computed pursuant to Sec. 1007.75;
    (4) Divide the resulting amount by the sum of the following for all 
handlers included in these computations;
    (i) The total hundredweight of producer milk; and
    (ii) The total hundredweight for which a value is computed pursuant 
to Sec. 1007.60(f); and
    (5) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight. The resulting figure, rounded to the nearest cent, shall 
be the weighted average price for each month and the uniform price for 
the months of June through January.
    (b) For each month of February through May, the market 
administrator shall compute the uniform prices per hundredweight for 
base milk and for excess milk, each of 3.5 percent butterfat content, 
as follows:
    (1) Compute the total value of excess milk for all handlers 
included in the computations pursuant to paragraph (a)(1) of this 
section as follows:
    (i) Multiply the hundredweight quantity of excess milk that does 
not exceed the total quantity of such handlers' producer milk assigned 
to Class III-A by the Class III-A price:
    (ii) Multiply the remaining hundredweight quantity of excess milk 
that does not exceed the total quantity of such handlers' producer milk 
assigned to Class III by the Class III price:
    (iii) Multiply the remaining hundredweight quantity of excess milk 
that does not exceed the total quantity of such handlers' producer milk 
assigned to Class II by the Class II price:
    (iv) Multiply the remaining hundredweight quantity of excess milk 
by the Class I price; and
    (v) Add together the resulting amounts;
    (2) Divide the total value of excess milk obtained in paragraph 
(b)(1) of this section by the total hundredweight of such milk and 
adjust to the nearest cent. The resulting figure shall be the uniform 
price for excess milk;
    (3) From the amount resulting from the computations pursuant to 
paragraphs (a)(1) through (a)(3) of this section subtract an amount 
computed by multiplying the hundredweight of milk specified in 
paragraph (a)(4)(ii) of this section by the weighted average price;
    (4) Subtract the total value of excess milk determined by 
multiplying the uniform price obtained in paragraph (b)(2) of this 
section times the hundredweight of excess milk from the amount computed 
pursuant to paragraph (b)(3) of this section;
    (5) Divide the amount calculated pursuant to paragraph (b)(4) of 
this section by the total hundredweight of base milk included in these 
computations; and
    (6) Subtract not less than 4 cents nor more than 5 cents from the 
price computed pursuant to paragraph (b)(5) of this section. The 
resulting figure, rounded to the nearest cent, shall be the uniform 
price for base milk.


Sec. 1007.62  Announcement of uniform price and butterfat differential.

    The market administrator shall announce publicly on or before:
    (a) The fifth day after the end of each month the butterfat 
differential for such month; and
    (b) The 11th day after the end of the month the applicable uniform 
price(s) pursuant to Sec. 1007.61 for such month.

Payments for Milk


Sec. 1007.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the producer-settlement fund into which the market 
administrator shall deposit all payments made by handlers pursuant to 
Secs. 1007.71, 1007.76, and 1007.77, and out of which the market 
administrator shall make all payments pursuant to Secs. 1007.72 and 
1007.77. Payments due any handler shall be offset by any payments due 
from such handler.


Sec. 1007.71  Payments to the producer-settlement fund.

    (a) On or before the 12th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the amount specified in paragraph (a)(1) of this section exceeds 
the amount specified in paragraph (a)(2) of this section:
    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1007.60.
    (2) The sum of:
    (i) The value at the uniform price(s) as adjusted pursuant to 
Sec. 1007.75, of such handler's receipts of producer milk and milk 
received from handlers pursuant to Sec. 1007.9(c); and
    (ii) The value at the weighted average price applicable at the 
location of the plant from which received of other source milk for 
which a value is computed pursuant to Sec. 1007.60(f).
    (b) On or before the 25th day after the end of the month each 
person who operated an other order plant that was regulated during such 
month under an order providing for individual-handler pooling shall pay 
to the market administrator an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled 
milk in route disposition from such plant in the marketing area which 
was allocated to Class I at such plant. If there is route disposition 
from such plant in marketing areas regulated by two or more marketwide 
pool orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and [[Page 29450]] 
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by the difference between the Class I price under this part 
applicable at the location of the other order plant (but not to be less 
than the Class III price) and the Class III price.


Sec. 1007.72  Payments from the producer-settlement fund.

