[Federal Register Volume 83, Number 62 (Friday, March 30, 2018)]
[Proposed Rules]
[Pages 13691-13700]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-06286]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 83, No. 62 / Friday, March 30, 2018 /
Proposed Rules
[[Page 13691]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 1006
[AMS-DA-17-0068; AO-18-0008]
Milk in the Florida Marketing Area; Decision on Proposed
Amendments to Marketing Agreement and Order
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule.
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SUMMARY: This document proposes to adopt, on an emergency basis,
amendments to the Florida Federal milk marketing order (FMMO) that
would implement a temporary assessment on Class I milk. Revenues
collected through the assessment would be disbursed to handlers and
producers who incurred extraordinary marketing losses and expenses due
to Hurricane Irma, which caused considerable market disruptions in
September 2017.
DATES: March 30, 2018.
FOR FURTHER INFORMATION CONTACT: Erin Taylor, Acting Director, Order
Formulation and Enforcement Division, USDA/AMS/Dairy Program, Stop
0231--Room 2963, 1400 Independence Avenue SW, Washington, DC 20250-
0231; phone: (202) 720-7311; email: [email protected].
SUPPLEMENTARY INFORMATION: This proposed rule, in accordance with 7 CFR
900.13a, is the Secretary's final decision in this proceeding and
proposes the issuance of a marketing order as defined in 7 CFR
900.2(j).
This administrative action is governed by the provisions of
Sections 556 and 557 of Title 5 of the United States Code and is
therefore excluded from the requirements of Executive Order 12866.
This proposed rule is not considered an Executive Order 13771
regulatory action because it does not meet the definition of a
``regulation'' or ``rule'' under Executive Order 12866.
The proposed amendments have been reviewed under Executive Order
12988, Civil Justice Reform. This rule is not intended to have
retroactive effect. If adopted, the proposed rule will not preempt any
state or local law, regulations, or policies, unless they present an
irreconcilable conflict with this rule.
AMS is committed to complying with the E-Government Act to promote
the use of the internet and other information technologies, to provide
increased opportunities for citizen access to Government information
and services, and for other purposes.
The Agricultural Marketing Agreement Act of 1937 (AMAA), as amended
(7 U.S.C. 601-674 and 7253), provides that administrative proceedings
must be exhausted before parties may file suit in court. Under section
608c(15)(A) of the AMAA, any handler subject to a marketing order may
request modification or exemption from such order by filing with the
U.S. Department of Agriculture (USDA) 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 law. A handler is
afforded the opportunity for a hearing on the petition. After a
hearing, USDA would rule on the petition. The AMAA provides that the
district court of the United States in any district in which the
handler is an inhabitant, or has its principal place of business, has
jurisdiction in equity to review USDA's ruling on the petition,
provided a bill in equity is filed not later than 20 days after the
date of the entry of the ruling.
Regulatory Flexibility Act and Paperwork Reduction Act
In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C.
601-612), AMS has considered the economic impact of this proposed
action on small entities and has determined that this proposed rule
will not have a significant economic impact on a substantial number of
small entities.
For the purpose of the RFA, a dairy farm is considered a small
business if it has an annual gross revenue of less than $750,000. Dairy
product manufacturers are considered small businesses based on the
number of people they employ. Small fluid milk and ice cream
manufacturers are defined as having 1,000 or fewer employees. Small
butter and dry or condensed dairy product manufacturers are defined as
having 750 or fewer employees. Small cheese manufacturers are defined
as having 1,250 or fewer employees. Manufacturing plants that are part
of larger companies operating multiple plants with total numbers of
employees that exceed the threshold for small businesses will be
considered large businesses, even if the local plant has fewer
employees than the threshold number.
AMS estimates that 248 dairy farms produced milk pooled on the
Florida FMMO in 2017. One hundred forty-one farms delivered milk to
Florida pool plants fewer than 100 days during 2017, and of those, 66
pooled less than 48,000 pounds of milk on the order during the entire
year. AMS estimates 107 farms (248 minus 141) were part of the
``normal'' Florida milk supply last year. Nineteen of those farms had
less than $750,000 in gross milk sales, based upon estimated 2017
production and a weighted average uniform price of $20.98 per cwt.
Considering all 248 farms that had producer milk on the Florida
FMMO, AMS estimates that 101 farms had less than $750,000 in gross milk
sales, no matter where all of their production was pooled, and would be
considered small businesses.
Interested persons were invited to present evidence at the hearing
on the possible regulatory impact of the proposals on small businesses.
Four witnesses testified at the hearing, each representing one or all
of the proponent cooperatives. Each of the witnesses indicated their
cooperatives include dairy farmer members who would be considered small
businesses.
AMS data indicates that six dairy farmer cooperatives, in their
capacity as handlers, pooled producer milk on the Florida FMMO in 2017.
AMS estimates that two of those cooperative handlers have fewer than
500 employees and would be considered small businesses. Thirty-eight
processing plants received producer milk in 2017, of which AMS
estimates that 13 would be considered small businesses. Two of the 13
small businesses are fully regulated distributing plants on the Florida
FMMO. The remaining 11 small business are nonpool or exempt plants.
The proposed amendments recommended in this final decision will
provide temporary reimbursement to handlers (cooperative associations
and proprietary handlers) who incurred
[[Page 13692]]
extraordinary losses in connection with Hurricane Irma in September
2017. The proposed amendments were requested by Southeast Milk, Inc.;
Dairy Farmers of America, Inc.; Premier Milk, Inc.; Maryland and
Virginia Milk Producers Cooperative Association, Inc.; and Lone Star
Milk Producers, Inc. The dairy farmer members of these five
cooperatives supply the majority of the milk pooled under the Florida
FMMO. The proposed amendments would implement, for a 7-month period
beginning with the first month the amendments would be effective, a
temporary assessment on Class I milk pooled on the Florida FMMO at a
rate not to exceed $0.09 per hundredweight (cwt). The amount generated
through the temporary assessment would be disbursed during the 7-month
period starting the month after the amendments become effective to
qualifying handlers who incurred extraordinary losses and expenses as a
result of the hurricane.
Hurricane Irma disrupted the orderly flow of milk movements within
the Florida marketing area between September 6, 2017, and September 15,
2017. Handlers in Florida experienced disruptions in moving and
marketing bulk milk to supply the Class I (fluid milk) needs of the
marketing area.
One of the functions of the FMMO program is to provide for the
orderly exchange of milk between the dairy farmer and the handler
(first buyer) to ensure the Class I needs of the market are met. The
record evidence clearly shows that the movements of bulk milk in the
Florida marketing area were disrupted because of the hurricane. As
well, handlers experienced losses due to selling milk at distressed
prices or dumping milk that could not be delivered to its usual
destination. Accordingly, the adoption of the proposed amendments would
provide financial relief to qualifying handlers who incurred additional
marketing expenses and losses for bulk milk movements that were
disrupted as a result of Hurricane Irma.
