Milk in the Pacific Northwest and Arizona-Las Vegas Marketing Areas; Order Amending the Orders, 9430-9434 [06-1587]

Download as PDF 9430 Federal Register / Vol. 71, No. 37 / Friday, February 24, 2006 / Rules and Regulations skinned, yellow fleshed potatoes shall grade U.S. Commercial or better. * * * * * Dated: February 17, 2006. Lloyd C. Day, Administrator, Agricultural Marketing Service. [FR Doc. 06–1717 Filed 2–23–06; 8:45 am] BILLING CODE 3410–02–P DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Parts 1124 and 1131 [Docket No. AO–368–A32, AO–271–A37; DA–03–04B] Milk in the Pacific Northwest and Arizona-Las Vegas Marketing Areas; Order Amending the Orders Agricultural Marketing Service, USDA. ACTION: Final rule. wwhite on PROD1PC61 with RULES AGENCY: SUMMARY: This final rule amends provisions of the producer-handler definitions of the Pacific Northwest and Arizona-Las Vegas orders as contained in the Final Decision published in the Federal Register on December 14, 2005. More than the required number of producers for the Arizona-Las Vegas and Pacific Northwest marketing areas approved the issuance of the orders as amended. DATES: Effective Date: April 1, 2006. FOR FURTHER INFORMATION CONTACT: Jack Rower, Marketing Specialist or Gino Tosi, Associate Deputy Administrator for Order Formulation and Enforcement, USDA/AMS/Dairy Programs, Order Formulation and Enforcement Branch, STOP 0231–Room 2971, 1400 Independence Avenue SW., Washington, DC 20250–0231, (202) 720– 2357 or (202) 690–1366, e-mail addresses: jack.rower@usda.gov or gino.tosi@usda.gov. SUPPLEMENTARY INFORMATION: This document amends the producer-handler and related provisions of the Pacific Northwest and Arizona-Las Vegas Federal milk orders. Specifically, this final rule permanently adopts a provision that will eliminate the exemption from pooling and pricing provisions of the orders for producerhandlers with in-area route disposition in excess of 3-million pounds per month. This administrative action is governed by the provisions of sections 556 and 557 of Title 5 of the United States Code and, therefore, is excluded from the requirements of Executive Order 12866. VerDate Aug<31>2005 18:05 Feb 23, 2006 Jkt 208001 This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. The rule is not intended to have a retroactive effect. This rule will not preempt any state or local laws, regulations, or policies, unless they present an irreconcilable conflict with the 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 request modification or exemption from such order by filing 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. 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 date of the entry of the ruling. Regulatory Flexibility Act and Paperwork Reduction Act In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), the Agricultural Marketing Service has considered the economic impact of this action on small entities and has certified that this final decision will not have a significant economic impact on a substantial number of small entities. For the purpose of the Regulatory Flexibility Act, a dairy farm is considered a ‘‘small business’’ if it has an annual gross revenue of less than $750,000, and a dairy products manufacturer is a ‘‘small business’’ if it has fewer than 500 employees. For the purposes of determining which dairy farms are ‘‘small businesses,’’ the $750,000 per year criterion was used to establish a milk marketing guideline of 500,000 pounds per month. Although this guideline does not factor in additional monies that may be received by dairy producers, it should be an inclusive standard for most ‘‘small’’ dairy farmers. For purposes of determining a handler’s size, if the plant is part of a larger company operating multiple plants that collectively exceed the 500 employee limit, the plant will be considered a large business even if the local plant has fewer than 500 employees. Producer-handlers are defined as dairy farmers that process only their PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 own milk production. These entities must be dairy farmers as a pre-condition to operating processing plants as producer-handlers. The size of the dairy farm determines the production level of the operation and is the controlling factor in the capacity of the processing plant and possible sales volume associated with the producer-handler entity. Determining whether a producerhandler is considered a small or large business must depend on its capacity as a dairy farm where a producer-handler with annual gross revenue in excess of $750,000 is considered a large business. The amendments will place entities currently considered to be producerhandlers under the Pacific Northwest or the Arizona-Las Vegas orders on the same terms as all other fully regulated handlers provided they meet the criteria for being subject to the pooling and pricing provisions of the two orders. Entities currently defined as producerhandlers under the terms of these orders will be subject to the pooling and pricing provisions of the orders if their route disposition of fluid milk products is more than 3 million pounds per month. Producer-handlers with route disposition of less than 3 million pounds during the month will not be subject to the pooling and pricing provisions of the orders. To the extent that current producer-handlers for each order have route disposition of fluid milk products outside of the marketing areas, such route disposition will be subject to an order’s pooling and pricing provisions if total in-area route disposition causes them to become fully regulated. Assuming that some current producer-handlers will have route disposition of fluid milk products of more than 3 million pounds during the month, such producer-handlers will be regulated subject to the pooling and pricing provisions of the orders like other handlers. Such producer-handlers will account to the pool for their uses of milk at the applicable minimum class prices and pay the difference between their use-value and the blend price of the order to the order’s producersettlement fund. While this may cause an economic impact on those entities with more than 3 million pounds of route sales who currently are considered producerhandlers by the two orders, the impact is offset by the benefit to other small businesses. With respect to dairy farmers whose milk is pooled on the two marketing orders, such dairy farmers who have not heretofore shared in the additional revenue that accrues from the marketwide pooling of Class I E:\FR\FM\24FER1.SGM 24FER1 wwhite on PROD1PC61 with RULES Federal Register / Vol. 71, No. 37 / Friday, February 24, 2006 / Rules and Regulations sales by producer-handlers will share in such revenue. This will have a positive impact on 486 small dairy farmers in the Pacific Northwest and Arizona-Las Vegas marketing areas. Additionally, all handlers who dispose of more than 3 million pounds of fluid milk products per month will pay at least the announced Federal order Class I price for such use. This will have a positive impact on 18 small regulated handlers. The extent that current producerhandlers in the Pacific Northwest and the Arizona-Las Vegas orders become subject to the pooling and pricing provisions will be determined in their capacity as handlers. Such entities will no longer have restrictions applicable to their business operations that were conditions for producer-handler status and exemption from the pooling and pricing provisions of the two orders. In general, this includes being able to buy or acquire any quantity of milk from dairy farmers or other handlers instead of being limited by the current constraints of the two orders. Additionally, the handlers’ burden of balancing their milk production is relieved. Milk production in excess of what is needed to satisfy their Class I route disposition needs will receive the minimum price protection established under the terms of the two orders. The burden of balancing milk supplies will be borne by all producers and handlers who are pooled and regulated under the terms of the two orders. During September 2003, the Pacific Northwest had 16 pool distributing plants, 1 pool supply plant, 3 cooperative pool manufacturing plants, 7 partially regulated distributing plants, 8 producer-handler plants and 2 exempt plants. Of the 27 regulated handlers, 16 or 59 percent were considered