    On or before the 13th day after the end of each month, the market 
administrator shall pay to each handler the amount, if any, by which 
the amount computed pursuant to Sec. 1007.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1007.71(a)(1). If, at such time, the balance 
in the producer-settlement fund is insufficient to make all payments 
pursuant to this section, the market administrator shall reduce 
uniformly such payments and shall complete such payments as soon as the 
funds are available.


Sec. 1007.73  Payments to producers and to cooperative associations.
    (a) Each handler shall pay each producer for producer milk for 
which payment is not made to a cooperative association pursuant to 
paragraph (b) of this section, as follows:
    (1) On or before the 26th day of each month, for milk received 
during the first 15 days of the month from such producer who has not 
discontinued delivery of milk to such handler before the 23rd day of 
the month at not less than the Class III price for the preceding month 
or 90 percent of the weighted average price for the preceding month, 
whichever is higher, less proper deductions authorized in writing by 
the producer. If the producer had discontinued shipping milk to such 
handler before the 25th day of any month, or if the producer had no 
established base upon which to receive payments during the base paying 
months of February through May, the applicable rate for making payments 
to such producer shall be the Class III price for the preceding month; 
and
    (2) On or before the 15th day of the following month, an amount 
equal to not less than the uniform price(s), as adjusted pursuant to 
Secs. 1007.74 and 1007.75, multiplied by the hundredweight of milk or 
base milk and excess milk received from such producer during the month, 
subject to the following adjustments:
    (i) Less payments made to such producer pursuant to paragraph 
(a)(1) of this section;
    (ii) Less deductions for marketing services made pursuant to 
Sec. 1007.86;
    (iii) Plus or minus adjustments for errors made in previous 
payments made to such producers; and
    (iv) Less proper deductions authorized in writing by such producer.
    (3) If a handler has not received full payment from the market 
administrator pursuant to Sec. 1007.72 by the 15th day of such month, 
such handler may reduce payments pursuant to this paragraph to 
producers on a pro rata basis but not by more than the amount of the 
underpayment. Such payments shall be completed thereafter not later 
than the date for making payments pursuant to this paragraph next 
following after receipt of the balance due from the market 
administrator.
    (b) On or before the day prior to the dates specified in paragraph 
(a) (1) and (2) of this section, each handler shall make payment to the 
cooperative association for milk from producers who market their milk 
through the cooperative association and who have authorized the 
cooperative to collect such payments on their behalf an amount equal to 
the sum of the individual payments otherwise payable for such producer 
milk pursuant to paragraph (a) (1) and (2) of this section.
    (c) If a handler has not received full payment from the market 
administrator pursuant to Sec. 1007.72 by the 15th day of such month, 
such handler may reduce payments pursuant to paragraph (b) of this 
section to such cooperative association on a pro rata basis, prorating 
such underpayment to the volume of milk received from such cooperative 
association in proportion to the total milk received from producers by 
the handler, but not by more than the amount of the underpayment. Such 
payments shall be completed in the following manner:
    (1) If the handler receives full payment from the market 
administrator by the 15th day of the month, the handler shall make 
payment to the cooperative association of the full value of the 
underpayment on the 15th day of the month;
    (2) If the handler has not received full payment from the market 
administrator by the 15th day of the month, the handler shall make 
payment to the cooperative association of the full value of the 
underpayment on or before the date for making such payments pursuant to 
this paragraph next following after receipt of the balance due from the 
market administrator.
    (d) Each handler pursuant to Sec. 1007.9(a) who receives milk from 
a cooperative association as a handler pursuant to Sec. 1007.9(c), 
including the milk of producers who are not members of such 
association, and who the market administrator determines have 
authorized such cooperative association to collect payment for their 
milk, shall pay such cooperative for such milk as follows:
    (1) On or before the 25th day of the month for milk received during 
the first 15 days of the month, not less than the Class III price for 
the preceding month or 90 percent of the weighted average price for the 
preceding month, whichever is higher; and
    (2) On or before the 14th day of the following month, not less than 
the appropriate uniform price(s) as adjusted pursuant to Secs. 1007.74 
and 1007.75, and less any payments made pursuant to paragraph (d)(1) of 
this section.
    (e) If a handler has not received full payment from the market 
administrator pursuant to Sec. 1007.72 by the 14th day of such month, 
such handler may reduce payments pursuant to paragraph (d) of this 
section to such cooperative association and complete such payments for 
milk received from such cooperative association in its capacity as a 
handler pursuant to Sec. 1007.9(c), in the manner prescribed in 
paragraph (c) (1) and (2) of this section.
    (f) In making payments to producers pursuant to this section, each 
handler shall furnish each producer, except a producer whose milk was 
received from a handler described in Sec. 1007.9(c), a supporting 
statement in such form that it may be retained by the recipient which 
shall show:
    (1) The month and identity of the producer;
    (2) The daily and total pounds and the average butterfat content of 
producer milk;
    (3) For the months of February through May the total pounds of base 
milk received from such producer;
    (4) The minimum rate(s) at which payment to the producer is 
required pursuant to this order;
    (5) The rate(s) used in making the payment if such rate(s) is (are) 
other than the applicable minimum rate(s);
    (6) The amount, or rate per hundredweight, and nature of each 
deduction claimed by the handler; and
    (7) The net amount of payment to such producer or cooperative 
association.