The proposed amendments would reimburse handlers for marketing
expenses and losses in four categories: Transportation costs to deliver
loads to other than their normal receiving plants; lost location value
due to selling milk in lower location value zones; milk dumped at farms
or on tankers, and skim milk dumped at plants; and distressed milk
sales. Reimbursement would be funded through an assessment on Class I
milk at a maximum rate of $0.09 per cwt. Record evidence indicates that
this would increase the consumer price of milk by less than $0.01 per
gallon during the 7-month proposed assessment period.
Handlers in the Florida marketing area would not be at a
competitive disadvantage due to the temporary assessment because of its
uniform application to all Class I milk. Additionally, any handler,
regardless of size, who experienced a qualifying marketing expense or
loss would be eligible to receive reimbursement. Dairy farmer blend
prices would not be impacted by the proposed amendments because the
assessment is not funded through the marketwide pool. Dairy farmer
cooperatives who pooled milk on the Florida order, and therefore
qualified as the pooling handler, would also be eligible for
reimbursement. In those instances, producers are receiving relief as
the money is returned to their dairy farmer-owned cooperative.
Accordingly, the adoption of the proposed amendments would not
significantly impact producers or handlers of any size, due to the
limited implementation period and the minimal impact to the Class I
milk price.
A review of reporting requirements was completed in accordance with
the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). As such,
the information collection requirements related to this final decision
do not require clearance by the Office of Management and Budget (OMB)
beyond the currently approved information collection [0581-0032]. The
information necessary to qualify for reimbursement, as proposed in this
decision, has already been submitted through the monthly handler
receipts and utilization form (INSERT FORM #), or is part of the normal
business records that are inspected during routine FMMO audits.
The primary sources of information that would be required for
application for reimbursements are documents currently generated in
customary business transactions. These documents include--but are not
limited to--invoices, receiving records, bulk milk manifests, hauling
bills, and contracts. These documents are routinely inspected by the
market administrator during handler audits. Thus no new information
would be collected as a result of the amendments.
Prior Documents in This Proceeding
Notification of Hearing: Issued December 6, 2017; published
December 11, 2017 (82 FR 58135).
Supplemental Notice of Hearing: Issued December 7, 2017; published
December 11, 2017 (82 FR 58135).
Secretary's Decision
Notice is hereby given of the filing with the Hearing Clerk of this
final decision with respect to proposed amendments to the tentative
marketing agreement and order regulating the handling of milk in the
Florida marketing area. This decision is issued pursuant to the
provisions of the AMAA and the applicable rules of practice and
procedure governing the formulation of marketing agreements and orders
(7 CFR part 900). The tentative marketing agreement and order are
authorized under 7 U.S.C. 608c.
The proposed amendments set forth below are based on the record of
a public hearing held in Tampa, Florida, December 12 through 14, 2017,
pursuant to a notification of hearing issued December 6, 2017, and
published December 11, 2017 (82 FR 58135).
The material issues on the record of this proceeding relate to:
1. Temporary Class I assessment for reimbursement of extraordinary
expenses and losses resulting from Hurricane Irma; and
2. Determination of whether emergency marketing conditions exist
that warrant the omission of a recommended decision and the opportunity
to file written exceptions.
Overview of Proposal
Proposal 1 was submitted by an association of cooperative dairy
producers who operate in the Florida milk marketing area. The
proponents include Southeast Marketing, Inc.; Dairy Farmers of America,
Inc.; Premier Milk, Inc.; Maryland and Virginia Producers Cooperative
Association, Inc.; and Lone Star Milk Producers, Inc. (hereinafter
referred to as ``Cooperatives''). According to the hearing record, the
proponents together market in excess of 90 percent of the milk pooled
on the Florida FMMO.
Proposal 1 would provide for emergency relief for Florida dairy
handlers and producers for extraordinary marketing expenses and losses
incurred September 6 through 15, 2017, as a result of Hurricane Irma.
Proposal 1 would amend the Florida FMMO by providing for a temporary
increase of $0.09 per cwt on Class I milk to fund reimbursements for
eligible reimbursement claims. The proposal would provide for
reimbursements related to: Transportation costs to deliver milk to
plants other than the normal receiving plant; lost location value due
to selling milk in lower location value zones; milk dumped at farms or
on tankers, and skim milk dumped at plants; and distressed milk sales.
[[Page 13693]]
Findings and Conclusions
The following findings and conclusions on the material issues are
based on evidence presented at the hearing and the record thereof:
1. Temporary reimbursement for extraordinary expenses and losses
resulting from Hurricane Irma. At issue in this proceeding is the
consideration of proposed amendments to the Florida FMMO to provide
reimbursement to qualifying handlers (handlers and dairy farmer-owned
cooperative associations in their capacity as handlers) for certain
categories of extraordinary losses and expenses due to market
disruptions caused by Hurricane Irma in September 2017. This decision
finds that reimbursement through a temporary assessment ($0.09 per cwt)
on Class I milk is appropriate.
A witness appearing on behalf of the Cooperatives testified in
support of Proposal 1. The witness explained that normal milk movements
in the Florida marketing area were disrupted as a result of Hurricane
Irma, and that producers and handlers resorted to extraordinary
measures to find alternative market outlets for milk that could not be
delivered and processed at its normal destination. According to the
witness, providing regulatory relief through a temporary assessment on
Class I milk, as proposed, would ensure that all affected Class I
handlers can be reimbursed for eligible claims.
The Cooperative witness stated that Proposal 1 would provide
reimbursement across four categories to handlers who experienced
extraordinary marketing expenses and losses. The witness categorized
the costs as extra transportation costs for hauling milk to more
distant plants; revenue lost due to the difference in location value as
a result of delivering milk to more distant plants; revenue lost on
milk that was dumped due to plant unavailability or logistical delays;
and revenue lost on sales of milk to unregulated manufacturing plants
at distressed milk prices.
In regards to transportation cost reimbursement, the Cooperative
witness clarified Proposal 1 only seeks reimbursement for
transportation costs in excess of what handlers would have normally
paid if the hurricane had not forced them to find alternative market
outlets. The witness explained the modification also would allow
handlers to receive hauling cost reimbursement for milk rerouted to
plants outside of Florida, even if the milk was not pooled on the
Florida FMMO in September 2017. Proposed language would also impose a
$3.75 per loaded mile upper limit on transportation cost reimbursement.
The witness explained the $3.75 limit was based upon the proponents'
industry experience and reflects current hauling rates for bulk milk.
The Cooperative witness explained that Proposal 1 seeks
reimbursement for revenue lost due to receiving a lower location value
than the milk would have normally received. The witness also modified
Proposal 1 to allow milk rerouted to plants outside of the Florida milk
marketing area to be eligible for location value reimbursement, even if
the milk was not pooled on the Florida FMMO. The witness explained
there were instances where milk normally associated with the Florida
marketing area was rerouted to alternative plants and pooled on another
FMMO. The witness said the modification would allow the handler to
recoup the lost location value despite the milk not being pooled on the
Florida FMMO. As with transportation costs, reimbursement would apply
to the difference between the location value handlers would have
normally received and the location value they actually received.
