[Title 7 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 1999 Edition]
[From the U.S. Government Printing Office]


          7



          Agriculture



[[Page i]]

          PARTS 1000 TO 1199

          Milk Orders
                         Revised as of January 1, 1999

          CONTAINING
          A CODIFICATION OF DOCUMENTS
          OF GENERAL APPLICABILITY
          AND FUTURE EFFECT

          AS OF JANUARY 1, 1999
          With Ancillaries
          Published by
          the Office of the Federal Register
          National Archives and Records
          Administration

          as a Special Edition of
          the Federal Register



[[Page ii]]

                                      




                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 1999



               For sale by U.S. Government Printing Office
 Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328



[[Page iii]]




                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 7:

    Subtitle B--Regulations of the Department of Agriculture--
      Continued:

          Chapter X--Agricultural Marketing Service (Marketing 
          Agreements and Orders; Milk), Department of 
          Agriculture.........................................       5

  Finding Aids:

      Table of CFR Titles and Chapters........................     901

      Alphabetical List of Agencies Appearing in the CFR......     919

      List of CFR Sections Affected...........................     929



[[Page iv]]


      


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

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  7 CFR 1000.1 refers 
                       to title 7, part 1000, 
                       section 1.

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

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, January 1, 1999), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 1986, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, or 1973-1985, published in seven separate volumes. For 
the period beginning January 1, 1986, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I), and Acts Requiring Publication 
in the Federal Register (Table II). A list of CFR titles, chapters, and 
parts and an alphabetical list of agencies publishing in the CFR are 
also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-523-5227 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408 or e-mail 
[email protected]

SALES

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ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, the LSA (List of 
CFR Sections Affected), The United States Government Manual, the Federal 
Register, Public Laws, Weekly Compilation of Presidential Documents and 
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Office. Phone 202-512-1530, or 888-293-6498 (toll-free). E-mail, 
[email protected]

[[Page vii]]

    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public law numbers, Federal Register finding aids, and related 
information. Connect to NARA's web site at www.nara.gov/fedreg. The NARA 
site also contains links to GPO Access.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

January 1, 1999.



[[Page ix]]



                               THIS TITLE

    Title 7--Agriculture is composed of fifteen volumes. The parts in 
these volumes are arranged in the following order: parts 1-26, 27-52, 
53-209, 210-299, 300-399, 400-699, 700-899, 900-999, 1000-1199, 1200-
1599, 1600-1899, 1900-1939, 1940-1949, 1950-1999, and part 2000 to end. 
The contents of these volumes represent all current regulations codified 
under this title of the CFR as of January 1, 1999.

    The Food and Nutrition Service current regulations in the volume 
containing parts 210-299, include the Child Nutrition Programs and the 
Food Stamp Program. The regulations of the Federal Crop Insurance 
Corporation are found in the volume containing parts 400-699.

    All marketing agreements and orders for fruits, vegetables and nuts 
appear in the one volume containing parts 900-999. All marketing 
agreements and orders for milk appear in the volume containing parts 
1000-1199. Part 900--General Regulations is carried as a note in the 
volume containing parts 1000-1199, as a convenience to the user.

    Redesignation tables appear in the Finding Aids section of the 
volumes containing parts 210-299 and parts 1600-1899.

    For this volume, Gwendolyn J. Henderson was Chief Editor. The Code 
of Federal Regulations publication program is under the direction of 
Frances D. McDonald, assisted by Alomha S. Morris.

[[Page x]]





[[Page 1]]



                          TITLE 7--AGRICULTURE




                 (This book contains parts 1000 to 1199)

  --------------------------------------------------------------------
                                                                    Part

SUBTITLE B--Regulations of the Department of Agriculture--
  Continued:................................................            

Chapter X--Agricultural Marketing Service (Marketing 
  Agreements and Orders; Milk), Department of Agriculture...        1000

[[Page 3]]

  Subtitle B--Regulations of the Department of Agriculture (Continued)

[[Page 4]]

[GRAPHIC] [TIFF OMITTED] TC18SE91.000


[[Page 5]]




CHAPTER X--AGRICULTURAL MARKETING SERVICE (Marketing Agreements and
Orders; Milk) DEPARTMENT OF AGRICULTURE



  --------------------------------------------------------------------
Part                                                                Page
900             General regulations [Note]..................           7
1000            General provisions of Federal milk marketing 
                    orders..................................          36
1001            Milk in the New England marketing area......          39
1002            Milk in New York-New Jersey marketing area..          69
1004            Milk in the Middle Atlantic marketing area..         109
1005            Milk in the Carolina marketing area.........         138
1006            Milk in Upper Florida marketing area........         166
1007            Milk in the Southeast marketing area........         189
1011            Milk in the Tennessee Valley marketing area.         219
1012            Milk in Tampa Bay marketing area............         220
1013            Milk in Southeastern Florida marketing area.         242
1030            Milk in Chicago Regional marketing area.....         265
1032            Milk in Southern Illinois-Eastern Missouri 
                    marketing area..........................         294
1033            Milk in the Ohio Valley marketing area......         318
1036            Milk in the Eastern Ohio-Western 
                    Pennsylvania marketing area.............         347
1040            Milk in Southern Michigan marketing area....         375
1044            Milk in Michigan Upper Peninsula marketing 
                    area....................................         402
1046            Milk in Louisville-Lexington-Evansville 
                    marketing area..........................         419
1049            Milk in the Indiana marketing area..........         447
1050            Milk in Central Illinois marketing area.....         478
1051-1063       [Reserved]
1064            Milk in the Greater Kansas City marketing 
                    area....................................         501
1065            Milk in the Nebraska-Western Iowa marketing 
                    area....................................         525
1068            Milk in the Upper Midwest marketing area....         555
1076            Milk in Eastern South Dakota marketing area.         584
1079            Milk in the Iowa marketing area.............         609

[[Page 6]]

1093-1097       [Reserved]
1106            Milk in Southwest Plains marketing area.....         637
1108-1120       [Reserved]
1124            Milk in the Pacific Northwest marketing area         666
1125            [Reserved]
1126            Milk in the Texas marketing area............         696
1131            Milk in Central Arizona marketing area......         725
1132            [Reserved]
1134            Milk in the Western Colorado marketing area.         749
1135            Milk in the Southwestern Idaho-Eastern 
                    Oregon marketing area...................         772
1136            [Reserved]
1137            Milk in the Eastern Colorado marketing area.         796
1138            Milk in the New Mexico-West Texas marketing 
                    area....................................         820
1139            Milk in the Great Basin marketing area......         846
1150            Dairy promotion program.....................         873
1151-1159       [Reserved]
1160            Fluid milk promotion program................         885
1161-1199       [Reserved]
                                  NOTE

[[Page 7]]

   7 CFR part 900, the general regulations with respect to marketing 
 agreements and orders, is herein set forth for convenience of users of 
                              this volume.



PART 900--GENERAL REGULATIONS

   Subpart--Rules of Practice and Procedure Governing Proceedings to 
           Formulate Marketing Agreements and Marketing Orders

Sec.
900.1  Words in the singular form.
900.2  Definitions.
900.3  Proposals.
900.4  Institution of proceeding.
900.5  Docket number.
900.6  Judges.
900.7  Motions and requests.
900.8  Conduct of the hearing.
900.9  Oral and written arguments.
900.10  Certification of the transcript.
900.11  Copies of the transcript.
900.12  Administrator's recommended decision.
900.13  Submission to Secretary.
900.13a  Decision by Secretary.
900.14  Execution of and issuance of marketing agreements and marketing 
          orders.
900.15  Filing; extensions of time; effective date of filing; and 
          computation of time.
900.16  Ex Parte communications.
900.17  Additional documents to be filed with hearing clerk.
900.18  Hearing before Secretary.