Sec. 1007.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform prices for base and excess milk shall be increased or 
decreased, respectively, for each one-tenth percent butterfat variation 
from 3.5 percent by a butterfat differential, rounded to the nearest 
one-tenth cent, which shall be 0.138 times the current month's butter 
price less [[Page 29451]] 0.0028 times the preceding month's average 
pay price per hundredweight, at test, for manufacturing grade milk, in 
Minnesota and Wisconsin, using the ``base month'' series, adjusted 
pursuant to Sec. 1007.51(a) through (e), as reported by the Department. 
The butter price means the simple average for the month of the Chicago 
Mercantile Exchange, Grade A butter price as reported by the 
Department.


Sec. 1007.75  Plant location adjustments for producers and on nonpool 
milk.

    (a) The uniform price and the uniform price for base milk shall be 
adjusted according to the location of the plant at which the milk was 
physically received at the rates set forth in Sec. 1007.52(a); and
    (b) The weighted average price applicable to other source milk 
shall be adjusted at the rates set forth in section Sec. 1007.52(a) 
applicable at the location of the nonpool plant from which the milk was 
received, except that the adjusted weighted average price shall not be 
less than the Class III price.


Sec. 1007.76  Payments by a handler operating a partially regulated 
distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Secs. 1007.30(b) and 1007.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be an amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk 
order; and
    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool plant by handlers fully regulated under any Federal 
milk order is classified and priced as Class I milk and is not used as 
an offset for any payment obligation under any order;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Multiply the remaining pounds by the difference between the 
Class I price and the weighted average price, both prices to be 
applicable at the location of the partially regulated distributing 
plant (except that the Class I price and weighted average price shall 
not be less than the Class III price); and
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any 
reconstituted milk that is not so labeled, the Class I price shall not 
be reduced by $1.00. Alternatively, for such disposition, payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order 
at the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1007.60 for the partially regulated distributing plant if the 
plant had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an 
other order plant shall be allocated at the partially regulated 
distributing plant to the same class in which such products were 
classified at the fully regulated plant;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be computed to the extent 
possible to those receipts at the partially regulated distributing 
plant from pool plants and other order plants that are classified in 
the corresponding class pursuant to paragraph (b)(1)(i) of this 
section. Any such transfers remaining after the above allocation which 
are in Class I and for which a value is computed for the handler 
operating the partially regulated distributing plant pursuant to 
Sec. 1007.60 shall be priced at the uniform price (or at the weighted 
average price if such is provided) of the respective order regulating 
the handling of milk at the transferee plant, with such uniform price 
adjusted to the location of the nonpool plant (but not to be less than 
the lowest class price of the respective order), except that transfers 
of reconstituted skim milk in filled milk shall be priced at the lowest 
price class of the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1007.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1007.60(f) less the value of such other source milk 
specified in Sec. 1007.71(a)(2)(ii), a value of milk determined 
pursuant to Sec. 1007.60 for each nonpool plant that is not an other 
order plant which serves as a supply plant for such partially regulated 
distributing plant by making shipments to the partially regulated 
distributed plant during the month equivalent to the requirements of 
Sec. 1007.7(b), subject to the following conditions:
    (A) The operator of the partially regulated distributing plant 
submits with its reports filed pursuant to Secs. 1007.30(b) and 
1007.31(b) similar reports for each such nonpool supply plant;
    (B) The operator of such nonpool plant maintains books and records 
showing the utilization of all skim milk and butterfat received at such 
plant which are made available if requested by the market administrator 
for verification purposes; and
    (C) The value of milk determined pursuant to Sec. 1007.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, 
subtract: [[Page 29452]] 
    (i) The gross payments by the operator of the partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1007.74, for milk received at 
the plant during the month that would have been producer milk had the 
plant been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 
3.5 percent butterfat basis by the butterfat differential specified in 
Sec. 1007.74, for milk received at the plant during the month that 
would have been producer milk if the plant had been fully regulated; 
and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1007.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order 
at the location of the plant where the nonfluid milk ingredients were 
processed (but not less than the Class III price) and the Class III 
price. This payment option shall apply only if a majority of the total 
milk received at the plant that processed the nonfluid milk ingredients 
is regulated under one or more Federal orders and payment may only be 
made to the producer-settlement fund of the order pricing a plurality 
of the milk used to produce the nonfluid milk ingredients. This payment 
option shall not apply if the source of the nonfluid ingredients used 
in reconstituted fluid milk products cannot be determined by the market 
administrator.