The Cooperative witness also clarified they are only seeking a net
reimbursement, on a load-by-load basis, between losses in location
value and any savings or losses on transportation costs. In this way,
the witness explained, proponents would not receive reimbursement in
excess of the actual cost incurred as a result of the hurricane.
The Cooperative witness explained that Proposal 1 also seeks
reimbursement for milk dumped on farms, in tankers, or skim milk dumped
at plants at the lowest classified value for the month. According to
the witness, there are documented cases where milk was dumped at the
farm because roads were impassable or tanker trucks or drivers were
unavailable to haul the milk. In other cases, milk was dumped from
tankers when no plants were available to receive it, or delivered to
plants that were able to skim off and market the butterfat, but the
skim milk had to be dumped. The witness noted that there may be loads
of dumped milk that were not reported in a handlers' September 2017
Report of Receipts and Utilization, and asked that the Market
Administrator allow handlers to revise their reports to reflect these
dumped loads, although such a provision had not been included in the
original proposal.
The last reimbursement category, said the Cooperative witness, is
reimbursement for distressed milk sales. The witness modified the
original proposal and testified that proponents are now seeking
reimbursement for distressed milk sales equal to the difference between
the announced price applicable to the milk at its classified use value
and the actual price received for the distressed milk moved to nonpool
plants. The witness explained that the purpose of this modification was
to seek reimbursement on distressed milk sales at the milk's actual
classified use value, as opposed to the lowest classified value, which
in September 2017 was Class IV. The witness said reimbursing handlers
for the actual classified use value ensures handlers are made whole
based on how the milk was actually used. The witness clarified that
reimbursement for distressed milk sales should not be limited to pooled
milk.
The Cooperative witness explained the proposed reimbursement
categories would be funded through a temporary assessment on Class I
milk at a maximum rate of $0.09 per cwt per month for a limited period
determined appropriate by USDA. The witness stated $0.09 per cwt was
the rate USDA allowed previously to fund reimbursements following
losses due to Hurricanes Charley, Frances, Ivan, and Jeanne in 2004.
According to the witness, $0.09 per cwt generated necessary funds
without causing market disruptions.
The witness said that in the Cooperatives' proposal, the Market
Administrator would determine and announce the temporary assessment on
Class I milk for each month the provisions are in effect. As the
witness explained, during each applicable month, the Market
Administrator would pay out verified eligible costs and losses, up to
the amount of funds collected under the assessment for that month,
uniformly prorating reimbursements if the eligible claims exceed funds
available for the month. The witness testified that if the total
dollars collected across all months exceed the total eligible claims,
the Market Administrator should reduce the temporary assessment in the
final month so as to not collect excess funds.
The Cooperative witness testified that because Class I prices are
announced in advance of the month, there is a possibility that in the
last month of the reimbursement period there could be a difference
between the amount of money generated and the amount needed to pay
final claim reimbursements. According to the witness, if the additional
funds exceed the final costs, the extra funds could be added to the
marketwide pool and
[[Page 13694]]
distributed to producers, or they could be returned pro rata to the
handlers. If funds from the assessment are less than the total eligible
claims due to handlers, the Market Administrator could prorate
available funds for reimbursement.
The same witness later appeared on behalf of Lone Star Milk
Producers, Inc. (Lone Star), in support of Proposal 1. Lone Star is a
dairy farmer-owned cooperative that markets milk on behalf of more than
100 producers located in the Florida, Southeast, and Southwest FMMO
areas. Lone Star is one of the Cooperative proponents of Proposal 1.
The witness testified that the majority of Lone Star producers who
market milk on the Florida FMMO would qualify as small businesses. The
witness testified to the expenses and losses Lone Star incurred as a
result of disorderly milk movements caused by Hurricane Irma.
According to the witness, Lone Star represents a small volume of
milk relative to other marketers of milk in the Florida marketing area,
but its members' pay prices were significantly impacted due to
hurricane-related costs associated with rerouting milk. The witness
testified that Lone Star was able to quantify its losses attributable
to the storm because in September, all of Lone Star's milk marketed in
Florida would have normally gone to its only customer in the Florida
milk marketing area.
The witness testified that Lone Star actually saved on
transportation costs, but experienced losses in location value of
approximately $1.80 per cwt, compared to their normal milk marketings
for September. The witness said Lone Star's losses in location value
exceed transportation savings, and that they would seek reimbursement
for only the difference. The witness also identified an $8,800 loss for
one load of dumped milk and $22,000 in losses for distressed milk sales
to unregulated plants. The witness summarized Lone Star's net losses,
after offsetting savings in hauling costs, as more than $38,000 on milk
normally pooled on the Florida order but which was rerouted or dumped.
The Lone Star witness testified regarding how USDA should view
reimbursement for dumped milk and distressed milk sales. If, the
witness explained, USDA determined that dumped milk was eligible for
reimbursement at the lowest classified value in September 2017, but
determined distressed milk sales were not eligible for reimbursement,
handlers would effectively be penalized for finding an alternative
market. The witness testified that if dumped milk was eligible for
reimbursement but distressed milk sales were not, this might
incentivize handlers to elect to dump milk in future natural disasters
instead of trying to find an alternative market outlet. The witness
concluded by expressing Lone Star's support for the proposed amendments
as an emergency action and urged USDA to omit issuance of a recommended
decision.
A witness testified in support of Proposal 1 on behalf of Southeast
Milk, Inc. (SMI). SMI is a dairy-farmer owned cooperative representing
approximately 150 dairy farmers located throughout the Southeast, of
which 64 are located in Florida. Approximately 70 percent of SMI's milk
production is located in the state of Florida, accounting for a
significant portion of the milk pooled on the Florida FMMO each month.
SMI is one of the proponent cooperatives of Proposal 1. According to
the witness, the Small Business Administration would classify
approximately 10 percent of all SMI producers as small businesses.
The SMI witness presented testimony regarding the Florida market
conditions attributable to Hurricane Irma. The witness testified that
the hurricane caused every plant in Florida to shut down between one
and five days and, of the eight plants where SMI delivers, the average
closure lasted 3.15 days.
The SMI witness also cited data released by the Florida Department
of Agriculture and Consumer Services (FDACS) reporting tropical storm
conditions in each of Florida's 67 counties. According to the FDACS
data, estimated agriculture losses from Hurricane Irma were in excess
of $2.5 billion, exceeding those of Hurricanes Charley and Frances in
2004. According to the FDACS information presented, Hurricane Irma was
the largest, most powerful hurricane ever recorded on the Atlantic
Ocean, making landfall in South Florida as a category three hurricane.