Subpart--Rules of Practice Governing Proceedings on Petitions To Modify 
                 or To Be Exempted From Marketing Orders

900.50  Words in the singular form.
900.51  Definitions.
900.52  Institution of proceeding.
900.52a  Answer to petition.
900.52b  Amended pleadings.
900.53  Withdrawal of petition.
900.54  Docket number.
900.55  Judges.
900.56  Consolidated hearings.
900.57  Intervention.
900.58  Prehearing conferences.
900.59  Motions and requests.
900.60  Oral hearings before judge.
900.61  Depositions.
900.62  Subpenas.
900.63  Fees and mileage.
900.64  The Administrative Law Judge's decision.
900.65  Appeals to Secretary: Transmittal of record.
900.66  Consideration of appeal by the Secretary and issuance of final 
          order.
900.67  [Reserved]
900.68  Applications for reopening hearings; for rehearings or 
          rearguments of proceedings; or for reconsideration of orders.
900.69  Filing; service; extensions of time; effective date of filing; 
          and computation of time.
900.70  Applications for interim relief.
900.71  Hearing before Secretary.

Subpart--Supplemental Rules of Practice for Marketing Orders, Marketing 
 Agreements, and Requirements Issued Pursuant to 7 U.S.C. 608b(b) and 7 
            U.S.C. 608e Covering Fruits, Vegetables, and Nuts

900.80  Words in the singular form.
900.81  Definitions.
900.82  Stipulation procedures.

Subpart--Procedure Governing Meetings To Arbitrate and Mediate Disputes 
                Relating to Sales of Milk or Its Products

900.100  Words in the singular form.
900.101  Definitions.
900.102  Filing of applications for mediation or arbitration.
900.103  Application for mediation.
900.104  Inquiry by the Administrator.
900.105  Notification.
900.106  Assignment of mediator.
900.107  Meetings.
900.108  Mediator's report.
900.109  Mediation agreement.
900.110  Application for arbitration.
900.111  Inquiry by the Administrator.
900.112  Notification.
900.113  Submission.
900.114  Designation of arbitrator.
900.115  Hearing.
900.116  Award.
900.117  Approval of award.
900.118  Costs.

                   Subpart--Miscellaneous Regulations

900.200  Definitions.
900.201  Investigation and disposition of alleged violations.
900.210  Disclosures of information.
900.211  Penalties.

   Subpart--Procedure for Conduct of Referenda to Determine Producer 
   Approval of Milk Marketing Orders To Be Made Effective Pursuant to 
        Agricultural Marketing Agreement Act of 1937, as Amended

900.300  General.
900.301  Definitions.
900.302  Associations eligible to vote.
900.303  Conduct of referendum.
900.304  Who may vote.
900.305  Duties of referendum agent.
900.306  Notice of the referendum.

[[Page 8]]

900.307  Time for voting.
900.308  Tabulation of ballots.
900.309  Confidential information.
900.310  Supplementary instructions.
900.311  Submittals or requests.

Subpart--Procedure for Determining the Qualification of Cooperative Milk 
                         Marketing Associations

900.350  General statement.
900.351  Applications for qualification.
900.352  Confidential information.
900.353  Qualification standards.
900.354  Inspection and investigation.
900.355  Annual reporting.
900.356  Listing of qualified associations.
900.357  Denial of application; suspension or revocation of 
          determination of qualification.

   Subpart--Procedure for the Conduct of Referenda in Connection With 
   Marketing Orders for Fruits, Vegetables, and Nuts Pursuant to the 
        Agricultural Marketing Agreement Act of 1937, as Amended

900.400  General.
900.401  Definitions.
900.402  Voting.
900.403  Instructions.
900.404  Subagents.
900.405  Ballots.
900.406  Referendum report.
900.407  Confidential information.

                       Subpart--Public Information

Availability of Program Information, Staff Manuals and Instructions, and 
                            Related Material

900.500  General.
900.501  Public inspection and copying.
900.502  Indexes.
900.503  Requests for records.
900.504  Appeals.

                     Subpart--Information Collection

900.600  General.
900.601  OMB control numbers assigned pursuant to the Paperwork 
          Reduction Act.

    Source: 25 FR 5907, June 28, 1960, unless otherwise noted.

   Subpart--Rules of Practice and Procedure Governing Proceedings to 
           Formulate Marketing Agreements and Marketing Orders

    Authority: Sec. 10, 48 Stat. 37, as amended; 7 U.S.C. 610.

Sec. 900.1  Words in the singular form.

    Words in this subpart in the singular form shall be deemed to import 
the plural, and vice versa, as the case may demand.

Sec. 900.2  Definitions.

    As used in this subpart, the terms as defined in the Act shall apply 
with equal force and effect. In addition, unless the context otherwise 
requires:
    (a) The term Act means Public Act No. 10, 73d Congress (48 Stat. 
31), as amended and as reenacted and amended by the Agricultural 
Marketing Agreement Act of 1937 (50 Stat. 246), as amended.
    (b) The term Department means the United States Department of 
Agriculture.
    (c) The term Secretary means the Secretary of Agriculture of the 
United States, or any officer or employee of the Department to whom 
authority has heretofore been delegated, or to whom authority may 
hereafter be delegated, to act in his stead.
    (d) The terms Administrative Law Judge or Judge means any 
administrative law judge appointed pursuant to 5 U.S.C. 3105, and 
assigned to conduct the proceeding.
    (e) The term Administrator means the Administrator of the 
Agricultural Marketing Service, with power to redelegate, or any officer 
or employee of the Department to whom authority has been delegated or 
may hereafter be delegated to act in his stead.
    (f) [Reserved]
    (g) The term ``Federal Register'' means the publication provided for 
by the Act of July 26, 1935 (49 Stat. 500), and acts supplementary 
thereto and amendatory thereof.
    (h) The term hearing means that part of the proceeding which 
involves the submission of evidence.
    (i) The term marketing agreement means any marketing agreement or 
any amendment thereto which may be entered into pursuant to section 8b 
of the Act.
    (j) The term marketing order means any order or any amendment 
thereto which may be issued pursuant to section 8c of the Act, and after 
notice and hearing as required by said section.
    (k) The term proceeding means a proceeding upon the basis of which a 
marketing agreement may be entered into or a marketing order may be 
issued.
    (l) The term hearing clerk means the hearing clerk, United States 
Department of Agriculture, Washington, DC.

[25 FR 5907, June 28, 1960, as amended at 26 FR 7796, Aug. 22, 1961; 28 
FR 579, Jan. 23, 1963; 37 FR 8059, Apr. 25, 1972; 38 FR 29798, Oct. 29, 
1973]

Sec. 900.3  Proposals.

    (a) A marketing agreement or a marketing order may be proposed by 
the Secretary or by any other person. If any person other than the 
Secretary proposes a marketing agreement or marketing order, he shall 
file with the Administrator a written application, together with at 
least four copies of the proposal, requesting the Secretary to hold a

[[Page 9]]

hearing upon the proposal. Upon receipt of such proposal, the 
Administrator shall cause such investigation to be made and such 
consideration thereof to be given as, in his opinion, are warranted. If 
the investigation and consideration lead the Administrator to conclude 
that the proposed marketing agreement or marketing order will not tend 
to effectuate the declared policy of the Act, or that for other proper 
reasons a hearing should not be held on the proposal, he shall deny the 
application, and promptly notify the applicant of such denial, which 
notice shall be accompanied by a brief statement of the grounds for the 
denial.
    (b) If the investigation and consideration lead the Administrator to 
conclude that the proposed marketing agreement or marketing order will 
tend to effectuate the declared policy of the Act, or if the Secretary 
desires to propose a marketing agreement or marketing order, he shall 
sign and cause to be served a notice of hearing, as provided in this 
subpart.

Sec. 900.4  Institution of proceeding.