Sec. 1007.77  Adjustment of accounts.

    Whenever audit by the market administrator of any handler's 
reports, books, records, or accounts, or other verification discloses 
errors resulting in money due the market administrator from a handler, 
or due a handler from the market administrator, or due a producer or 
cooperative association from a handler, the market administrator shall 
promptly notify such handler of any amount so due and payment thereof 
shall be made on or before the next date for making payments as set 
forth in the provisions under which the error(s) occurred.


Sec. 1007.78 Charges on overdue accounts.

    Any unpaid obligation due the market administrator from a handler 
pursuant to Secs. 1007.71, 1007.76, 1007.77, 1007.78, 1007.85, and 
1007.86 shall be increased 1.5 percent each month beginning with the 
day following the date such obligation was due under the order. Any 
remaining amount due shall be increased at the same rate on the 
corresponding day of each month until paid. The amounts payable 
pursuant to this section shall be computed monthly on each unpaid 
obligation and shall include any unpaid charges previously made 
pursuant to this section. The late charges shall be added to the 
respective accounts to which due. For the purpose of this section, any 
obligation that was determined at a date later than prescribed by the 
order because of a handler's failure to submit a report to the market 
administrator when due shall be considered to have been payable by the 
date it would have been due if the report had been filed when due.

Administrative Assessment and Marketing Service Deduction


Sec. 1007.85  Assessment for order administration.
    As each handler's pro rata share of the expense of administration 
of the order, each handler shall pay to the market administrator on or 
before the 15th day after the end of the month 5 cents per 
hundredweight or such lesser amount as the Secretary may prescribe with 
respect to:
    (a) Receipts of producer milk (including such handler's own 
production) other than such receipts by a handler described in 
Sec. 1007.9(c) that were delivered to pool plants of other handlers;
    (b) Receipts from a handler described in Sec. 1007.9(c);
    (c) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class 
I use pursuant to Sec. 1007.43(d) and other source milk allocated to 
Class I pursuant to Sec. 1007.44(a) (7) and (11) and the corresponding 
steps of Sec. 1007.44(b), except such other source milk that is 
excluded from the computations pursuant to Sec. 1007.60 (d) and (f); 
and
    (d) Route disposition in the marketing area from a partially 
regulated distributing plant that exceeds the skim milk and butterfat 
subtracted pursuant to Sec. 1007.76(a)(2).


Sec. 1007.86  Deduction for marketing services.

    (a) Except as provided in paragraph (b) of this section each 
handler, in making payments to producers for milk (other than milk of 
such handler's own production) pursuant to Sec. 1007.73, shall deduct 7 
cents per hundredweight or such lesser amount as the Secretary may 
prescribe and shall pay such deductions to the market administrator not 
later than the 15th day after the month. Such money shall be used by 
the market administrator to verify or establish weights, samples and 
tests of producer milk and provide market information for producers who 
are not receiving such services from a cooperative association. Such 
services shall be performed in whole or in part by the market 
administrator or an agent engaged by and responsible to the market 
administrator;
    (b) In the case of producers for whom a cooperative association 
that the Secretary has determined is actually performing the services 
set forth in paragraph (a) of this section, each handler shall make, in 
lieu of the deduction specified in paragraph (a) of this section, such 
deductions from the payments to be made to such producers as may be 
authorized by the membership agreement or marketing contract between 
such cooperative association and such producers, and on or before the 
15th day after the end of the month, pay such deductions to the 
cooperative association rendering such services accompanied by a 
statement showing the amount of any such deductions and the amount of 
milk for which such deduction was computed for each producer.