FDACS data estimates the value of lost production in the Florida dairy
sector to be at least $7.5 million. This estimate, the witness said,
does not account for the losses for which the Cooperatives are seeking
reimbursement through Proposal 1, but focuses on losses such as on-farm
structure damage.
The SMI witness noted USDA declared 19 Florida counties Primary
Natural Disaster Areas, with another 25 counties eligible for Federal
assistance. The witness testified that 57 (or 87 percent) of SMI's 64
Florida dairy farms are located in counties declared disaster areas,
and these farms produce approximately 91 percent of SMI's Florida milk
production. According to the witness, some of SMI's southern Florida
producers reported a 25 percent reduction in their daily milk
production as a result of the stress to the milking herd. For the month
of September, the witness stated that SMI members' production reports
show a decrease of 3 percent, or 4 million pounds, as compared to
September 2016. The witness noted that the loss in production will
impact farmers for months to come.
The SMI witness testified that more than 15 million people were
without power as a result of the storm and cited state agency reports
indicating that on September 13, two days after the storm had passed,
nearly 3.8 million customers still had no power. The witness explained
that power outages meant that plants were unable to process milk,
grocery stores were unable to store milk, and customers were unable to
purchase milk, leaving dairy farmers with no market for their milk for
multiple days.
In addition to the disruption caused by power outages, the SMI
witness described fuel shortages that impacted farmers who rely on fuel
to run on-farm generators. Without power or fuel to run generators,
many farmers were unable to milk cows or keep bulk tanks cold. Farmers
that were able to run generators had difficulty getting milk tankers to
pick up their milk and deliver to plants in time for the milk to be
pasteurized in accordance with health and sanitation standards. These
factors, along with processing plant and road closures, led SMI
producers to dump over 2 million pounds of milk on the farm or from
tankers during and after the storm. SMI estimates the value lost due to
dumped milk at approximately $328,000.
The witness testified SMI also incurred losses from milk sold at
distressed prices. According to the witness, SMI estimates the lost
value of selling milk that normally services the Class I market to a
cheese processor at distressed prices to be at around $73,000, and an
additional $19,300 loss on the same milk due to the difference in
location value. The witness noted that these losses do not include the
additional transportation costs SMI incurred shipping the milk out of
the marketing area. According to the witness, dairy farmers will
continue to see reduced mailbox prices for months to come as a result
of the milk dumped and the milk sold at distressed prices.
The SMI witness explained that when electric power was restored and
plants began to reopen, demand for fluid milk was extremely high. The
witness noted that SMI experienced additional disorder and expenses as
they worked to fill the pipeline. The witness said the
[[Page 13695]]
demand to restock the Florida market significantly impacted milk
movements through September 15.
A witness testified on behalf of Premier Milk, Inc. (Premier), in
support of Proposal 1. Premier is a dairy farmer-owned cooperative that
markets nearly all of its members' milk on the Florida FMMO, with
occasional sales on the Southeast FMMO. Premier is one of the proponent
cooperatives of Proposal 1. In September 2017, Premier marketed milk on
behalf of fifteen producers in the Florida FMMO, five of which are
considered small businesses.
During September 2017, the witness said Premier shipped almost all
of its members' milk to a dairy processor in Orange City, Florida. The
witness explained Premier began experiencing delays delivering milk
between September 7 and September 9 due to heavily congested roads
resulting from pre-storm evacuations. According to the witness, the
processor then announced it would close its plant on September 9 and
would not process milk until the power was fully restored, which did
not occur until September 13. The witness testified Premier took steps
to minimize losses and avoid dumping milk, and was able to reroute some
of its milk to a cheese plant in Alabama; however driver availability
became an issue. According to the witness, Premier also worked with a
small local processor to skim butterfat from some of its loads and dump
the skim milk.
Ultimately, the witness testified, Premier's marketing losses had a
significant impact on producer pay prices. The witness stated that
reduced pay, in combination with farm losses due to structural damage
and lost production, meant some of Premier's members had not been able
to pay all their bills during the months after the hurricane.
The witness estimated Premier's total losses to be approximately
$106,000: Losses for dumped milk at $32,000; net losses for distressed
milk sales due to location value loss and freight costs at $33,000; and
losses due to selling butterfat and dumping skim milk at $41,000.
Premier urged USDA to expedite decision making regarding the proposed
amendments in order to relieve some of the financial stress dairy
farmers continue to be faced with after Hurricane Irma.
A witness representing Dairy Farmers of America, Inc. (DFA),
testified in support of Proposal 1. DFA is a dairy farmer-owned
cooperative marketing milk on all FMMOs except Arizona. According to
the witness, 1,367 member farms service the cooperative's operational
area that includes the Florida market, of which 10 farms are associated
with the Florida FMMO during a typical month. The witness stated that
none of its Florida farms would be considered small businesses. DFA is
one of the proponent cooperatives of Proposal 1.
The DFA witness explained its members suffered marketing losses
from Hurricane Irma and were seeking emergency relief in the form of
reimbursement through the provisions of Proposal 1, as modified at the
hearing. The DFA witness reiterated Proposal 1's intent to only seek
compensation for net market losses resulting from the hurricane's
disruption. The witness testified that DFA supports implementing the
temporary maximum $0.09 per cwt assessment on Class I milk until all
eligible claims are paid.
The DFA witness highlighted Market Administrator data that
demonstrated changes in daily milk deliveries before, during and after
the storm. The witness also referenced additional Market Administrator
data showing a substantial amount of milk dumped on farms in September
2017, a practice that is highly unusual during a normal marketing
month.
The DFA witness estimated the cooperative's losses due to the
hurricane at approximately $150,000. Similar to earlier witnesses, the
witness described DFA's efforts to minimize marketing losses. The
witness said although DFA tried to meet the demand for extra milk prior
to the storm, movements were difficult and costly because of highway
congestion and the lack of available drivers. The witness explained
that only three of the 75 loads of milk DFA would have normally
delivered to Florida marketing area processors between September 9 and
13 went to their usual destinations; the rest were rerouted elsewhere,
in most cases to pool plants and non-pool plants in neighboring
marketing areas. The witness testified that DFA found an alternative
market for almost all of its milk, but in doing so, tanker loads
traveled longer distances and were sold at lower values than if they
had been delivered to Florida plants. The witness noted that such
extensive market disruption was historically unprecedented, even during
emergency plant closures due to power or water loss.
The DFA witness stated that at the rate of $0.09 per cwt, the
impact of the proposed temporary assessment on consumers would be less
than $0.01 per gallon. According to the witness, providing for
reimbursements through the proposed amendments to the Florida FMMO
supports orderly marketing, as it recognizes the extraordinary nature
of the hurricane's impact, and ensures the impact on milk producers,
processors, sellers, and consumers is shared equally by the entire
affected market. Finally, the witness urged USDA to expedite the
rulemaking process necessary to make a determination in this matter.