large businesses. Of the 691 dairy farmers whose milk was pooled on the order, 223 or 32 percent were considered large businesses. If these amendatory actions were not undertaken, 68 percent of the dairy farmers (468) in the Pacific Northwest order who are small businesses would continue to be adversely affected by the operations of large producer-handlers. For the Arizona-Las Vegas order, during September 2003 there were 3 pool distributing plants, 1 cooperative pool manufacturing plant, 18 partially regulated distributing plants, 2 producer-handler plants and 3 exempt plants (including an exempt plant located in Clark County, Nevada) operated by 22 handlers. Of these plants, 15 or 68 percent were considered large businesses. Of the 106 dairy farmers whose milk was pooled on the order, 88 or 83 percent were considered VerDate Aug<31>2005 18:05 Feb 23, 2006 Jkt 208001 large businesses. If these amendatory actions were not undertaken, 17 percent of the dairy farmers in the Arizona-Las Vegas order who are small businesses would continue to be adversely affected by large producer-handler operations. In their capacity as producers, 7 producer-handlers would be considered to be large producers because their annual marketing exceeds 6 million pounds of milk. Record evidence indicates that for the Pacific Northwest marketing order at the time of the hearing, four producer-handlers would potentially become subject to the pooling and pricing provisions of the order because of route disposition of more than 3 million pounds per month within the marketing area. For the Arizona-Las Vegas order, one producerhandler would be considered to be a large producer because its annual marketing exceeds 6 million pounds of milk and potentially would be subject to the pooling and pricing provisions of the order because of route disposition exceeding 3 million pounds per month. A review of reporting requirements was completed under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). It was determined that these proposed amendments will have minimal impact on reporting, recordkeeping, or other compliance requirements for entities currently considered producer-handlers under the Pacific Northwest and the Arizona-Las Vegas marketing orders because they will remain identical to the current requirements applicable to all other regulated handlers who are currently subject to the pooling and pricing provisions of the two orders. No new forms are proposed and no additional reporting requirements are necessary. This notice does not require additional information collection that requires clearance by the Office of Management and Budget (OMB) beyond currently approved information collection. The primary sources of data used to complete the forms are routinely used in most business transactions. Forms require only a minimal amount of information which can be supplied without data processing equipment or a trained statistical staff. Thus, the information collection and reporting burden is relatively small. Requiring the same reports for all handlers does not significantly disadvantage any handler that is smaller than the industry average. Prior Documents in This Proceeding Notice of Hearing: Issued July 31, 2003; published August 6, 2003 (68 FR 46505). PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 9431 Correction to Notice of Hearing: Issued August 20, 2003; published August 26, 2003 (68 FR 51202). Notice of Reconvened Hearing: Issued October 27, 2003; published October 31, 2003 (68 FR 62027). Notice of Reconvened Hearing: Issued December 18, 2003; published December 29, 2003 (68 FR 74874). Recommended Decision: Issued April 7, 2005; published April 13, 2005 (70 FR 19636). Final Decision: Issued December 9, 2005; published December 14, 2005 (70 FR 74166). Findings and Determinations The findings and determinations hereinafter set forth supplement those that were made when the orders were first issued and when they were amended. The previous findings and determinations are hereby ratified and confirmed, except where they may conflict with those set forth herein. The following findings are hereby made with respect to the Pacific Northwest and Arizona-Las Vegas orders: (a) Finding. A public hearing was held upon certain proposed amendments to the tentative marketing agreement and to the order regulating the handling of milk in the Pacific Northwest and Arizona-Las Vegas 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 said orders as hereby amended, 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 area. 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 said orders as hereby amended regulate the handling of milk in the same manner as, and are applicable only to persons in the respective classes of industrial or commercial activity specified in, a marketing agreement upon which a hearing has been held. E:\FR\FM\24FER1.SGM 24FER1 9432 Federal Register / Vol. 71, No. 37 / Friday, February 24, 2006 / Rules and Regulations (4) All milk and milk products handled by handlers, as defined in the tentative marketing agreements and the orders as hereby amended, are in the current of interstate commerce or directly burden, obstruct, or affect interstate commerce in milk or its products. (b) Determinations. It is hereby determined that: (1) The refusal or failure of handlers (excluding cooperative associations specified in Sec 8c(9) of the Act) of more than 50 percent of the milk that is marketed within the specified marketing areas to sign a proposed marketing agreement tends to prevent the effectuation of the declared policy of the Act: (2) The issuance of this order amending the Pacific Northwest and Arizona-Las Vegas orders is the only practical means pursuant to the declared policy of the Act of advancing the interests of producers as defined by the orders as hereby amended; (3) The issuance of the order amending the Pacific Northwest and Arizona-Las Vegas orders is favored by at least two-thirds of the producers who were engaged in the production of milk for sale in the marketing areas. List of Subjects in 7 CFR Parts 1124 and 1131 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 Pacific Northwest and Arizona-Las Vegas marketing areas shall be in conformity to and in compliance with the terms and conditions of the orders, as amended, and as hereby amended, as follows: I PARTS 1124 AND 1131—[AMENDED] 1. The authority citation for 7 CFR parts 1124 and 1131 continues to read as follows: I Authority: 7 U.S.C. 601–674, and 7253. PART 1124—MILK IN THE PACIFIC NORTHWEST MARKETING AREA I 2. Revise § 1124.10 to read as follows: wwhite on PROD1PC61 with RULES § 1124.10 Producer-handler. Producer-handler means a person who operates a dairy farm and a distributing plant from which there is route distribution within the marketing area during the month not to exceed 3 million pounds and who the market administrator has designated a producer-handler after determining that all of the requirements of this section have been met. VerDate Aug<31>2005 18:05 Feb 23, 2006 Jkt 208001 (a) Requirements for designation. Designation of any person as a producer-handler by the market administrator shall be contingent upon meeting the conditions set forth in paragraphs (a)(1) through (5) of this section. Following the cancellation of a previous producer-handler designation, a person seeking to have their producerhandler designation reinstated must demonstrate that these conditions have been met for the preceding month. (1) The care and management of the dairy animals and the other resources and facilities designated in paragraph (b)(1) of this section necessary to produce all Class I milk handled (excluding receipts from handlers fully regulated under any Federal order) are under the complete and exclusive control, ownership and management of the producer-handler and are operated as the producer-handler’s own enterprise and its own risk. (2) The plant operation designated in paragraph (b)(2) of this section at which the producer-handler processes and packages, and from which it distributes, its own milk production is under the complete and exclusive control, ownership and management of the producer-handler and is operated as the producer-handler’s own enterprise and at its sole risk. (3) The producer-handler neither receives at its designated milk production resources and facilities nor receives, handles, processes, or distributes