Base-Excess Plan


Sec. 1007.90  Base milk.

    Base milk means the producer milk of a producer in each month of 
February through May that is not in excess of the producer's base 
multiplied by the number of days in the month.


Sec. 1007.91  Excess milk.

    Excess milk means the producer milk of a producer in each month of 
February through May in excess of the producer's base milk for the 
month, and shall include all the producer milk in such months of a 
producer who has no base.


Sec. 1007.92  Computation of base for each producer.

    (a) Subject to paragraph (c) of this section, a base for each dairy 
farmer who was a producer pursuant to Sec. 1007.12 during one or more 
of the immediately preceding months of July through December shall be 
determined [[Page 29453]] by dividing the total pounds of producer milk 
delivered by such producer during each of those months by the number of 
calendar days in the month, adding together the four highest monthly 
averages so computed, and dividing by four. If a producer operated more 
than one farm at the same time, a separate computation of base shall be 
made for each such farm.
    (b) Any producer who delivered milk to a nonpool plant that became 
a pool plant after the beginning of the July-December base-forming 
period shall be assigned a base calculated as if the plant were a pool 
plant during such entire base-forming period. A base thus assigned 
shall not be transferable.
    (c) A person who was unable to qualify as a producer during four or 
more of the immediately preceding months of July through December or 
who did not have at least four complete months of production, in either 
case for one or more of the reasons specified in this paragraph, may 
request a base computation based upon a lesser number of months by 
submitting to the market administrator in writing on or before February 
1 a statement that establishes to the satisfaction of the market 
administrator that during four or more of the months in the immediately 
preceding July through December base-forming period the amount of milk 
produced on such producer's farm was substantially reduced because of 
conditions beyond the control of such person as a result of:
    (1) The loss by fire, windstorm, or other natural disaster of a 
farm building used in the production of milk on the producer's farm;
    (2) Brucellosis, bovine tuberculosis or other infectious diseases 
in the producer's milking herd as certified by a licensed veterinarian; 
or
    (3) A quarantine by a Federal or State authority that prevented the 
dairy farmer from supplying milk from the farm of such producer to a 
plant.


Sec. 1007.93  Base rules.

    (a) Except as provided in Sec. 1007.92 (b) and (c) and paragraph 
(b) of this section, a base may be transferred in its entirety or in 
amounts of not less than 300 pounds effective on the first day of the 
month following the date on which such application is received by the 
market administrator. Base may be transferred only to a person who is 
or will be a producer by the end of the month that the transfer is to 
be effective. A base transfer to be effective on February 1 for the 
month of February must be received on or before February 15. Such 
application shall be on a form approved by the market administrator and 
signed by the baseholder or the legal representative of the 
baseholder's estate. If a base is held jointly, the application shall 
be signed by all joint holders or the legal representative of the 
estate of any deceased baseholder.
    (b) A producer who transferred base on or after February 1 may not 
receive by transfer additional base that would be applicable during 
February through May of the same year. A producer who received base by 
transfer on or after February 1 may not transfer a portion of the base 
to be applicable during February through May of the same year, but may 
transfer the entire base.
    (c) The base established by a partnership may be divided between 
the partners on any basis agreed to in writing by them if written 
notification of the agreed upon division of base by each partner is 
received by the market administrator prior to the first day of the 
month in which such division is to be effective.
    (d) Two or more producers in a partnership may combine their 
separately established bases by giving notice to the market 
administrator prior to the first day of the month in which such 
combination of bases is to be effective.


Sec. 1007.94  Announcement of established bases.

    On or before January 31 of each year, the market administrator 
shall calculate a base for each person who was a producer during one or 
more of the preceding months of July through December and shall notify 
each producer and the handler receiving milk from such dairy farmer of 
the base established by the producer. If requested by a cooperative 
association, the market administrator shall notify the cooperative 
association of each producer-member's base.

PARTS 1093, 1094, 1096, AND 1108 [REMOVED AND RESERVED]

    2. Parts 1093, 1094, 1096, and 1108 are removed and reserved.

    Dated: May 23, 1995.
Patricia Jensen,
Acting Assistant Secretary, Marketing and Regulatory Programs.
[FR Doc. 95-13160 Filed 6-1-95; 8:45 am]
BILLING CODE 3410-02-P