The Cooperatives submitted a post-hearing brief reiterating the
effects Hurricane Irma had on milk marketing conditions in Florida. The
brief highlighted the unprecedented nature of the hurricane, noting the
simultaneous closure of all processing plants in the state, extensive
milk dumping, and resulting depressed producer pay prices. The brief
noted the lack of opposition from any interested and impacted industry
participants to substantiate the case for expedited relief. The
Cooperatives' brief stated that the AMAA provides the authority for the
adoption of Proposal 1 on an emergency basis.
The Cooperatives' brief stressed that Hurricane Irma impacted the
entire state of Florida, emphasizing that historically, hurricanes in
Florida have severely impacted a portion of the state but left other
portions intact, allowing the dairy industry to mitigate market
disruptions. Hurricane Irma, however, caused all fluid milk processing
plants to simultaneously close from one to five days. The brief
estimated that during the 10-day period from September 6 through
September 15, 2017, more than 20 million pounds of milk that was part
of the normal Florida milk supply had to find an alternative market
outlet.
The Cooperatives' brief summarized the marketing expenses and
losses for which handlers are seeking reimbursement, organized by four
categories: Extra transportation expenses; lost location value; revenue
lost due to dumped milk; and revenue lost due to distressed milk sales
to unregulated manufacturing plants. The brief explained the
differences between the proposal as published in the Notice of Hearing
and the modified proposal submitted at the hearing. The Cooperatives
wrote that the modifications were made following further review of
actual milk movements and data, as well as adapting the proposal to
account for the regulatory impact of Florida FMMO diversion limits.
Regarding transportation costs, the Cooperative brief clarified
their intention to reimburse handlers for only the transportation costs
of milk that exceed what the handler would have paid had there been no
hurricane. The brief also explained that after reviewing data on milk
movements, the
[[Page 13696]]
Cooperatives realized that some milk was delivered to plants fully
regulated on another FMMO, and therefore the milk was pooled on the
other FMMO. Under the language submitted in the Notice of Hearing, this
milk would have been excluded from receiving reimbursement for
additional transportation costs because the milk was not pooled on the
Florida order. As the order limits the pooling of diversions to nonpool
plants based on volumes delivered to pool plants, the plant closures
that resulted from the Hurricane reduced allowable diversions to
nonpool plants and prevented handlers from pooling all of the normal
milk supply on the Florida FMMO.
The Cooperatives' brief explained a similar modification made to
the provisions seeking reimbursement for lost location value. As with
transportation cost reimbursement, the proposed modifications clarify
that milk rerouted to plants outside of Florida also would be eligible
for location value reimbursement, even if the milk was not pooled on
the Florida FMMO in September 2017.
The Cooperatives brief reviewed the proposed reimbursement for
dumped milk and distressed milk sales, and clarified that reimbursement
for distressed milk sales should be equal to the actual classified use
value of the milk rather than the lowest classified use value for the
month of September 2017.
The Cooperatives brief emphasized the necessity of obtaining
regulatory relief by outlining the difficulties, in absence of a
regulatory scheme, associated with ensuring all Class I milk is
assessed and all Class I handlers are treated uniformly. In addition,
the brief restated hearing testimony noting there is no market process
for repooling reimbursable costs and no market arbiter to administer a
private surcharge and repooling program.
Dean Foods Company (Dean), while not present at the hearing,
submitted a post-hearing brief in support of Proposal 1. Dean is a
dairy processor that owns and operates three distributing plants fully
regulated by the Florida FMMO. To supply its Florida distributing
plants, Dean relies on milk from both cooperatives and independent
producers. Dean's brief expressed support for exercising emergency
rulemaking authority and instituting a temporary $0.09 per cwt
assessment on Class I milk to fund reimbursement. The brief highlighted
Dean Foods' support for the proposed assessment to the extent that it
funds reimbursement only for losses sustained due to Hurricane Irma.
According to Dean, funds generated above the amount necessary to pay
reimbursement claims should be returned to Class I handlers on a pro
rata basis.
The Cooperatives are seeking regulatory relief though a temporary
assessment on Class I milk to provide financial assistance to the
area's handlers and producers that experienced extraordinary marketing
expenses and losses as a result of the hurricane. This decision
evaluated the entire hearing record to determine whether Hurricane Irma
impacted the orderly marketing conditions in the Florida FMMO marketing
area to an extent that justifies regulatory relief.
The record of this proceeding clearly demonstrates that Hurricane
Irma impacted the entire Florida marketing area. The hurricane's track
went through the entire state, resulting in significant road closures
and widespread, prolonged electrical outages. The electrical outages
caused not only extensive plant closures for extended periods of time,
but also grocery store closures, which resulted in lost Class I sales
in the retail sector and a trickle-down impact through the entire milk
supply chain. The record of the proceeding indicates that this
extraordinary market situation left dairy farmers with limited--and in
some cases no--market outlets in the marketing area for several days.
Proponents stressed that the storm disrupted dairy plant operations and
retail marketing, but producers could not stop their cows from
producing milk. This market reality, the proponents emphasized, left
pooling handlers with few options for marketing milk, and many incurred
significant losses despite their best efforts to balance the milk
supply of the entire marketing area.
The record contains extensive evidence detailing the difficulties
of marketing milk September 6 through September 15, 2017, the time
period in which Hurricane Irma impacted the market, according to
proponents. While Hurricane Irma first hit the state approximately
September 10, 2017, disruptions to the milk supply were experienced
both days before and after landfall. The record shows that during that
time period the Cooperatives, in their capacity as the pooling handlers
of their members' milk, were forced to transport milk long distances to
find alternative outlets. As a last resort, witnesses said they were
forced to dump milk, if no alternative outlet could be found. These
losses were borne by the cooperatives, and the record indicates they
have no viable method for recouping those losses. Detailed record
testimony also shows that the losses borne by producers have directly
impacted the cash flows of their dairy farm operations.
The record contains detailed information regarding the
extraordinary losses for which the proponents are seeking reimbursement
through this proceeding. Record evidence provided shows total losses
for the Cooperatives are estimated to exceed $700,000 for the four
categories of reimbursement, excluding additional transportation costs
that at the time of the hearing had yet to be quantified by all
witnesses.
The AMAA provides authority for payments to handlers for services
of marketwide benefit.\1\ These payments are authorized to come from
marketwide pool monies before a producer blend price is computed. The
record of this proceeding contains substantial evidence that from
September 6 through 15, 2017, the Florida dairy market was completely
disrupted due to Hurricane Irma and Florida handlers did their best to
market and balance the area's milk supply. The record reveals that, in
performing this marketwide service, handlers incurred marketing
expenses and losses solely attributable to the market situation created
by Hurricane Irma. Further, the record demonstrates that handlers have
no market process for recouping these marketing expenses and losses.
---------------------------------------------------------------------------
\1\ 7 U.S.C. 608c(5)(J).