at or through any of its designated milk handling, processing, or distributing resources and facilities other source milk products for reconstitution into fluid milk products or fluid milk products derived from any source other than: (i) Its designated milk production resources and facilities (own farm production); (ii) Pool handlers and plants regulated under any Federal order within the limitation specified in paragraph (c)(2) of this section; or (iii) Nonfat milk solids which are used to fortify fluid milk products. (4) The producer-handler is neither directly nor indirectly associated with the business control or management of, nor has a financial interest in, another handler’s operation; nor is any other handler so associated with the producer-handler’s operation. (5) No milk produced by the herd(s) or on the farm(s) that supply milk to the producer-handler’s plant operation is: (i) Subject to inclusion and participation in a marketwide equalization pool under a milk classification and pricing program under the authority of a State PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 government maintaining marketwide pooling of returns, or (ii) Marketed in any part as Class I milk to the non-pool distributing plant of any other handler. (b) Designation of resources and facilities. Designation of a person as a producer-handler shall include the determination of what shall constitute milk production, handling, processing, and distribution resources and facilities, all of which shall be considered an integrated operation, under the sole and exclusive ownership of the producerhandler. (1) Milk production resources and facilities shall include all resources and facilities (milking herd(s), buildings housing such herd(s), and the land on which such buildings are located) used for the production of milk which are solely owned, operated, and which the producer-handler has designated as a source of milk supply for the producerhandler’s plant operation. However, for purposes of this paragraph, any such milk production resources and facilities which do not constitute an actual or potential source of milk supply for the producer-handler’s operation shall not be considered a part of the producerhandler’s milk production resources and facilities. (2) Milk handling, processing, and distribution resources and facilities shall include all resources and facilities (including store outlets) used for handling, processing, and distributing fluid milk products which are solely owned by, and directly operated or controlled by the producer-handler or in which the producer-handler in any way has an interest, including any contractual arrangement, or over which the producer-handler directly or indirectly exercises any degree of management control. (3) All designations shall remain in effect until canceled, pursuant to paragraph (c) of this section. (c) Cancellation. The designation as a producer-handler shall be canceled upon determination by the market administrator that any of the requirements of paragraph (a)(1) through (5) of this section are not continuing to be met, or under any of the conditions described in paragraphs (c)(1), (2) or (3) of this section. Cancellation of a producer-handler’s status pursuant to this paragraph shall be effective on the first day of the month following the month in which the requirements were not met or the conditions for cancellation occurred. (1) Milk from the milk production resources and facilities of the producerhandler, designated in paragraph (b)(1) of this section, is delivered in the name E:\FR\FM\24FER1.SGM 24FER1 Federal Register / Vol. 71, No. 37 / Friday, February 24, 2006 / Rules and Regulations of another person as producer milk to another handler. (2) The producer-handler handles fluid milk products derived from sources other than the milk production facilities and resources designated in paragraph (b)(1) of this section, except that it may receive at its plant, or acquire for route disposition, fluid milk products from fully regulated plants and handlers under any Federal order if such receipts do not exceed 150,000 pounds monthly. This limitation shall not apply if the producer-handler’s own-farm production is less than 150,000 pounds during the month. (3) Milk from the milk production resources and facilities of the producerhandler is subject to inclusion and participation in a marketwide equalization pool under a milk classification and pricing plan operating under the authority of a State government. (d) Public announcement. The market administrator shall publicly announce: (1) The name, plant location(s), and farm location(s) of persons designated as producer-handlers; (2) The names of those persons whose designations have been cancelled; and (3) The effective dates of producerhandler status or loss of producerhandler status for each. Such announcements shall be controlling with respect to the accounting at plants of other handlers for fluid milk products received from any producer-handler. (e) Burden of establishing and maintaining producer-handler status. The burden rests upon the handler who is designated as a producer-handler to establish through records required pursuant to § 1000.27 that the requirements set forth in paragraph (a) of this section have been and are continuing to be met, and that the conditions set forth in paragraph (c) of this section for cancellation of the designation do not exist. PART 1131—MILK IN THE ARIZONALAS VEGAS MARKETING AREA I 3. Revise § 1131.10 to read as follows: wwhite on PROD1PC61 with RULES § 1131.10 Producer-handler. Producer-handler means a person who operates a dairy farm and a distributing plant from which there is route distribution within the marketing area during the month not to exceed 3 million pounds and who the market administrator has designated a producer-handler after determining that all of the requirements of this section have been met. (a) Requirements for designation. Designation of any person as a VerDate Aug<31>2005 18:05 Feb 23, 2006 Jkt 208001 producer-handler by the market administrator shall be contingent upon meeting the conditions set forth in paragraphs (a)(1) through (5) of this section. Following the cancellation of a previous producer-handler designation, a person seeking to have their producerhandler designation reinstated must demonstrate that these conditions have been met for the preceding month. (1) The care and management of the dairy animals and the other resources and facilities designated in paragraph (b)(1) of this section necessary to produce all Class I milk handled (excluding receipts from handlers fully regulated under any Federal order) are under the complete and exclusive control, ownership and management of the producer-handler and are operated as the producer-handler’s own enterprise and its own risk. (2) The plant operation designated in paragraph (b)(2) of this section at which the producer-handler processes and packages, and from which it distributes, its own milk production is under the complete and exclusive control, ownership and management of the producer-handler and is operated as the producer-handler’s own enterprise and at its sole risk. (3) The producer-handler neither receives at its designated milk production resources and facilities nor receives, handles, processes, or distributes at or through any of its designated milk handling, processing, or distributing resources and facilities other source milk products for reconstitution into fluid milk products or fluid milk products derived from any source other than: (i) Its designated milk production resources and facilities (own farm production); (ii) Pool handlers and plants regulated under any Federal order within the limitation specified in paragraph (c)(2) of this section; or (iii) Nonfat milk solids which are used to fortify fluid milk products. (4) The producer-handler is neither directly nor indirectly associated with the business control or management of, nor has a financial interest in, another handler’s operation; nor is any other handler so associated with the producer-handler’s operation. (5) No milk produced by the herd(s) or on the farm(s) that supply milk to the producer-handler’s plant operation is: (i) Subject to inclusion and participation in a marketwide equalization pool under a milk classification and pricing program under the authority of a State government maintaining