    (a) Filing and contents of the notice of hearing. The proceeding 
shall be instituted by filing the notice of hearing with the hearing 
clerk. The notice of hearing shall contain a reference to the authority 
under which the marketing agreement or marketing order is proposed; 
shall define the scope of the hearing as specifically as may be 
practicable; shall contain either the terms or substance of the proposed 
marketing agreement or marketing order or a description of the subjects 
and issues involved and shall state the industry, area, and class of 
persons to be regulated, the time and place of such hearing, and the 
place where copies of such proposed marketing agreement or marketing 
order may be obtained or examined. The time of the hearing shall not be 
less than 15 days after the date of publication of the notice in the 
Federal Register, as provided in this subpart, unless the Administrator 
shall determine that an emergency exists which requires a shorter period 
of notice, in which case the period of notice shall be that which the 
Administrator may determine to be reasonable in the circumstances: 
Provided, That, in the case of hearings on amendments to marketing 
agreements or marketing orders, the time of the hearing may be less than 
15 days but shall not be less than 3 days after the date of publication 
of the notice in the Federal Register.
    (b) Giving notice of hearing and supplemental publicity. (1) The 
Administrator shall give or cause to be given notice of hearing in the 
following manner:
    (i) By publication of the notice of hearing in the Federal Register;
    (ii) By mailing a true copy of the notice of hearing to each of the 
persons known to the Administrator, to be interested therein;
    (iii) By issuing a press release containing the complete text or a 
summary of the contents of the notice of hearing and making the same 
available to such newspapers in the area proposed to be subjected to 
regulation as reasonably will tend to bring the notice to the attention 
of the persons interested therein;
    (iv) By forwarding copies of the notice of hearing addressed to the 
governors of such of the several States of the United States and to 
executive heads of such of the Territories and possessions of the United 
States as the Administrator, having due regard for the subject matter of 
the proposal and the public interest, shall determine, should be 
notified.
    (2) Legal notice of the hearing shall be deemed to be given if 
notice is given in the manner provided by paragraph (b)(1)(i) of this 
section; and failure to give notice in the manner provided in paragraph 
(b)(1)(ii), (iii), and (iv) of this section shall not affect the 
legality of the notice.
    (c) Record of notice and supplemental publicity. There shall be 
filed with the hearing clerk or submitted to the judge at the hearing an 
affidavit or certificate of the person giving the notice provided in 
(b)(1)(iii) and (iv) of this section. In regard to the provisions 
relating to mailing in (b)(1)(ii) of this section, a determination by 
the Administrator that such provisions have been complied with shall be 
filed with the hearing clerk or submitted to the judge at the hearing. 
In the alternative, if notice is not given in the manner provided in 
(b)(1)(ii), (iii), and (iv) of this section there shall be filed with 
the hearing clerk or submitted to the judge at the hearing a 
determination by the Administrator that such notice is impracticable, 
unnecessary, or contrary to the public interest with a brief statement 
of the reasons for such determination. Determinations by the 
Administrator as herein provided shall be final.

Sec. 900.5  Docket number.

    Each proceeding, immediately following its institution, shall be 
assigned a docket number by the hearing clerk and thereafter the 
proceeding may be referred to by such number.

Sec. 900.6  Judges.

    (a) Assignment. No judge who has any pecuniary interest in the 
outcome of a proceeding shall serve as judge in such proceeding.
    (b) Powers of judges. Subject to review by the Secretary, as 
provided elsewhere in this subpart, the judge, in any proceeding, shall 
have power to:
    (1) Rule upon motions and requests;
    (2) Change the time and place of hearing, and adjourn the hearing 
from time to time or from place to place;
    (3) Administer oaths and affirmations and take affidavits;

[[Page 10]]

    (4) Examine and cross-examine witnesses and receive evidence;
    (5) Admit or exclude evidence;
    (6) Hear oral argument on facts or law;
    (7) Do all acts and take all measures necessary for the maintenance 
of order at the hearing and the efficient conduct of the proceeding.
    (c) Who may act in absence of judge. In case of the absence of the 
judge or his inability to act, the powers and duties to be performed by 
him under this part in connection with a proceeding may, without 
abatement of the proceeding unless otherwise ordered by the Secretary, 
be assigned to any other judge.
    (d) Disqualification of judge. The judge may at any time withdraw as 
judge in a proceeding if he deems himself to be disqualified. Upon the 
filing by an interested person in good faith of a timely and sufficient 
affidavit of personal bias or disqualification of a judge, the Secretary 
shall determine the matter as a part of the record and decision in the 
proceeding, after making such investigation or holding such hearings, or 
both, as he may deem appropriate in the circumstances.

Sec. 900.7  Motions and requests.

    (a) General. All motions and requests shall be filed with the 
hearing clerk, except that those made during the course of the hearing 
may be filed with the judge or may be stated orally and made a part of 
the transcript.
    Except as provided in Sec. 900.15(b) such motions and requests shall 
be addressed to, and ruled on by, the judge if made prior to his 
certification of the transcript pursuant to Sec. 900.10 or by the 
Secretary if made thereafter.
    (b) Certification to Secretary. The judge may in his discretion 
submit or certify to the Secretary for decision any motion, request, 
objection, or other question addressed to the judge.

Sec. 900.8  Conduct of the hearing.

    (a) Time and place. The hearing shall be held at the time and place 
fixed in the notice of hearing, unless the judge shall have changed the 
time or place, in which event the judge shall file with the hearing 
clerk a notice of such change, which notice shall be given in the same 
manner as provided in Sec. 900.4 (relating to the giving of notice of 
the hearing): Provided, That, if the change in time or place of hearing 
is made less than 5 days prior to the date previously fixed for the 
hearing, the judge, either in addition to or in lieu of causing the 
notice of the change to be given, shall announce, or cause to be 
announced, the change at the time and place previously fixed for the 
hearing.
    (b) Appearances--(1) Right to appear. At the hearing, any interested 
person shall be given an opportunity to appear, either in person or 
through his authorized counsel or representative, and to be heard with 
respect to matters relevant and material to the proceeding. Any 
interested person who desires to be heard in person at any hearing under 
these rules shall, before proceeding to testify, state his name, 
address, and occupation. If any such person is appearing through a 
counsel or representative, such person or such counsel or representative 
shall, before proceeding to testify or otherwise to participate in the 
hearing, state for the record the authority to act as such counsel or 
representative, and the names and addresses and occupations of such 
person and such counsel or representative. Any such person or such 
counsel or representative shall give such other information respecting 
his appearance as the judge may request.
    (2) Debarment of counsel or representative. Wherever, while a 
proceeding is pending before him, the judge finds that a person, acting 
as counsel or representative for any person participating in the 
proceeding, is guilty of unethical or unprofessional conduct, the judge 
may order that such person be precluded from further acting as counsel 
or representative in such proceeding. An appeal to the Secretary may be 
taken from any such order, but the proceeding shall not be delayed or 
suspended pending disposition of the appeal: Provided, That the judge 
may suspend the proceeding for a reasonable time for the purpose of 
enabling the client to obtain other counsel or other representative.
    In case the judge has ordered that a person be precluded from 
further acting as counsel or representative in the proceeding, the 
judge, within a reasonable time thereafter shall submit to the Secretary 
a report of the facts and circumstances surrounding such order and shall 
recommend what action the Secretary should take respecting the 
appearance of such person as counsel or representative in other 
proceedings before the Secretary. Thereafter the Secretary may, after 
notice and an opportunity for hearing, issue such order, respecting the 
appearance of such person as counsel or representative in proceedings 
before the Secretary, as the Secretary finds to be appropriate.
    (3) Failure to appear. If any interested person fails to appear at 
the hearing, he shall be deemed to have waived the right to be heard in 
the proceeding.
    (c) Order of procedure. (1) The judge shall, at the opening of the 
hearing prior to the taking of testimony, have noted as part of the 
record the notice of hearing as filed with the Office of the Federal 
Register and the affidavit or certificate of the giving of notice or the 
determination provided for in Sec. 900.4(c).
    (2) Evidence shall then be received with respect to the matters 
specified in the notice of the hearing in such order as the judge shall 
announce.