---------------------------------------------------------------------------
Accordingly this decision finds a temporary assessment of $0.09 per
cwt on Class I milk is justified to provide reimbursement to handlers
for demonstrated extraordinary costs incurred September 6 through 15,
2017, that fall into the four identified general categories. The
hearing record reflects that the assessment would have an impact of
less than $0.01 per gallon on milk consumers in the Florida marketing
area. The assessment would only be collected during the 7-month period
starting in the initial month the assessment would become effective.
Assessment funds would be collected by the market administrator and
distributed to qualifying handlers who incurred costs in the four
identified categories, and who provide proof satisfactory to the market
administrator that costs are eligible for reimbursement.
This decision finds it appropriate that handlers be required to
submit all claim requests to the market administrator during the first
month the assessment would become effective. This would provide
handlers adequate time to assemble and submit necessary records, and
give the market administrator
[[Page 13697]]
sufficient time to determine the total amount of eligible claims and
adjust the assessment accordingly in the last month, ensuring that, as
accurately as possible, only the necessary funds are collected.
For all claims submitted to the market administrator, documents
substantiating the claims may include, but are not limited to,
invoices, receiving records, bulk milk manifests, hauling billings,
transaction records and contract agreements. Handlers would not be
eligible to obtain reimbursement through these temporary provisions if
they have applied for or received reimbursement through insurance
claims or through any State, Federal, or other programs for the same
losses.
Transportation Costs: This decision finds that handlers should be
reimbursed for transportation expenses in excess of costs associated
with customary shipping routes for milk that would have been considered
part of the regular producer milk supply of the order, but was
delivered to plants outside of the marketing area from September 6
through 15, 2017. Extensive record testimony was provided describing
how Hurricane Irma caused significant road closures and lengthy plant
closings that forced handlers to reroute a large number of milk tankers
from their customary shipping destinations within the marketing area to
alternative outlets outside of the marketing area. In many, but not
all, cases described, the transportation costs associated with these
alterative outlets were more expensive.
This decision finds it reasonable to reimburse handlers for the
increase in transportation costs for each eligible load over what would
be considered transportation costs during normal market conditions.
Record evidence demonstrates that handlers faced unprecedented
challenges and additional transportation costs and it is reasonable to
provide these handlers with limited reimbursement for additional
transportation costs incurred. Limiting transportation cost
reimbursement to only the increase in transportation costs due to the
hurricane will ensure that handlers are not being reimbursed for costs
associated with marketing milk under normal market conditions.
This decision finds that while the milk on eligible loads did not
have to be pooled as producer milk on the Florida FMMO during September
2017 to be eligible for reimbursement, proof must be provided to the
market administrator that milk on those loads would have been part of
the normal producer milk supply of the Florida FMMO. This decision
finds a reasonable reimbursement rate on eligible loads should be the
lesser of actual demonstrated transportation expenses or $3.75 per
loaded mile. Record evidence supports $3.75 per loaded mile as an
appropriate maximum reimbursement rate, based on the proponents'
industry knowledge of current bulk milk transportation costs. Further,
reimbursement should only be granted for the transportation costs
incurred in excess of what the handlers would have paid during normal
marketing conditions. This decision finds that milk rerouted from pool
distributing plants to plants outside of the marketing area, milk
transported off the farm but then dumped from milk tankers, and skim
milk dumped after the butterfat was removed at a plant would be
eligible for transportation cost reimbursement.
The record testimony reflects that the Florida FMMO diversion
limitations, combined with milk deliveries to alternative outlets,
caused some milk normally pooled on the Florida FMMO to instead be
pooled on another FMMO. Much of the milk was delivered to plants in the
Southeast and Appalachian marketing areas and may have been pooled on
those respective orders. The Southeast and Appalachian order provisions
provide for transportation credits on supplemental milk supplies
sourced from outside of those combined marketing areas. Therefore,
there could be instances where milk normally associated with the
Florida FMMO was instead pooled on the Southeast or Appalachian order
and may have received a transportation credit. This decision finds that
transportation credits received on loads eligible for transportation
cost reimbursement through this proceeding would have the
transportation credits received netted out of any final transportation
cost reimbursement due to the requesting handler.
Lost Location Value: This decision finds that handlers should be
reimbursed for lost location value on milk that would have normally
been delivered to fluid milk plants within the marketing area but was
instead rerouted to plants outside of the marketing area because of
Hurricane Irma. The location value of milk is the Class I differential
associated with plant of first receipt. The FMMO system has a
coordinated national set of Class I differentials that set a Class I
differential level for each county in the contiguous United States.\2\
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\2\ 7 CFR 1000.52 as adjusted by Sec. Sec. 1005.51(b),
1006.51(b), and 1007.51(b).
---------------------------------------------------------------------------
The hearing record shows that from September 6 through 15, 2017,
there were many instances where the only available market outlet for
milk that would have normally been delivered to plants inside the
Florida marketing area was to plants outside of the state. Record
evidence indicates that during the hurricane, milk was delivered to
plants in lower location value zones outside of the marketing area, and
as a result, producers received a lower location value than they
otherwise would have if that milk had been delivered to its normal
market outlet. For example, the record indicates that milk was
delivered to a plant located outside of Florida in the $3.40 per cwt
zone, instead of its normal plant located within the state of Florida
in the $5.40 per cwt zone. The change in plant of first receipt reduced
the location value of that milk by $2.00 per cwt.
Record evidence estimates the Cooperatives incurred a total loss in
location value of $30,000. The record supports claims that producers
would have normally received the additional location value had it not
been for disruptions caused by Hurricane Irma, which forced handlers to
deliver milk to alternative locations.
Record testimony indicates that in some instances, while loads that
were rerouted to a plant outside the marketing area did receive a lower
location value, the transportation cost to move some of those loads was
actually less than if the milk was delivered to its normal outlet. In
those instances, this decision finds that the reimbursement owed to the
handlers should be the net value when considering both change in
location value and change in transportation costs, on a load-by-load
basis.
Dumped Milk: This decision finds that handlers should be
reimbursed, at the lowest classified use value for September 2017, for
milk dumped on farms, milk dumped from tankers after being moved off
farms, or skim milk dumped at plants due to Hurricane Irma. The record
evidence contains detailed information regarding the market conditions
associated with Hurricane Irma. The hurricane's far reaching impact
across the entire state caused road closings and electrical outages
that necessitated the dumping of milk because there were no available
market outlets. In some cases, producers dumped milk on their farms
because road closures prevented trucks from picking up milk. In other
instances, handlers that normally pick up farm milk and assemble tanker
loads for plant deliveries at an assembly point had to dump milk from
milk tankers because of
[[Page 13698]]
limited available plant processing capacity. Record testimony also
described situations where handlers were able to find a market outlet
for butterfat. In those situations handlers delivered farm milk to
plants where the butterfat was removed for sale and the skim milk was
dumped at the plants.