marketwide pooling of returns, or PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 9433 (ii) Marketed in any part as Class I milk to the non-pool distributing plant of any other handler. (6) The producer-handler does not distribute fluid milk products to a wholesale customer who is served by a plant described in § 1131.7(a), (b), or (e), or a handler described in § 1000.8(c) that supplied the same product in the same-sized package with a similar label to a wholesale customer during the month. (b) Designation of resources and facilities. Designation of a person as a producer-handler shall include the determination of what shall constitute milk production, handling, processing, and distribution resources and facilities, all of which shall be considered an integrated operation, under the sole and exclusive ownership of the producerhandler. (1) Milk production resources and facilities shall include all resources and facilities (milking herd(s), buildings housing such herd(s), and the land on which such buildings are located) used for the production of milk which are solely owned, operated, and which the producer-handler has designated as a source of milk supply for the producerhandler’s plant operation. However, for purposes of this paragraph, any such milk production resources and facilities which do not constitute an actual or potential source of milk supply for the producer-handler’s operation shall not be considered a part of the producerhandler’s milk production resources and facilities. (2) Milk handling, processing, and distribution resources and facilities shall include all resources and facilities (including store outlets) used for handling, processing, and distributing fluid milk products which are solely owned by, and directly operated or controlled by the producer-handler or in which the producer-handler in any way has an interest, including any contractual arrangement, or over which the producer-handler directly or indirectly exercises any degree of management control. (3) All designations shall remain in effect until canceled pursuant to paragraph (c) of this section. (c) Cancellation. The designation as a producer-handler shall be canceled upon determination by the market administrator that any of the requirements of paragraph (a)(1) through (5) of this section are not continuing to be met, or under any of the conditions described in paragraphs (c)(1), (2) or (3) of this section. Cancellation of a producer-handler’s status pursuant to this paragraph shall be effective on the first day of the month following the E:\FR\FM\24FER1.SGM 24FER1 9434 Federal Register / Vol. 71, No. 37 / Friday, February 24, 2006 / Rules and Regulations month in which the requirements were not met or the conditions for cancellation occurred. (1) Milk from the milk production resources and facilities of the producerhandler, designated in paragraph (b)(1) of this section, is delivered in the name of another person as producer milk to another handler. (2) The producer-handler handles fluid milk products derived from sources other than the milk production facilities and resources designated in paragraph (b)(1) of this section, except that it may receive at its plant, or acquire for route disposition, fluid milk products from fully regulated plants and handlers under any Federal order if such receipts do not exceed 150,000 pounds monthly. This limitation shall not apply if the producer-handler’s own-farm production is less than 150,000 pounds during the month. (3) Milk from the milk production resources and facilities of the producerhandler is subject to inclusion and participation in a marketwide equalization pool under a milk classification and pricing plan operating under the authority of a State government. (d) Public announcement. The market administrator shall publicly announce: (1) The name, plant location(s), and farm location(s) of persons designated as producer-handlers; (2) The names of those persons whose designations have been cancelled; and (3) The effective dates of producerhandler status or loss of producerhandler status for each. Such announcements shall be controlling with respect to the accounting at plants of other handlers for fluid milk products received from any producer-handler. (e) Burden of establishing and maintaining producer-handler status. The burden rests upon the handler who is designated as a producer-handler to establish through records required pursuant to § 1000.27 that the requirements set forth in paragraph (a) of this section have been and are continuing to be met, and that the conditions set forth in paragraph (c) of this section for cancellation of the designation do not exist. Dated: February 15, 2006. Lloyd C. Day, Administrator, Agricultural Marketing Service. [FR Doc. 06–1587 Filed 2–23–06; 8:45 am] wwhite on PROD1PC61 with RULES BILLING CODE 3410–02–P VerDate Aug<31>2005 18:05 Feb 23, 2006 Jkt 208001 DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA–2005–23283; Directorate Identifier 2005–NM–185–AD; Amendment 39–14483; AD 2006–04–02] RIN 2120–AA64 Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Final rule. AGENCY: SUMMARY: The FAA is adopting a new airworthiness directive (AD) for all EMBRAER Model EMB–135 airplanes; and Model EMB–145, –145ER, –145MR, –145LR, –145XR, –145MP, and –145EP airplanes. This AD requires repetitive inspections of the pitot static heating relay K0057 for damage to the pin-type contacts, relay enclosure, and finishing material and corrective actions if necessary. This AD also requires doing a terminating modification, which ends the repetitive inspections. This AD results from a report of a burning drain hose and smoke caused by an overheated pitot static heating relay. We are issuing this AD to prevent overheating of a certain pitot static heating relay, which could result in the burning of the windowsill drain hoses and consequent smoke or fire in the airplane cockpit. DATES: This AD becomes effective March 31, 2006. The Director of the Federal Register approved the incorporation by reference of certain publications listed in the AD as of March 31, 2006. ADDRESSES: You may examine the AD docket on the Internet at https:// dms.dot.gov or in person at the Docket Management Facility, U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, room PL–401, Washington, DC. Contact Empresa Brasileira de Aeronautica S.A. (EMBRAER), P.O. Box 343—CEP 12.225, Sao Jose dos Campos—SP, Brazil, for service information identified in this AD. Frm 00008 Fmt 4700 SUPPLEMENTARY INFORMATION: Examining the Docket Airworthiness Directives; Empresa Brasileira de Aeronautica S.A. (EMBRAER) Model EMB–135 Airplanes; and Model EMB–145, –145ER, –145MR, –145LR, –145XR, –145MP, and –145EP Airplanes PO 00000 Dan Rodina, Aerospace Engineer, International Branch, ANM–116, Transport Airplane Directorate, FAA, 1601 Lind Avenue, SW., Renton, Washington 98055–4056; telephone (425) 227–2125; fax (425) 227–1149. FOR FURTHER INFORMATION CONTACT: Sfmt 4700 You may examine the airworthiness directive (AD) docket on the Internet at https://dms.dot.gov or in person at the Docket Management Facility office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The Docket Management Facility office (telephone (800) 647–5227) is located on the plaza level of the Nassif Building at the street address stated in the ADDRESSES section. Discussion The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to all EMBRAER Model EMB–135 airplanes; and Model EMB–145, –145ER, –145MR, –145LR, –145XR, –145MP, and –145EP airplanes. That NPRM was published in the Federal Register on December 13, 2005 (70 FR 73668). That NPRM proposed to require repetitive inspections of the pitot static heating relay K0057 for damage to the pin-type contacts, relay enclosure, and finishing material and corrective actions if necessary. That NPRM also proposed to require doing a terminating modification, which ends the repetitive inspections. Comments We provided the public the opportunity to participate in the development of this AD. We received no comments on the NPRM or on the determination of the cost to the public. Conclusion We have carefully reviewed the available data and determined that air safety and the public interest require adopting the AD as proposed. Costs of Compliance The following table provides the estimated costs for U.S. operators to comply with this AD. E:\FR\FM\24FER1.SGM 24FER1