[[Page 11]]

    (d) Evidence--(1) In general. The hearing shall be publicly 
conducted, and the testimony given at the hearing shall be reported 
verbatim.
    Every witness shall, before proceeding to testify, be sworn or make 
affirmation. Cross-examination shall be permitted to the extent required 
for a full and true disclosure of the facts.
    When necessary, in order to prevent undue prolongation of the 
hearing, the judge may limit the number of times any witness may testify 
to the same matter or the amount of corroborative or cumulative 
evidence.
    The judge shall, insofar as practicable, exclude evidence which is 
immaterial, irrelevant, or unduly repetitious, or which is not of the 
sort upon which responsible persons are accustomed to rely.
    (2) Objections. If a party objects to the admission or rejection of 
any evidence or to any other ruling of the judge during the hearing, he 
shall state briefly the grounds of such objection, whereupon an 
automatic exception will follow if the objection is overruled by the 
judge. The transcript shall not include argument or debate thereon 
except as ordered by the judge. The ruling of the judge on any objection 
shall be a part of the transcript.
    Only objections made before the judge may subsequently be relied 
upon in the proceeding.
    (3) Proof and authentication of official records or documents. An 
official record or document, when admissible for any purpose, shall be 
admissible as evidence without the production of the person who made or 
prepared the same. Such record or document shall, in the discretion of 
the judge, be evidenced by an official publication thereof or by a copy 
attested by the person having legal custody thereof and accompanied by a 
certificate that such person has the custody.
    (4) Exhibits. All written statements, charts, tabulations, or 
similar data offered in evidence at the hearing shall, after 
identification by the proponent and upon satisfactory showing of the 
authenticity, relevancy, and materiality of the contents thereof, be 
numbered as exhibits and received in evidence and made a part of the 
record. Such exhibits shall be submitted in quadruplicate and in 
documentary form. In case the required number of copies is not made 
available, the judge shall exercise his discretion as to whether said 
exhibits shall, when practicable, be read in evidence or whether 
additional copies shall be required to be submitted within a time to be 
specified by the judge. If the testimony of a witness refers to a 
statute, or to a report or document (including the record of any 
previous hearing) the judge, after inquiry relating to the 
identification of such statute, report, or document, shall determine 
whether the same shall be produced at the hearing and physically be made 
a part of the evidence as an exhibit, or whether it shall be 
incorporated into the evidence by reference. If relevant and material 
matter offered in evidence is embraced in a report or document 
(including the record of any previous hearing) containing immaterial or 
irrelevant matter, such immaterial or irrelevant matter shall be 
excluded and shall be segregated insofar as practicable, subject to the 
direction of the judge.
    (5) Official notice. Official notice may be taken of such matters as 
are judicially noticed by the courts of the United States and of any 
other matter of technical, scientific or commercial fact of established 
character: Provided, That interested persons shall be given adequate 
notice, at the hearing or subsequent thereto, of matters so noticed and 
shall be given adequate opportunity to show that such facts are 
inaccurate or are erroneously noticed.
    (6) Offer of proof. Whenever evidence is excluded from the record, 
the party offering such evidence may make an offer of proof, which shall 
be included in the transcript. The offer of proof shall consist of a 
brief statement describing the evidence to be offered. If the evidence 
consists of a brief oral statement or of an exhibit, it shall be 
inserted into the transcript in toto. In such event, it shall be 
considered a part of the transcript if the Secretary decides that the 
judge's ruling in excluding the evidence was erroneous. The judge shall 
not allow the insertion of such evidence in toto if the taking of such 
evidence will consume a considerable length of time at the hearing. In 
the latter event, if the Secretary decides that the judge erred in 
excluding the evidence, and that such error was substantial, the hearing 
shall be reopened to permit the taking of such evidence.

[25 FR 5907, June 28, 1960, as amended at 37 FR 1103, Jan. 25, 1972]

Sec. 900.9  Oral and written arguments.

    (a) Oral argument before judge. Oral argument before the judge shall 
be in the discretion of the judge. Such argument, when permitted, may be 
limited by the judge to any extent that he finds necessary for the 
expeditious disposition of the proceeding and shall be reduced to 
writing and made part of the transcript.
    (b) Briefs, proposed findings and conclusions. The judge shall 
announce at the hearing a reasonable period of time within which 
interested persons may file with the hearing clerk proposed findings and 
conclusions, and written arguments or briefs, based upon the evidence 
received at the hearing, citing, where practicable, the page or pages of 
the transcript of the testimony where such evidence appears. Factual 
material other than that adduced at the hearing or subject to official 
notice shall not be alluded to therein,

[[Page 12]]

and, in any case, shall not be considered in the formulation of the 
marketing agreement or marketing order. If the person filing a brief 
desires the Secretary to consider any objection made by such person to a 
ruling of the judge, as provided in Sec. 900.8(d), he shall include in 
the brief a concise statement concerning each such objection, referring 
where practicable, to the pertinent pages of the transcript.

Sec. 900.10  Certification of the transcript.

    The judge shall notify the hearing clerk of the close of a hearing 
as soon as possible thereafter and of the time for filing written 
arguments, briefs, proposed findings and proposed conclusions, and shall 
furnish the hearing clerk with such other information as may be 
necessary. As soon as possible after the hearing, the judge shall 
transmit to the hearing clerk an original and three copies of the 
transcript of the testimony and the original and all copies of the 
exhibits not already on file in the office of the hearing clerk. He 
shall attach to the original transcript of testimony his certificate 
stating that to the best of his knowledge and belief, the transcript is 
a true transcript of the testimony given at the hearing except in such 
particulars as he shall specify; and that the exhibits transmitted are 
all the exhibits as introduced at the hearing with such exceptions as he 
shall specify. A copy of such certificate shall be attached to each of 
the copies of the transcript of testimony. In accordance with such 
certificate the hearing clerk shall note upon the official record copy, 
and cause to be noted on other copies, of the transcript each correction 
detailed therein by adding or crossing out (but without obscuring the 
text as originally transcribed) at the appropriate place any words 
necessary to make the same conform to the correct meaning, as certified 
by the judge. The hearing clerk shall obtain and file certifications to 
the effect that such corrections have been effected in copies other than 
the official record copy.

Sec. 900.11  Copies of the transcript.

    (a) During the period in which the proceeding has an active status 
in the Department, a copy of the transcript and exhibits shall be kept 
on file in the office of the hearing clerk, where it shall be available 
for examination during official hours of business. Thereafter said 
transcript and exhibits shall be made available by the hearing clerk for 
examination during official hours of business after prior request and 
reasonable notice to the hearing clerk.
    (b) If a personal copy of the transcript is desired, such copy may 
be obtained upon written application filed with the reporter and upon 
payment of fees at the rate (if any) provided in the contract between 
the reporter and the Secretary.

Sec. 900.12  Administrator's recommended decision.

    (a) Preparation. As soon as practicable following the termination of 
the period allowed for the filing of written arguments or briefs and 
proposed findings and conclusions the Administrator shall file with the 
hearing clerk a recommended decision.
    (b) Contents. The Administrator's recommended decision shall 
include: (1) A preliminary statement containing a description of the 
history of the proceedings, a brief explanation of the material issues 
of fact, law, or discretion presented on the record, and proposed 
findings and conclusions with respect to such issues as well as the 
reasons or basis therefor; (2) A ruling upon each proposed finding or 
conclusion submitted by interested persons; and (3) An appropriate 
proposed marketing agreement or marketing order effectuating his 
recommendations.
    (c) Exceptions to recommended decision. Immediately following the 
filing of his recommended decision, the Administrator shall give notice 
thereof, and opportunity to file exceptions thereto by publication in 
the Federal Register. Within a period of time specified in such notice 
any interested person may file with the hearing clerk exceptions to the 
Administrator's proposed marketing agreement or marketing order, or 
both, as the case may be, and a brief in support of such exceptions. 
Such exceptions shall be in writing, shall refer, where practicable, to 
the related pages of the transcript and may suggest appropriate changes 
in the proposed marketing agreement or marketing order.
    (d) Omission of recommended decision. The procedure provided in this 
section may be omitted only if the Secretary finds on the basis of the 
record that due and timely execution of his functions imperatively and 
unavoidably requires such omission.

Sec. 900.13  Submission to Secretary.