The record indicates that the market administrator allowed pooling
handlers to pool the dumped milk. The milk was classified as ``other
use'' milk and assigned a Class IV value (the lowest classified value
for September 2017), and the pooling handler received a payment from
the pool equal to the difference between the order's uniform blend
price for the month and the Class IV price. The proposal for
consideration at this hearing would reimburse pooling handlers for the
lost Class IV value, essentially making the pooling handler whole.
Record evidence estimates the Cooperatives dumped milk at a total value
of $368,000.
Record evidence clearly indicates the hurricane was an
extraordinary weather event, and despite the best efforts from pooling
handlers, not all milk could find a market outlet, which led to unusual
milk dumping situations. This decision finds that pooling handlers
should be reimbursed for the lost value of dumped milk that was
reported to the market administrator and reflected on their September
2017 Receipts and Utilization report. Handlers had 22 days between the
end of the time period they assert the market was impacted by Hurricane
Irma (September 15, 2017) and when September pool handler reports were
due to the market administrator (October 7, 2017). Milk not reported as
dumped milk on the September 2017 Receipts and Utilization report would
not be eligible for reimbursement.
Distressed Milk: This decision finds handlers who sold milk at
distressed prices due to Hurricane Irma should be reimbursed for the
difference between the end-use classified value and the price the
handler actually received for the milk. The hearing record indicates
that in an effort to find an alternative outlet for the regular milk
supply of the Florida market, pooling handlers sold milk to nonpool
manufacturing plants outside of the marketing area at prices below its
classified use value. Pooling handlers testified that selling milk at
distressed prices was better than the alternative of dumping the milk
and receiving no compensation from the market. Proposal 1, as amended
at the hearing, seeks reimbursement for the difference between the
classified use value of the milk had it been pooled, and the actual
price received for the milk. This reimbursement rate would be based on
the actual price received and the end product utilization, and would be
verified through documentation submitted to the market administrator.
Record testimony estimates the Cooperatives incurred an aggregate loss
on distressed milk sales of $168,000.
This decision finds that reimbursement for distressed milk sales at
the milks end-use classification is justified. Similar to the
requirements for other cost reimbursement categories recognized in this
decision, handlers of distressed milk loads would need to submit
documentation to the market administrator demonstrating that while the
milk may or may not have been pooled on the Florida order that month,
the milk was part of the normal milk supply of the Florida marketing
area.
2. Determination of whether emergency marketing conditions exist
that warrant the omission of a recommended decision and the opportunity
to file written exceptions.
Record evidence supports the adoption of Proposal 1, as modified at
the hearing and in this decision, on an emergency basis due to
Hurricane Irma's significant impact on the orderly marketing conditions
of the entire Florida marketing area between September 6 and September
15, 2017. The proposed amendments to the Florida FMMO would provide
reimbursement to handlers (handlers and dairy-farmer-owned cooperative
associations in their capacity as handlers) who incurred marketing
expenses and losses in the four categories previously discussed through
a maximum 7-month $0.09 per cwt assessment on Class I milk.
The Rules of Practice and Procedure governing FMMO rulemaking
proceedings allow the Department to omit issuing a recommended decision
should such omission be found warranted on the basis of the hearing
record.\3\
---------------------------------------------------------------------------
\3\ 7 CFR 900.12(d).
---------------------------------------------------------------------------
Record evidence clearly indicates that the marketing of bulk milk
for the entire Florida marketing area was significantly impacted due to
Hurricane Irma. Such evidence includes official disaster declarations,
reports of processing plant closures and suspended operations,
widespread and prolonged electrical outages, road closures that
required the rerouting of milk or dumping of milk with no market
outlet, and the direct impact on producers' cash flow in the months
since the hurricane. The record indicates that no market mechanism is
available to provide uniform relief to all handlers and producers who
incurred the marketing expenses and losses that have been documented in
this hearing record. Further, record evidence indicates producer pay
prices are continuing to be reduced as their Cooperatives have no means
for alternative financial relief.
The record shows that the timely implementation of the proposed
amendments would provide much needed relief to handlers and producers
who incurred this marketing expenses and losses as a direct result of
Hurricane Irma. No record evidence was presented opposing the omission
of a recommended decision. Accordingly, this decision finds that
emergency marketing conditions exist that warrant the omission of a
recommended decision and the opportunity to file written exceptions.
Rulings on Proposed Findings and Conclusions
Briefs and proposed findings and conclusions were filed on behalf
of certain interested parties. These briefs, proposed findings and
conclusions, and the evidence in the record were considered in making
the findings and conclusions set forth above. To the extent that the
suggested findings and conclusions filed by interested parties are
inconsistent with the findings and conclusions set forth herein, the
requests to make such findings or reach such conclusions are denied for
the reasons previously stated in this decision.
General Findings
The findings and determinations hereinafter set forth supplement
those that were made when the Florida FMMO was first issued and when it
was amended. The previous findings and determinations are hereby
ratified and confirmed, except where they may conflict with those set
forth herein.
(a) The tentative marketing agreement and the order, as hereby
proposed to be amended, and all of the terms and conditions thereof,
will tend to effectuate the declared policy of the AMAA;
(b) The parity prices of milk as determined pursuant to section 2
of the AMAA are not reasonable in view of the price of feeds, available
supplies of feeds, and other economic conditions that affect market
supply and demand for milk in the Florida marketing area, and the
minimum prices specified in the tentative marketing agreement and
order, as hereby proposed to be 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
[[Page 13699]]
(c) The tentative marketing agreement and order, as hereby proposed
to be amended, will regulate the handling of milk in the same manner
as, and will be applicable only to persons in the respective classes of
industrial and commercial activity specified in, marketing agreements
upon which a hearing has been held.
Marketing Agreement and Order Amending the Order
Annexed hereto and made a part hereof are two documents, a
Marketing Agreement regulating the handling of milk, and an Order
amending the order regulating the handling of milk in the Florida
marketing area, which has been decided upon as the detailed and
appropriate means of effectuating the foregoing conclusions.
It is hereby ordered that this entire decision and the two
documents annexed hereto be published in the Federal Register.
Determination of Producer Approval and Representative Period
August 2017 is hereby determined to be the representative period
for the purpose of ascertaining whether the issuance of the order, as
amended and as hereby proposed to be amended, regulating the handling
of milk in the Florida marketing area is approved or favored by
producers, as defined under the terms of the order (as amended and as
hereby proposed to be amended), who during such representative period
were engaged in the production of milk for sale within the aforesaid
marketing areas.
List of Subjects in 7 CFR Part 1006
Milk marketing orders.
Dated: March 23, 2018.
Bruce Summers,
Acting Administrator, Agricultural Marketing Service.
Order Amending the Order Regulating the Handling of Milk in the Florida
Marketing Area
(This order shall not become effective unless and until the
requirements of Sec. 900.14 of the rules of practice and procedure
governing proceedings to formulate marketing agreements and marketing
orders have been met.)