Agencies

[Federal Register Volume 71, Number 37 (Friday, February 24, 2006)]
[Rules and Regulations]
[Pages 9430-9434]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-1587]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 1124 and 1131

[Docket No. AO-368-A32, AO-271-A37; DA-03-04B]


Milk in the Pacific Northwest and Arizona-Las Vegas Marketing 
Areas; Order Amending the Orders

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule amends provisions of the producer-handler 
definitions of the Pacific Northwest and Arizona-Las Vegas orders as 
contained in the Final Decision published in the Federal Register on 
December 14, 2005. More than the required number of producers for the 
Arizona-Las Vegas and Pacific Northwest marketing areas approved the 
issuance of the orders as amended.

DATES: Effective Date: April 1, 2006.

FOR FURTHER INFORMATION CONTACT: Jack Rower, Marketing Specialist or 
Gino Tosi, Associate Deputy Administrator for Order Formulation and 
Enforcement, USDA/AMS/Dairy Programs, Order Formulation and Enforcement 
Branch, STOP 0231-Room 2971, 1400 Independence Avenue SW., Washington, 
DC 20250-0231, (202) 720-2357 or (202) 690-1366, e-mail addresses: 
jack.rower@usda.gov or gino.tosi@usda.gov.

SUPPLEMENTARY INFORMATION: This document amends the producer-handler 
and related provisions of the Pacific Northwest and Arizona-Las Vegas 
Federal milk orders. Specifically, this final rule permanently adopts a 
provision that will eliminate the exemption from pooling and pricing 
provisions of the orders for producer-handlers with in-area route 
disposition in excess of 3-million pounds per month.
    This administrative action is governed by the provisions of 
sections 556 and 557 of Title 5 of the United States Code and, 
therefore, is excluded from the requirements of Executive Order 12866.
    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. The rule is not intended to have a retroactive 
effect. This rule will not preempt any state or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with the 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 request 
modification or exemption from such order by filing 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. 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 date of the entry of the ruling.

Regulatory Flexibility Act and Paperwork Reduction Act

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.), the Agricultural Marketing Service has considered the economic 
impact of this action on small entities and has certified that this 
final decision will not have a significant economic impact on a 
substantial number of small entities. For the purpose of the Regulatory 
Flexibility Act, a dairy farm is considered a ``small business'' if it 
has an annual gross revenue of less than $750,000, and a dairy products 
manufacturer is a ``small business'' if it has fewer than 500 
employees. For the purposes of determining which dairy farms are 
``small businesses,'' the $750,000 per year criterion was used to 
establish a milk marketing guideline of 500,000 pounds per month. 
Although this guideline does not factor in additional monies that may 
be received by dairy producers, it should be an inclusive standard for 
most ``small'' dairy farmers. For purposes of determining a handler's 
size, if the plant is part of a larger company operating multiple 
plants that collectively exceed the 500 employee limit, the plant will 
be considered a large business even if the local plant has fewer than 
500 employees.
    Producer-handlers are defined as dairy farmers that process only 
their own milk production. These entities must be dairy farmers as a 
pre-condition to operating processing plants as producer-handlers. The 
size of the dairy farm determines the production level of the operation 
and is the controlling factor in the capacity of the processing plant 
and possible sales volume associated with the producer-handler entity. 
Determining whether a producer-handler is considered a small or large 
business must depend on its capacity as a dairy farm where a producer-
handler with annual gross revenue in excess of $750,000 is considered a 
large business.
    The amendments will place entities currently considered to be 
producer-handlers under the Pacific Northwest or the Arizona-Las Vegas 
orders on the same terms as all other fully regulated handlers provided 
they meet the criteria for being subject to the pooling and pricing 
provisions of the two orders. Entities currently defined as producer-
handlers under the terms of these orders will be subject to the pooling 
and pricing provisions of the orders if their route disposition of 
fluid milk products is more than 3 million pounds per month.
    Producer-handlers with route disposition of less than 3 million 
pounds during the month will not be subject to the pooling and pricing 
provisions of the orders. To the extent that current producer-handlers 
for each order have route disposition of fluid milk products outside of 
the marketing areas, such route disposition will be subject to an 
order's pooling and pricing provisions if total in-area route 
disposition causes them to become fully regulated.
    Assuming that some current producer-handlers will have route 
disposition of fluid milk products of more than 3 million pounds during 
the month, such producer-handlers will be regulated subject to the 
pooling and pricing provisions of the orders like other handlers. Such 
producer-handlers will account to the pool for their uses of milk at 
the applicable minimum class prices and pay the difference between 
their use-value and the blend price of the order to the order's 
producer-settlement fund.
    While this may cause an economic impact on those entities with more 
than 3 million pounds of route sales who currently are considered 
producer-handlers by the two orders, the impact is offset by the 
benefit to other small businesses. With respect to dairy farmers whose 
milk is pooled on the two marketing orders, such dairy farmers who have 
not heretofore shared in the additional revenue that accrues from the 
marketwide pooling of Class I