    Upon the expiration of the period allowed for filing exceptions or 
upon request of the Secretary, the hearing clerk shall transmit to the 
Secretary the record of the proceeding. Such record shall include: all 
motions and requests filed with the hearing clerk and rulings thereon; 
the certified transcripts; any proposed findings or conclusions or 
written arguments or briefs that may have been filed; the 
Administrator's recommended decision, if any, and such exceptions as may 
have been filed.

Sec. 900.13a  Decision by Secretary.

    After due consideration of the record, the Secretary shall render a 
decision. Such decision shall become a part of the record and shall 
include (a) a statement of his findings and conclusions, as well as the 
reasons or basis therefor, upon all the material issues of fact, law or 
discretion presented on the

[[Page 13]]

record, (b) a ruling upon each proposed finding and proposed conclusion 
not previously ruled upon in the record, (c) a ruling upon each 
exception filed by interested persons and (d) either (1) a denial of the 
proposal to issue a marketing agreement or marketing order or (2) a 
marketing agreement and, if the findings upon the record so warrant, a 
marketing order, the provisions of which shall be set forth directly or 
by reference, regulating the handling of the commodity or product in the 
same manner and to the same extent as such marketing agreement, which 
order shall be complete except for its effective date and any 
determinations to be made under Sec. 900.14(b) or Sec. 900.14(c): 
Provided, That such marketing order shall not be executed, issued, or 
made effective until and unless the Secretary determines that the 
requirements of Sec. 900.14(b) or Sec. 900.14(c) have been met.

Sec. 900.14  Execution and issuance of marketing agreements and 
          marketing orders.

    (a) Execution and issuance of marketing agreement. If the Secretary 
has approved a marketing agreement, as provided in Sec. 900.13a, the 
Administrator shall cause copies thereof to be distributed for execution 
by the handlers eligible to become parties thereto. If and when such 
number of the handlers as the Secretary shall deem sufficient shall have 
executed the agreement, the Secretary shall execute the agreement. After 
execution of a marketing agreement, such agreement shall be filed with 
the hearing clerk, and notice thereof, together with notice of the 
effective date, shall be given by publication in the Federal Register. 
The marketing agreement shall not become effective less than 30 days 
after its publication in the Federal Register, unless the Secretary, 
upon good cause found and published with the agreement, fixes an earlier 
effective date therefor: Provided, That no marketing agreement shall 
become effective as to any person signatory thereto before either (1) it 
has been filed with the Office of the Federal Register, or (2) such 
person has received actual notice that the Secretary has executed the 
agreement and the effective date of the marketing agreement.
    (b) Issuance of marketing order with marketing agreement. Whenever, 
as provided in paragraph (a) of this section, the Secretary executes a 
marketing agreement, and handlers also have executed the same as 
provided in section 8c(8) of the Act, he shall, if he finds that it will 
tend to effectuate the purposes of the Act, issue and make effective the 
marketing order, if any, which was filed as a part of his decision 
pursuant to Sec. 900.13a: Provided, That the issuance of such order 
shall have been approved or favored by producers as required by section 
8c(8) of the act.
    (c) Issuance of marketing order without marketing agreement. If, 
despite the failure or refusal of handlers to sign the marketing 
agreement, as provided in section 8c(8) of the Act, the Secretary makes 
the determinations required under section 8c(9) of the Act, the 
Secretary shall issue and make effective the marketing order, if any, 
which was filed as a part of his decision pursuant to Sec. 900.13a.
    (d) Effective date of marketing order. No marketing order shall 
become effective less than 30 days after its publication in the Federal 
Register, unless the Secretary, upon good cause found and published with 
the order, fixes an earlier effective date therefor: Provided, That no 
marketing order shall become effective as to any person sought to be 
charged thereunder before either (1) it has been filed with the Office 
of the Federal Register, or (2) such person has received actual notice 
of the issuance and terms of the marketing order.
    (e) Notice of issuance. After issuance of a marketing order, such 
order shall be filed with the hearing clerk, and notice thereof, 
together with notice of the effective date, shall be given by 
publication in the Federal Register. (7 U.S.C. 610(c).)

[25 FR 5907, June 28, 1960, as amended at 53 FR 15659, May 3, 1988]

Sec. 900.15  Filing; extensions of time; effective date of filing; and 
          computation of time.

    (a) Filing, number of copies. Except as is provided otherwise in 
this subpart, all documents or papers required or authorized by the 
foregoing provisions of this subpart to be filed with the hearing clerk 
shall be filed in quadruplicate. Any document or paper, so required or 
authorized to be filed with the hearing clerk, shall, during the course 
of an oral hearing, be filed with the judge. The provisions of this 
subpart concerning filing with the hearing clerk of hearing notices, 
recommended and final decisions, marketing agreements and orders, and 
all documents described in Sec. 900.17 shall be met by filing a true 
copy thereof with the hearing clerk.
    (b) Extensions of time. The time for the filing of any document or 
paper required or authorized by the foregoing provisions of this subpart 
to be filed may be extended by the judge (before the record is certified 
by the judge) or by the Administrator (after the record is so certified 
by the judge but before it is transmitted to the Secretary), or by the 
Secretary (after the record is transmitted to the Secretary) upon 
request filed, and if, in the judgment of the judge, Administrator, or 
the Secretary, as the case may be, there is good reason for the 
extension. All rulings made pursuant to this paragraph shall be filed 
with the hearing clerk.
    (c) Effective date of filing. Any document or paper required or 
authorized by the foregoing provisions of this subpart to be filed shall 
be deemed to be filed when it is postmarked or when it is received by 
the hearing clerk.

[[Page 14]]

    (d) Computation of time. Sundays and Federal holidays shall be 
included in computing the time allowed for the filing of any document or 
paper: Provided, That, when such time expires on a Sunday or legal 
holiday, such period shall be extended to include the next following 
business day.

[25 FR 5907, June 28, 1960, as amended at 30 FR 254, Jan. 9, 1965]

Sec. 900.16  Ex parte communications.

    (a) At no stage of the proceeding following the issuance of a notice 
of hearing and prior to the issuance of the Secretary's decision therein 
shall an employee of the Department who is or may reasonably be expected 
to be involved in the decisional process of the proceeding discuss ex 
parte the merits of the proceeding with any person having an interest in 
the proceeding or with any representative of such person: Provided, That 
procedural matters and status reports shall not be included within this 
limitation; and Provided further, That an employee of the Department who 
is or may reasonably be expected to be involved in the decisional 
process of the proceeding may discuss the merits of the proceeding with 
such a person if all parties known to be interested in the proceeding 
have been given notice and an opportunity to participate. A memorandum 
of any such discussion shall be included in the record of the 
proceeding.
    (b) No person interested in the proceeding shall make or knowingly 
cause to be made to an employee of the Department who is or may 
reasonably be expected to be involved in the decisional process of the 
proceeding an ex parte communication relevant to the merits of the 
proceeding except as provided in paragraph (a) of this section.
    (c) If an employee of the Department who is or may reasonably be 
expected to be involved in the decisional process of the proceeding 
receives or makes a communication prohibited by this section, the 
Department shall place on the public record of the proceeding:
    (1) All such written communications;
    (2) Memoranda stating the substance of all such oral communications; 
and
    (3) All written responses, and memoranda stating the substance of 
all oral responses thereto.
    (d) Upon receipt of a communication knowingly made or knowingly 
caused to be made by a party in violation of this section, the 
Department may, to the extent consistent with the interest of justice 
and the policy of the underlying statute, take whatever steps are deemed 
necessary to nullify the effect of such communication.
    (e) For the purposes of this section, ex parte communication means 
an oral or written communication not on the public record with respect 
to which reasonable prior notice to all interested parties is not given, 
but which shall not include requests for status reports (including 
requests on procedural matters) on any proceeding.

[42 FR 10833, Feb. 24, 1977]

Sec. 900.17  Additional documents to be filed with hearing clerk.

    In addition to the documents or papers required or authorized by the 
foregoing provisions of this subpart to be filed with the hearing clerk, 
the hearing clerk shall receive for filing and shall have custody of all 
papers, reports, records, orders, and other documents which relate to 
the administration of any marketing agreement or marketing order and 
which the Secretary is required to issue or to approve.