Findings and Determinations
The findings and determinations hereinafter set forth supplement
those that were made when the orders were first issued and when they
were amended. The previous findings and determinations are hereby
ratified and confirmed, except where they may conflict with those set
forth herein.
(a) Findings. A public hearing was held upon certain proposed
amendments to the tentative marketing agreement and to the order
regulating the handling of milk in the Florida marketing area. The
hearing was held pursuant to the provisions of the Agricultural
Marketing Agreement Act of 1937 (Act), 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 determined that:
(1) The said order 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 order as hereby amended 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.
Order Relative to Handling
It is therefore ordered, that on and after the effective date
hereof, the handling of milk in the Florida marketing area shall be in
conformity to and in compliance with the terms and conditions of the
order, as amended, and as hereby amended, as follows:
PART 1006--MILK IN THE FLORIDA MILK MARKETING AREA
0
1. The authority citation for 7 CFR part 1006 continues to read as
follows:
Authority: 7 U.S.C. 601-674, and 7253.
0
2. Section 1006.60 is amended by revising paragraphs (a) and (g) and
adding paragraphs (h) and (i) to read as follows:
Sec. 1006.60 Handler's value of milk.
* * * * *
(a) Multiply the pounds of skim milk and butterfat in producer milk
that were classified in each class pursuant to 7 CFR 1000.44(c) by the
applicable skim milk and butterfat prices, and add the resulting
amounts; except that for the months of__2018 through __2018, the Class
I skim milk price for this purpose shall be the Class I skim milk price
as determined in 7 CFR 1000.50(b) plus $0.09 per hundredweight, and the
Class I butterfat price for this purpose shall be the Class I butterfat
price as determined in 7 CFR 1000.50(c) plus $0.0009 per pound. The
adjustments to the Class I skim milk and butterfat prices provided
herein may be reduced by the market administrator for any month if the
market administrator determines that the payments yet unpaid computed
pursuant to paragraphs (g)(1) through (6) of this section will be less
than the amount computed pursuant to paragraph (h) of this section. The
adjustments to the Class I skim milk and butterfat prices provided
herein during the months of__ 2018 through__ 2018 shall be announced
along with the prices announced in 7 CFR 1000.53(b);
* * * * *
(g) For transactions occurring during the period of September 6,
2017, through September 15, 2017, for handlers who have submitted proof
satisfactory to the market administrator no later than__, 2018, to
determine eligibility for reimbursement of hurricane-imposed costs,
subtract an amount equal to:
(1) The additional cost of transportation on loads of milk rerouted
from pool distributing plants to plants outside the state of Florida as
a result of Hurricane Irma, and the additional cost of transportation
on loads of milk moved and then dumped. The reimbursement of
transportation costs pursuant to this section shall be the actual
demonstrated cost of such transportation of bulk milk or the miles of
transportation on such loads of bulk milk multiplied by $3.75 per
loaded mile, whichever is less;
(2) The lost location value on loads of milk rerouted to plants
outside the state of Florida as a result of Hurricane Irma. The lost
location value shall be the difference per hundredweight between the
value specified in 7 CFR 1000.52, adjusted by Sec. 1006.51(b), at the
location of the plant where the milk would have normally been received
and the value specified in 7 CFR 1000.52, as adjusted by 7 CFR
1005.51(b) and 1007.51(b), at the location of the plant to which the
milk was rerouted;
(3) The value per hundredweight at the lowest classified price for
the month of September 2017 for milk dumped at the farm and classified
as other use milk pursuant to 7 CFR 1000.40(e) as a result of Hurricane
Irma;
(4) The value per hundredweight at the lowest classified price for
the month of September 2017 for milk dumped
[[Page 13700]]
from milk tankers after being moved off-farm and classified as other
use milk pursuant to 7 CFR 1000.40(e) as a result of Hurricane Irma;
(5) The value per hundredweight at the lowest classified price for
the month of September 2017 for skim portion of milk dumped and
classified as other use milk pursuant to 7 CFR 1000.40(e) as a result
of Hurricane Irma; and
(6) The difference between the announced class price applicable to
the milk as classified by the market administrator for the month of
September 2017 and the actual price received for milk delivered to
nonpool plants outside the state of Florida as a result of Hurricane
Irma.
(h) The total amount of payment to all handlers under paragraph (g)
of this section shall be limited for each month to an amount determined
by multiplying the total Class I producer milk for all handlers
pursuant to 7 CFR 1000.44(c) times $0.09 per hundredweight.
(i) If the cost of payments computed pursuant to paragraphs (g)(1)
through (6) of this section exceeds the amount computed pursuant to
paragraph (h) of this section, the market administrator shall prorate
such payments to each handler based on each handler's proportion of
transportation and other use milk costs submitted pursuant to
paragraphs (g)(1) through (6). Costs submitted pursuant to paragraphs
(g)(1) thought (6) which are not paid as a result of such a proration
shall be paid in subsequent months until all costs incurred and
documented through (g)(1) through (6) have been paid.
[This marketing agreement will not appear in the Code of Federal
Regulations.]
Marketing Agreement Regulating the Handling of Milk in the Florida
Marketing Area
The parties hereto, in order to effectuate the declared policy of
the Act, and in accordance with the rules of practice and procedure
effective thereunder (7 CFR part 900), desire to enter into this
marketing agreement and do hereby agree that the provisions referred to
in paragraph I hereof, as augmented by the provisions specified in
paragraph II hereof, shall be and are the provisions of this marketing
agreement as if set out in full herein.
I. The findings and determinations, order relative to handling, and
the provisions of Sec. Sec. 1006.1 to 1006.86, all inclusive, of the
order regulating the handling of milk in the Florida marketing area (7
CFR part 1006), which is annexed hereto; and
II. The following provision: Sec. 1006.87--Record of milk handled
and authorization to correct typographical errors.
(a) Record of milk handled. The undersigned certifies that he/she
handled during the month of [insert representative period],
______hundredweight of milk covered by this marketing agreement.
(b) Authorization to correct typographical errors. The undersigned
hereby authorizes the Deputy Administrator, or Acting Deputy
Administrator, Dairy Programs, Agricultural Marketing Service, to
correct any typographical errors which may have been made in this
marketing agreement.
Sec. 1006.87 Effective Date. This marketing agreement shall become
effective upon the execution of a counterpart thereof by the Secretary
in accordance with Sec. 900.14(a) of the aforesaid rules of practice
and procedure.
In Witness Whereof, The contracting handlers, acting under the
provisions of the Act, for the purposes and subject to the limitations
herein contained and not otherwise, have hereunto set their respective
hands and seals.
Signature
By (Name)--------------------------------------------------------------
(Title)----------------------------------------------------------------
(Address)--------------------------------------------------------------
(Seal)
Attest
[FR Doc. 2018-06286 Filed 3-29-18; 8:45 am]
BILLING CODE 3410-02-P