[[Page 9431]]

sales by producer-handlers will share in such revenue. This will have a 
positive impact on 486 small dairy farmers in the Pacific Northwest and 
Arizona-Las Vegas marketing areas. Additionally, all handlers who 
dispose of more than 3 million pounds of fluid milk products per month 
will pay at least the announced Federal order Class I price for such 
use. This will have a positive impact on 18 small regulated handlers.
    The extent that current producer-handlers in the Pacific Northwest 
and the Arizona-Las Vegas orders become subject to the pooling and 
pricing provisions will be determined in their capacity as handlers. 
Such entities will no longer have restrictions applicable to their 
business operations that were conditions for producer-handler status 
and exemption from the pooling and pricing provisions of the two 
orders. In general, this includes being able to buy or acquire any 
quantity of milk from dairy farmers or other handlers instead of being 
limited by the current constraints of the two orders. Additionally, the 
handlers' burden of balancing their milk production is relieved. Milk 
production in excess of what is needed to satisfy their Class I route 
disposition needs will receive the minimum price protection established 
under the terms of the two orders. The burden of balancing milk 
supplies will be borne by all producers and handlers who are pooled and 
regulated under the terms of the two orders.
    During September 2003, the Pacific Northwest had 16 pool 
distributing plants, 1 pool supply plant, 3 cooperative pool 
manufacturing plants, 7 partially regulated distributing plants, 8 
producer-handler plants and 2 exempt plants. Of the 27 regulated 
handlers, 16 or 59 percent were considered large businesses. Of the 691 
dairy farmers whose milk was pooled on the order, 223 or 32 percent 
were considered large businesses. If these amendatory actions were not 
undertaken, 68 percent of the dairy farmers (468) in the Pacific 
Northwest order who are small businesses would continue to be adversely 
affected by the operations of large producer-handlers.
    For the Arizona-Las Vegas order, during September 2003 there were 3 
pool distributing plants, 1 cooperative pool manufacturing plant, 18 
partially regulated distributing plants, 2 producer-handler plants and 
3 exempt plants (including an exempt plant located in Clark County, 
Nevada) operated by 22 handlers. Of these plants, 15 or 68 percent were 
considered large businesses. Of the 106 dairy farmers whose milk was 
pooled on the order, 88 or 83 percent were considered large businesses. 
If these amendatory actions were not undertaken, 17 percent of the 
dairy farmers in the Arizona-Las Vegas order who are small businesses 
would continue to be adversely affected by large producer-handler 
operations.
    In their capacity as producers, 7 producer-handlers would be 
considered to be large producers because their annual marketing exceeds 
6 million pounds of milk. Record evidence indicates that for the 
Pacific Northwest marketing order at the time of the hearing, four 
producer-handlers would potentially become subject to the pooling and 
pricing provisions of the order because of route disposition of more 
than 3 million pounds per month within the marketing area. For the 
Arizona-Las Vegas order, one producer-handler would be considered to be 
a large producer because its annual marketing exceeds 6 million pounds 
of milk and potentially would be subject to the pooling and pricing 
provisions of the order because of route disposition exceeding 3 
million pounds per month.
    A review of reporting requirements was completed under the 
Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). It was 
determined that these proposed amendments will have minimal impact on 
reporting, recordkeeping, or other compliance requirements for entities 
currently considered producer-handlers under the Pacific Northwest and 
the Arizona-Las Vegas marketing orders because they will remain 
identical to the current requirements applicable to all other regulated 
handlers who are currently subject to the pooling and pricing 
provisions of the two orders. No new forms are proposed and no 
additional reporting requirements are necessary.
    This notice does not require additional information collection that 
requires clearance by the Office of Management and Budget (OMB) beyond 
currently approved information collection. The primary sources of data 
used to complete the forms are routinely used in most business 
transactions. Forms require only a minimal amount of information which 
can be supplied without data processing equipment or a trained 
statistical staff. Thus, the information collection and reporting 
burden is relatively small. Requiring the same reports for all handlers 
does not significantly disadvantage any handler that is smaller than 
the industry average.

Prior Documents in This Proceeding

    Notice of Hearing: Issued July 31, 2003; published August 6, 2003 
(68 FR 46505).
    Correction to Notice of Hearing: Issued August 20, 2003; published 
August 26, 2003 (68 FR 51202).
    Notice of Reconvened Hearing: Issued October 27, 2003; published 
October 31, 2003 (68 FR 62027).
    Notice of Reconvened Hearing: Issued December 18, 2003; published 
December 29, 2003 (68 FR 74874).
    Recommended Decision: Issued April 7, 2005; published April 13, 
2005 (70 FR 19636).
    Final Decision: Issued December 9, 2005; published December 14, 
2005 (70 FR 74166).

Findings and Determinations

    The findings and determinations hereinafter set forth supplement 
those that were made when the orders were first issued and when they 
were amended. The previous findings and determinations are hereby 
ratified and confirmed, except where they may conflict with those set 
forth herein.
    The following findings are hereby made with respect to the Pacific 
Northwest and Arizona-Las Vegas orders:
    (a) Finding. A public hearing was held upon certain proposed 
amendments to the tentative marketing agreement and to the order 
regulating the handling of milk in the Pacific Northwest and Arizona-
Las Vegas 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 said orders as hereby amended, 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 area. 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 said orders as hereby amended regulate the handling of milk 
in the same manner as, and are applicable only to persons in the 
respective classes of industrial or commercial activity specified in, a 
marketing agreement upon which a hearing has been held.

[[Page 9432]]

    (4) All milk and milk products handled by handlers, as defined in 
the tentative marketing agreements and the orders as hereby amended, 
are in the current of interstate commerce or directly burden, obstruct, 
or affect interstate commerce in milk or its products.
    (b) Determinations. It is hereby determined that:
    (1) The refusal or failure of handlers (excluding cooperative 
associations specified in Sec 8c(9) of the Act) of more than 50 percent 
of the milk that is marketed within the specified marketing areas to 
sign a proposed marketing agreement tends to prevent the effectuation 
of the declared policy of the Act:
    (2) The issuance of this order amending the Pacific Northwest and 
Arizona-Las Vegas orders is the only practical means pursuant to the 
declared policy of the Act of advancing the interests of producers as 
defined by the orders as hereby amended;
    (3) The issuance of the order amending the Pacific Northwest and 
Arizona-Las Vegas orders is favored by at least two-thirds of the 
producers who were engaged in the production of milk for sale in the 
marketing areas.