Sec. 900.18  Hearing before Secretary.

    The Secretary may act in the place and stead of a judge in any 
proceeding under this subpart. When he so acts the hearing clerk shall 
transmit the record to the Secretary at the expiration of the period 
provided for the filing of proposed findings of fact, conclusions and 
orders, and the Secretary shall thereupon, after due consideration of 
the record, issue his final decision in the proceeding: Provided, That 
he may issue a tentative decision in which event the parties shall be 
afforded an opportunity to file exceptions before the issuance of the 
final decision.

Subpart--Rules of Practice Governing Proceedings on Petitions To Modify 
                 or To Be Exempted From Marketing Orders

    Authority: Sec. 5, 49 Stat. 753, as amended; 7 U.S.C. 608c.

Sec. 900.50  Words in the singular form.

    Words in this subpart in the singular form shall be deemed to import 
the plural, and vice versa, as the case may demand.

Sec. 900.51  Definitions.

    As used in this subpart, the terms as defined in the Act shall apply 
with equal force and effect. In addition, unless the context otherwise 
requires:
    (a) The term Act means Public Act No. 10, 73d Congress, as amended 
and as reenacted and amended by the Agricultural Marketing Agreement Act 
of 1937, as amended (7 U.S.C. and Sup. 601);
    (b) The term Department means the United States Department of 
Agriculture;
    (c) The term Secretary means the Secretary of Agriculture of the 
United States, or any officer or employee of the Department to whom 
authority has heretofore been delegated, or to whom authority may 
hereafter be delegated, to act in his stead;

[[Page 15]]

    (d) The terms administrative law judge or judge means any 
Administrative Law Judge, appointed pursuant to 5 U.S.C. 3105, and 
assigned to the proceeding involved;
    (e) The term administrator means the Administrator of the 
Agricultural Marketing Service, with power to redelegate, or any officer 
or employee of the Department to whom authority has been delegated or 
may hereafter be delegated to act in his stead.
    (f) [Reserved]
    (g) The term ``Federal Register'' means the publication provided for 
by the Act of July 26, 1935 (49 Stat. 500), and acts supplementary 
thereto and amendatory thereof;
    (h) The term marketing order means any order or any amendment 
thereto which may be issued pursuant to section 8c of the Act;
    (i) The term handler means any person who, by the terms of a 
marketing order, is subject thereto, or to whom a marketing order is 
sought to be made applicable;
    (j) The term proceeding means a proceeding before the Secretary 
arising under subsection (15)(A) of section 8c of the Act;
    (k) The term hearing means that part of the proceeding which 
involves the submission of evidence;
    (l) The term party includes the Department;
    (m) The term hearing clerk means the hearing clerk, United States 
Department of Agriculture, Washington, DC;
    (n) [Reserved]
    (o) The term decision means the judge's initial decision in 
proceedings subject to 5 U.S.C. 556 and 557, and includes the judge's 
(1) findings of fact and conclusions with respect to all material issues 
of fact, law or discretion as well as the reasons or basis thereof, (2) 
order, and (3) rules on findings, conclusions and orders submitted by 
the parties;
    (p) The term petition includes an amended petition.

[25 FR 5907, June 28, 1960, as amended at 26 FR 7796, Aug. 22, 1961, 28 
FR 579, Jan. 23, 1963; 37 FR 8059, Apr. 25, 1972; 38 FR 29798, Oct. 29, 
1973]

Sec. 900.52  Institution of proceeding.

    (a) Filing and service of petition. Any handler desiring to complain 
that any marketing order or any provision of any such order or any 
obligation imposed in connection therewith is not in accordance with 
law, shall file with the hearing clerk, in quadruplicate, a petition in 
writing addressed to the Secretary. Promptly upon receipt of the 
petition, the hearing clerk shall transmit a true copy thereof to the 
Administrator and the General Counsel, respectively.
    (b) Contents of petition. A petition shall contain:
    (1) The correct name, address, and principal place of business of 
the petitioner. If petitioner is a corporation, such fact shall be 
stated, together with the name of the State of incorporation, the date 
of incorporation, and the names, addresses, and respective positions 
held by its officers; if an unincorporated association, the names and 
addresses of its officers, and the respective positions held by them; if 
a partnership, the name and address of each partner;
    (2) Reference to the specific terms or provisions of the order, or 
the interpretation or application thereof, which are complained of;
    (3) A full statement of the facts (avoiding a mere repetition of 
detailed evidence) upon which the petition is based, and which it is 
desired that the Secretary consider, setting forth clearly and concisely 
the nature of the petitioner's business and the manner in which 
petitioner claims to be affected by the terms or provisions of the order 
or the interpretation or application thereof, which are complained of;
    (4) A statement of the grounds on which the terms or provisions of 
the order, or the interpretation or application thereof, which are 
complained of, are challenged as not in accordance with law;
    (5) Prayers for the specific relief which the petitioner desires the 
Secretary to grant;
    (6) An affidavit by the petitioner, or if the petitioner is not an 
individual, by an officer of the petitioner having knowledge of the 
facts stated in the petition, verifying the petition and stating that it 
is filed in good faith and not for purposes of delay.
    (c) Motion to dismiss petition--(1) Filing, contents, and responses 
thereto. If the Administrator is of the opinion that the petition, or 
any portion thereof, does not substantially comply, in form or content, 
with the act or with the requirements of paragraph (b) of this section, 
or is not filed in good faith, or is filed for purposes of delay, he 
may, within thirty days after the filing of the petition, file with the 
Hearing Clerk a motion to dismiss the petition, or any portion thereof, 
on one or more of the grounds stated in this paragraph. Such motion 
shall specify the grounds of objection to the petition and if based, in 
whole or in part, on an allegations of fact not appearing on the face of 
the petition, shall be accompanied by appropriate affidavits or 
documentary evidence substantiating such allegations of fact. The motion 
may be accompanied by a memorandum of law. Upon receipt of such motion, 
the Hearing Clerk shall cause a copy thereof to be served upon the 
petitioner, together with a notice stating that all papers to be 
submitted in opposition to such motion including any memorandum of law, 
must be filed by the petitioner with the Hearing Clerk not later than 20 
days after the service of such notice upon the petitioner. Upon the 
expiration of the time specified in such notice, or upon receipt of such 
papers from the petitioner, the Hearing Clerk shall transmit all

[[Page 16]]

papers which have been filed in connection with the motion to the Judge 
for his consideration.
    (2) Decision by Administrative Law Judge. The Judge, after due 
consideration, shall render a decision upon the motion stating the 
reasons for his action. Such decision shall be in the form of an order 
and shall be filed with the Hearing Clerk who shall cause a copy thereof 
to be served upon the petitioner and a copy thereof to be transmitted to 
the Administrator. Any such order shall be final unless appealed 
pursuant to Sec. 900.65: Provided, That within 20 days following the 
service upon the petitioner of a copy of the order of the Judge 
dismissing the petition, or any portion thereof, on the ground that it 
does not substantially comply in form and content with the act or with 
paragraph (b) of this section, the petitioner shall be permitted to file 
an amended petition.
    (3) Oral argument. Unless a written application for oral argument is 
filed by a party with the hearing clerk not later than the time fixed 
for filing papers in opposition to the motion, it shall be considered 
that the party does not desire oral argument. The granting of a request 
to make oral argument shall rest in the discretion of the Judge.

[25 FR 5907, June 28, 1960, as amended at 38 FR 29798, Oct. 29, 1973]

Sec. 900.52a  Answer to petition.

    (a) Time of filing. Within 30 days after the filing of the petition, 
the Administrator shall file an answer thereto: Provided, That if a 
motion to dismiss the petition, in whole or in part, is made pursuant to 
Sec. 900.52(c), the answer shall be filed within 15 days after the 
filing of an order of the administrative law judge denying the motion or 
granting the motion with respect to only a portion of the petition. The 
answer shall be filed with the hearing clerk who shall cause a copy 
thereof to be served promptly upon the petitioner.
    (b) Contents. The answer shall specify which of the material 
allegations of fact or of law in the petition are controverted and which 
are not controverted. The answer also may contain affirmative 
allegations of fact constituting separate defenses and statements of 
objections to the sufficiency of the whole or any part of the petition.