List of Subjects in 7 CFR Parts 1124 and 1131

    Milk marketing orders.

Order Relative to Handling

0
It is therefore ordered, that on and after the effective date hereof, 
the handling of milk in the Pacific Northwest and Arizona-Las Vegas 
marketing areas shall be in conformity to and in compliance with the 
terms and conditions of the orders, as amended, and as hereby amended, 
as follows:

PARTS 1124 AND 1131--[AMENDED]

0
1. The authority citation for 7 CFR parts 1124 and 1131 continues to 
read as follows:

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

PART 1124--MILK IN THE PACIFIC NORTHWEST MARKETING AREA

0
2. Revise Sec.  1124.10 to read as follows:


Sec.  1124.10  Producer-handler.

    Producer-handler means a person who operates a dairy farm and a 
distributing plant from which there is route distribution within the 
marketing area during the month not to exceed 3 million pounds and who 
the market administrator has designated a producer-handler after 
determining that all of the requirements of this section have been met.
    (a) Requirements for designation. Designation of any person as a 
producer-handler by the market administrator shall be contingent upon 
meeting the conditions set forth in paragraphs (a)(1) through (5) of 
this section. Following the cancellation of a previous producer-handler 
designation, a person seeking to have their producer-handler 
designation reinstated must demonstrate that these conditions have been 
met for the preceding month.
    (1) The care and management of the dairy animals and the other 
resources and facilities designated in paragraph (b)(1) of this section 
necessary to produce all Class I milk handled (excluding receipts from 
handlers fully regulated under any Federal order) are under the 
complete and exclusive control, ownership and management of the 
producer-handler and are operated as the producer-handler's own 
enterprise and its own risk.
    (2) The plant operation designated in paragraph (b)(2) of this 
section at which the producer-handler processes and packages, and from 
which it distributes, its own milk production is under the complete and 
exclusive control, ownership and management of the producer-handler and 
is operated as the producer-handler's own enterprise and at its sole 
risk.
    (3) The producer-handler neither receives at its designated milk 
production resources and facilities nor receives, handles, processes, 
or distributes at or through any of its designated milk handling, 
processing, or distributing resources and facilities other source milk 
products for reconstitution into fluid milk products or fluid milk 
products derived from any source other than:
    (i) Its designated milk production resources and facilities (own 
farm production);
    (ii) Pool handlers and plants regulated under any Federal order 
within the limitation specified in paragraph (c)(2) of this section; or
    (iii) Nonfat milk solids which are used to fortify fluid milk 
products.
    (4) The producer-handler is neither directly nor indirectly 
associated with the business control or management of, nor has a 
financial interest in, another handler's operation; nor is any other 
handler so associated with the producer-handler's operation.
    (5) No milk produced by the herd(s) or on the farm(s) that supply 
milk to the producer-handler's plant operation is:
    (i) Subject to inclusion and participation in a marketwide 
equalization pool under a milk classification and pricing program under 
the authority of a State government maintaining marketwide pooling of 
returns, or
    (ii) Marketed in any part as Class I milk to the non-pool 
distributing plant of any other handler.
    (b) Designation of resources and facilities. Designation of a 
person as a producer-handler shall include the determination of what 
shall constitute milk production, handling, processing, and 
distribution resources and facilities, all of which shall be considered 
an integrated operation, under the sole and exclusive ownership of the 
producer-handler.
    (1) Milk production resources and facilities shall include all 
resources and facilities (milking herd(s), buildings housing such 
herd(s), and the land on which such buildings are located) used for the 
production of milk which are solely owned, operated, and which the 
producer-handler has designated as a source of milk supply for the 
producer-handler's plant operation. However, for purposes of this 
paragraph, any such milk production resources and facilities which do 
not constitute an actual or potential source of milk supply for the 
producer-handler's operation shall not be considered a part of the 
producer-handler's milk production resources and facilities.
    (2) Milk handling, processing, and distribution resources and 
facilities shall include all resources and facilities (including store 
outlets) used for handling, processing, and distributing fluid milk 
products which are solely owned by, and directly operated or controlled 
by the producer-handler or in which the producer-handler in any way has 
an interest, including any contractual arrangement, or over which the 
producer-handler directly or indirectly exercises any degree of 
management control.
    (3) All designations shall remain in effect until canceled, 
pursuant to paragraph (c) of this section.
    (c) Cancellation. The designation as a producer-handler shall be 
canceled upon determination by the market administrator that any of the 
requirements of paragraph (a)(1) through (5) of this section are not 
continuing to be met, or under any of the conditions described in 
paragraphs (c)(1), (2) or (3) of this section. Cancellation of a 
producer-handler's status pursuant to this paragraph shall be effective 
on the first day of the month following the month in which the 
requirements were not met or the conditions for cancellation occurred.
    (1) Milk from the milk production resources and facilities of the 
producer-handler, designated in paragraph (b)(1) of this section, is 
delivered in the name

[[Page 9433]]

of another person as producer milk to another handler.
    (2) The producer-handler handles fluid milk products derived from 
sources other than the milk production facilities and resources 
designated in paragraph (b)(1) of this section, except that it may 
receive at its plant, or acquire for route disposition, fluid milk 
products from fully regulated plants and handlers under any Federal 
order if such receipts do not exceed 150,000 pounds monthly. This 
limitation shall not apply if the producer-handler's own-farm 
production is less than 150,000 pounds during the month.
    (3) Milk from the milk production resources and facilities of the 
producer-handler is subject to inclusion and participation in a 
marketwide equalization pool under a milk classification and pricing 
plan operating under the authority of a State government.
    (d) Public announcement. The market administrator shall publicly 
announce:
    (1) The name, plant location(s), and farm location(s) of persons 
designated as producer-handlers;
    (2) The names of those persons whose designations have been 
cancelled; and
    (3) The effective dates of producer-handler status or loss of 
producer-handler status for each. Such announcements shall be 
controlling with respect to the accounting at plants of other handlers 
for fluid milk products received from any producer-handler.
    (e) Burden of establishing and maintaining producer-handler status. 
The burden rests upon the handler who is designated as a producer-
handler to establish through records required pursuant to Sec.  1000.27 
that the requirements set forth in paragraph (a) of this section have 
been and are continuing to be met, and that the conditions set forth in 
paragraph (c) of this section for cancellation of the designation do 
not exist.

PART 1131--MILK IN THE ARIZONA-LAS VEGAS MARKETING AREA

0
3. Revise Sec.  1131.10 to read as follows:


Sec.  1131.10  Producer-handler.

    Producer-handler means a person who operates a dairy farm and a 
distributing plant from which there is route distribution within the 
marketing area during the month not to exceed 3 million pounds and who 
the market administrator has designated a producer-handler after 
determining that all of the requirements of this section have been met.
    (a) Requirements for designation. Designation of any person as a 
producer-handler by the market administrator shall be contingent upon 
meeting the conditions set forth in paragraphs (a)(1) through (5) of 
this section. Following the cancellation of a previous producer-handler 
designation, a person seeking to have their producer-handler 
designation reinstated must demonstrate that these conditions have been 
met for the preceding month.
    (1) The care and management of the dairy animals and the other 
resources and facilities designated in paragraph (b)(1) of this section 
necessary to produce all Class I milk handled (excluding receipts from 
handlers fully regulated under any Federal order) are under the 
complete and exclusive control, ownership and management of the 
producer-handler and are operated as the producer-handler's own 
enterprise and its own risk.
    (2) The plant operation designated in paragraph (b)(2) of this 
section at which the producer-handler processes and packages, and from 
which it distributes, its own milk production is under the complete and 
exclusive control, ownership and management of the producer-handler and 
is operated as the producer-handler's own enterprise and at its sole 
risk.
    (3) The producer-handler neither receives at its designated milk 
production resources and facilities nor receives, handles, processes, 
or distributes at or through any of its designated milk handling, 
processing, or distributing resources and facilities other source milk 
products for reconstitution into fluid milk products or fluid milk 
products derived from any source other than:
    (i) Its designated milk production resources and facilities (own 
farm production);
    (ii) Pool handlers and plants regulated under any Federal order 
within the limitation specified in paragraph (c)(2) of this section; or
    (iii) Nonfat milk solids which are used to fortify fluid milk 
products.
    (4) The producer-handler is neither directly nor indirectly 
associated with the business control or management of, nor has a 
financial interest in, another handler's operation; nor is any other 
handler so associated with the producer-handler's operation.
    (5) No milk produced by the herd(s) or on the farm(s) that supply 
milk to the producer-handler's plant operation is:
    (i) Subject to inclusion and participation in a marketwide 
equalization pool under a milk classification and pricing program under 
the authority of a State government maintaining marketwide pooling of 
returns, or
    (ii) Marketed in any part as Class I milk to the non-pool 
distributing plant of any other handler.
    (6) The producer-handler does not distribute fluid milk products to 
a wholesale customer who is served by a plant described in Sec.  
1131.7(a), (b), or (e), or a handler described in Sec.  1000.8(c) that 
supplied the same product in the same-sized package with a similar 
label to a wholesale customer during the month.
    (b) Designation of resources and facilities. Designation of a 
person as a producer-handler shall include the determination of what 
shall constitute milk production, handling, processing, and 
distribution resources and facilities, all of which shall be considered 
an integrated operation, under the sole and exclusive ownership of the 
producer-handler.
    (1) Milk production resources and facilities shall include all 
resources and facilities (milking herd(s), buildings housing such 
herd(s), and the land on which such buildings are located) used for the 
production of milk which are solely owned, operated, and which the 
producer-handler has designated as a source of milk supply for the 
producer-handler's plant operation. However, for purposes of this 
paragraph, any such milk production resources and facilities which do 
not constitute an actual or potential source of milk supply for the 
producer-handler's operation shall not be considered a part of the 
producer-handler's milk production resources and facilities.
    (2) Milk handling, processing, and distribution resources and 
facilities shall include all resources and facilities (including store 
outlets) used for handling, processing, and distributing fluid milk 
products which are solely owned by, and directly operated or controlled 
by the producer-handler or in which the producer-handler in any way has 
an interest, including any contractual arrangement, or over which the 
producer-handler directly or indirectly exercises any degree of 
management control.
    (3) All designations shall remain in effect until canceled pursuant 
to paragraph (c) of this section.
    (c) Cancellation. The designation as a producer-handler shall be 
canceled upon determination by the market administrator that any of the 
requirements of paragraph (a)(1) through (5) of this section are not 
continuing to be met, or under any of the conditions described in 
paragraphs (c)(1), (2) or (3) of this section. Cancellation of a 
producer-handler's status pursuant to this paragraph shall be effective 
on the first day of the month following the

[[Page 9434]]

month in which the requirements were not met or the conditions for 
cancellation occurred.
    (1) Milk from the milk production resources and facilities of the 
producer-handler, designated in paragraph (b)(1) of this section, is 
delivered in the name of another person as producer milk to another 
handler.
    (2) The producer-handler handles fluid milk products derived from 
sources other than the milk production facilities and resources 
designated in paragraph (b)(1) of this section, except that it may 
receive at its plant, or acquire for route disposition, fluid milk 
products from fully regulated plants and handlers under any Federal 
order if such receipts do not exceed 150,000 pounds monthly. This 
limitation shall not apply if the producer-handler's own-farm 
production is less than 150,000 pounds during the month.
    (3) Milk from the milk production resources and facilities of the 
producer-handler is subject to inclusion and participation in a 
marketwide equalization pool under a milk classification and pricing 
plan operating under the authority of a State government.
    (d) Public announcement. The market administrator shall publicly 
announce:
    (1) The name, plant location(s), and farm location(s) of persons 
designated as producer-handlers;
    (2) The names of those persons whose designations have been 
cancelled; and
    (3) The effective dates of producer-handler status or loss of 
producer-handler status for each. Such announcements shall be 
controlling with respect to the accounting at plants of other handlers 
for fluid milk products received from any producer-handler.
    (e) Burden of establishing and maintaining producer-handler status. 
The burden rests upon the handler who is designated as a producer-
handler to establish through records required pursuant to Sec.  1000.27 
that the requirements set forth in paragraph (a) of this section have 
been and are continuing to be met, and that the conditions set forth in 
paragraph (c) of this section for cancellation of the designation do 
not exist.

    Dated: February 15, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 06-1587 Filed 2-23-06; 8:45 am]
BILLING CODE 3410-02-P