[25 FR 5907, June 28, 1960]

Sec. 900.52b  Amended pleadings.

    At any time before the close of the hearing the petition or answer 
may be amended, but the hearing shall, at the request of the adverse 
party, be adjourned or recessed for such reasonable time as the judge 
may determine to be necessary to protect the interests of the parties. 
Amendments subsequent to the first amendment or subsequent to the filing 
of an answer may be made only with leave of the judge or with the 
written consent of the adverse party.

Sec. 900.53  Withdrawal of petition.

    If, at any time after the petition is filed, the petitioner desires 
to withdraw the same, he shall file with the hearing clerk (or, if filed 
during the course of a hearing, with the judge) a written request for 
permission to withdraw. The judge may, in his discretion, thereupon 
dismiss the petition without further procedure: Provided, That, if the 
request to withdraw is filed after a hearing has been opened, permission 
to withdraw shall be granted only in exceptional circumstances.

Sec. 900.54  Docket number.

    Each proceeding, immediately following its institution, shall be 
assigned a docket number by the hearing clerk and thereafter the 
proceeding may be referred to by such number.

Sec. 900.55  Judges.

    (a) Assignment. No judge who has any pecuniary interest in the 
outcome of the proceeding, or who has participated in any investigation 
preceding the institution of the proceeding, shall serve as judge in 
such proceeding.
    (b) Conduct. The judge shall conduct the proceeding in a fair and 
impartial manner and shall not discuss ex parte the merits of the 
proceeding with any person who is or who has been connected in any 
manner with the proceeding in an advocative or investigative capacity.
    (c) Powers of judges. Subject to review by the Secretary, as 
provided elsewhere in this subpart, the judge shall have power to:
    (1) Rule upon motions and requests;
    (2) Adjourn the hearing from time to time, and change the time and 
place of hearing;
    (3) Administer oaths and affirmations and take affidavits;
    (4) Issue subpenas, under the facsimile signature of the Secretary, 
requiring the attendance and testimony of witnesses and the production 
of books, records, contracts, papers, and other documentary evidence;
    (5) Examine witnesses and receive evidence;
    (6) Take or order, under the facsimile signature of the Secretary, 
the taking of depositions;
    (7) Admit or exclude evidence;
    (8) Hear oral argument on facts or law;
    (9) Consolidate hearings upon two or more petitions pertaining to 
the same order;
    (10) Do all acts and take all measures necessary for the maintenance 
of order at the hearing and the efficient conduct of the proceeding.
    (d) Who may act in absence of judge. In case of the absence of the 
judge or his inability to act, the powers and duties to be performed

[[Page 17]]

by him under these rules of practice in connection with a proceeding 
may, without abatement of the proceeding unless otherwise ordered by the 
Secretary, be assigned to any other judge.
    (e) Disqualification of judge. The judge may at any time withdraw as 
judge in a proceeding if he deems himself to be disqualified. Upon the 
filing by an interested person in good faith of a timely and sufficient 
affidavit of personal bias or disqualification of a judge, the Secretary 
shall determine the matter as a part of the record and decision in the 
proceeding, after making such investigation or holding such hearings, or 
both, as he may deem appropriate in the circumstances.

Sec. 900.56  Consolidated hearings.

    At the discretion of the judge, hearings upon two or more petitions 
pertaining to the same order may be consolidated, and the evidence taken 
at such consolidated hearing may be embodied in a single record.

Sec. 900.57  Intervention.

    Intervention in proceedings subject to this subpart shall not be 
allowed, except that, in the discretion of the Secretary or the judge, 
any person (other than the petitioner) showing a substantial interest in 
the outcome of a proceeding shall be permitted to participate in the 
oral argument and to file a brief.

Sec. 900.58  Prehearing conferences.

    In any proceeding in which it appears that such procedure will 
expedite the proceeding, the judge, at any time prior to the 
commencement of or during the course of the hearing, may request the 
parties or their counsel to appear at a conference before him to 
consider (a) the simplification of issues; (b) the possibility of 
obtaining stipulations of fact and of documents which will avoid 
unnecessary proof; (c) the limitation of the number of expert or other 
witnesses; and (d) such other matters as may expedite and aid in the 
disposition of the proceeding. No transcript of such conference shall be 
made, but the judge shall prepare and file for the record a written 
summary of the action taken at the conference, which shall incorporate 
any written stipulations or agreements made by the parties at the 
conference or as a result of the conference. If the circumstances are 
such that a conference is impracticable, the judge may request the 
parties to correspond with him for the purpose of accomplishing any of 
the objects set forth in this section. The judge shall forward copies of 
letters and documents to the parties as the circumstances require. 
Correspondence in such negotiations shall not be a part of the record, 
but the judge shall submit a written summary for the record if any 
action is taken.

Sec. 900.59  Motions and requests.

    (a) General. All motions and requests shall be filed with the 
hearing clerk, except that those made during the course of an oral 
hearing may be filed with the judge or may be stated orally and made a 
part of the transcript.
    The judge is authorized to rule upon all motions and requests filed 
or made prior to the transmittal by the hearing clerk to the Secretary 
of the record as provided in this subpart. The Secretary shall rule upon 
all motions and requests filed after that time.
    (b) Certification of motions. The submission or certification of any 
motion, request, objection, or other question to the Secretary shall be 
in the discretion of the judge.

[25 FR 5907, June 28, 1960, as amended at 38 FR 29798, Oct. 29, 1973]

Sec. 900.60  Oral hearings before judge.

    (a) Time and place. The judge shall set a time and place for hearing 
and shall file with the hearing clerk a notice stating the time and 
place of hearing. If any change in the time or place of hearing becomes 
necessary, it shall be made by the judge, who, in such event, shall file 
with the hearing clerk a notice of the change. Such notice shall be 
served upon the parties, unless it is made during the course of an oral 
hearing and made a part of the transcript.
    (b) Appearances--(1) Representation. In any proceeding under the 
act, the parties may appear in person or by counsel or other 
representative. The Department, if represented by counsel, shall be 
represented by an attorney assigned by the General Counsel of the 
Department, and such attorney shall present or supervise the 
presentation of the position of the Department.
    (2) Debarment of counsel or representative. Whenever, while a 
proceeding is pending before him, the judge finds that a person acting 
as counsel or representative for any party to the proceeding is guilty 
of unethical or unprofessional conduct, the judge may order that such 
person be precluded from further acting as counsel or representative in 
such proceeding. An appeal to the Secretary may be taken from any such 
order, but the proceeding shall not be delayed or suspended pending 
disposition of the appeal: Provided, That the judge may suspend the 
proceeding for a reasonable time for the purpose of enabling the client 
to obtain other counsel or representative.
    In case the judge has issued an order precluding a person from 
further acting as counsel or representative in the proceeding, the 
judge, within a reasonable time thereafter, shall submit to the 
Secretary a report of the facts and circumstances surrounding the 
issuance of the order and shall recommend what action the Secretary 
should take respecting the appearance of such person as

[[Page 18]]

counsel or representative in other proceedings before the Secretary. 
Thereafter, the Secretary may, after notice and an opportunity for 
hearing, issue such order respecting the appearance of such person as 
counsel or representative in proceedings before the Secretary as the 
Secretary finds to be appropriate.
    (3) Failure to appear. If the petitioner, after being duly notified, 
fails to appear at the hearing, he shall be deemed to have authorized 
the dismissal of the proceeding, without further procedure, and with or 
without prejudice as the judge may determine. In the event that the 
petitioner appears at the hearing and no representative of the 
Department appears, the judge shall proceed ex parte to hear the 
evidence of the petitioner. Provided, That failure on the part of such 
representative of the Department to appear at a hearing shall not be 
deemed to be waiver of the Department's right to file suggested findings 
of fact, conclusions and order; to be served with a copy of the judge's 
initial decision and to appeal to the Secretary with respect thereto.
    (c) Order of proceeding. Except as may be determined otherwise by 
the judge, the petitioner shall proceed first at the hearing.
    (d) Evidence--(1) In general. The hearing shall be publicly 
conducted, and the testimony given at the hearing shall be reported 
verbatim.
    The testimony of witnesses at a hearing shall be upon oath or 
affirmation and subject to cross-examination.
    Any witness may, in the discretion of the judge, be examined 
separately and apart from all other witnesses except those who may be 
parties to the proceeding.
    The judge shall exclude, insofar as practicable, evidence which is 
immaterial, irrelevant, or unduly repetitious, or which is not of the 
sort upon which responsible persons are accustomed to rely.
    (2) Objections. If a party objects to the admission or rejection of 
any evidence or to the limitation of the scope of any examination or 
cross-examination, or any other ruling of the judge, he shall state 
briefly the grounds of such objection, whereupon an automatic exception 
will follow which may be pursued in an appeal pursuant to Sec. 900.65 by 
the party adversely affected by the judge's ruling.
    (3) Depositions. The deposition of any witness shall be admitted, in 
the manner hereinafter provided in and subject to the provisions of 
Sec. 900.61.
    (4) Affidavits. Except as is otherwise provided in this subpart, 
affidavits may be admitted only if the evidence is otherwise admissible 
and the parties agree (which may be determined by their failure to make 
timely objections) that affidavits may be used.
    (5) Proof and authentication of official records or documents. An 
official record or document, when admissible for any purpose, shall be 
admissible in evidence without the production of the person who made or 
prepared the same. Such record or document shall, in the discretion of 
the judge, be evidenced by an official publication thereof or by a copy 
attested by the person having legal custody thereof and accompanied by a 
certificate that such person has the custody.
    (6) Exhibits. All written statements, charts, tabulations, or 
similar data offered in evidence at the hearing shall, after 
identification by the proponent and upon a satisfactory showing of the 
admissibility of the contents thereof, be numbered as exhibits and 
received in evidence and made a part of the record. Except where the 
judge finds that the furnishing of copies is impracticable, a copy of 
each exhibit, in addition to the original, shall be filed with the judge 
for the use of each other party to the proceeding. The judge shall 
advise the parties as to the exact number of copies which will be 
required to be filed and shall make and have noted on the record the 
proper distribution of the copies.
    If the testimony of a witness refers to a statute, or to a report, 
document, or transcript, the judge, after inquiry relating to the 
identification of such statute, report, document, or transcript, shall 
determine whether the same shall be produced at the hearing and 
physically be made a part of the evidence as an exhibit, or whether it 
shall be incorporated into the evidence by reference. If relevant and 
material matter offered in evidence is embraced in a report, document, 
or transcript containing immaterial or irrelevant matter, such 
immaterial or irrelevant matter shall be excluded and shall be 
segregated insofar as practicable, subject to the direction of the 
judge.
    (7) Official notice. Official notice will be taken of such matters 
as are judicially noticed by the courts of the United States and of any 
other matter of technical, scientific, or commercial fact of established 
character: Provided, That the parties shall be given adequate notice, at 
the hearing or by reference in the judge's report or the tentative order 
or otherwise, of matters so noticed, and (except where official notice 
is taken, for the first time in the proceeding, in the final order) 
shall be given adequate opportunity to show that such facts are 
erroneously noticed.
    (8) Offer of proof. Whenever evidence is excluded from the record, 
the party offering such evidence may make an offer of proof, which shall 
be included in the transcript. The offer of proof shall consist of a 
brief statement describing the evidence to be offered. If the evidence 
consists of a brief oral statement or of an exhibit, it shall be 
inserted into the transcript in toto. In such event, it shall be 
considered a part of the transcript if the Secretary decides that the 
judge's ruling in excluding the evidence was

[[Page 19]]

erroneous. The judge shall not allow the insertion of such evidence in 
toto if the taking of such evidence will consume a considerable length 
of time at the hearing. In the latter event, if on appeal the Secretary 
decides that the judge erred in excluding the evidence, and that such 
error was substantial, the hearing shall be reopened to permit the 
taking of such evidence.
    (e) [Reserved]
    (f) Transcript. (1) During the period in which the proceeding has an 
active status the transcript and exhibits shall be kept on file in the 
office of the hearing clerk, where it shall be available for examination 
during official hours of business. Thereafter said transcript and 
exhibits shall be made available by the hearing clerk for examination 
during official hours of business after prior request and reasonable 
notice to the hearing clerk.
    (2) If a personal copy of the transcript is desired, such copy may 
be obtained upon written application filed with the reporter, and upon 
payment of fees at the rate (if any) provided in the contract between 
the reporter and the Secretary.

[25 FR 5907, June 28, 1960, as amended at 38 FR 29798, Oct. 29, 1973]

Sec. 900.61  Depositions.

    (a) Procedure in lieu of deposition. Before any party may have 
testimony taken by deposition, said party shall, if practicable, submit 
to the other party an affidavit which shall set forth the facts to which 
the witness would testify, if the deposition should be taken. If, after 
examination of such affidavit, the other party agrees, or (within 10 
days after submission of the affidavit) fails to object, that the 
affidavit may be used in lieu of the deposition, the judge shall admit 
the affidavit in evidence and shall not order the deposition to be 
taken.
    (b) Application for taking deposition. Upon the application of a 
party to the proceeding, the judge may, at any time after the filing of 
the moving paper, order, under the facsimile signature of the Secretary, 
the taking of testimony by deposition. The application shall be in 
writing and shall be filed with the hearing clerk and shall set forth: 
(1) The name and address of the proposed deponent; (2) the name and 
address of the person (referred to hereinafter in this section as the 
``officer''), qualified under the rules in this part to take 
depositions, before whom the proposed examination is to be made; (3) the 
proposed time and place of the examination, which shall be at least 15 
days after the date of the mailing of the application; and (4) the 
reasons why such deposition should be taken.
    (c) Judge's order for taking deposition. If, after the examination 
of the application, the judge is of the opinion that the deposition 
should be taken, he shall order its taking. The order shall be filed 
with the hearing clerk and shall be served upon the parties and shall 
state: (1) The time and place of the examination (which shall not be 
less than 10 days after the filing of the order); (2) the name of the 
officer before whom the examination is to be made; (3) the name of the 
deponent. The officer and the time and place need not be the same as 
those suggested in the application.
    (d) Qualifications of officer. The deposition shall be taken before 
the judge or before an officer authorized by the law of the United 
States or by the law of the place of the examination to administer 
oaths, or before an officer authorized by the Secretary to administer 
oaths.
    (e) Procedure on examination. The deponent shall be examined under 
oath or affirmation and shall be subject to cross-examination. The 
testimony of the deponent shall be recorded by the officer or by some 
person under his direction and in his presence. In lieu of oral 
examination, parties may transmit written interrogatories to the officer 
prior to the examination and the officer shall propound such 
interrogatories to the deponent.
    The applicant must arrange for the examination of the witness either 
by oral examination or by written interrogatories. If it is found by the 
judge, upon the protest of a party to the proceeding, that such party 
has his residence and his place of business more than 100 miles from the 
place of the examination and that it would constitute an undue hardship 
upon such party to be represented at the examination, the applicant will 
be required to conduct the examination by means of interrogatories. When 
the examination is conducted by means of interrogatories, copies of the 
interrogatories shall be served upon the other parties to the proceeding 
at least five days prior to the date set for the examination, and the 
other parties shall be afforded an opportunity to file with the officer 
cross-interrogatories at any time prior to the time of the examination.
    (f) Certification by officer. The officer shall certify on the 
deposition that the deponent was duly sworn by him and that the 
deposition is a true record of the deponent's testimony. He shall then 
securely seal the deposition, together with two copies thereof, in an 
envelope and mail the same by registered mail to the hearing clerk.
    (g) Use of depositions. A deposition ordered and taken in accord 
with the provisions of this section may be used in a proceeding under 
the act if the judge finds that the evidence is otherwise admissible and 
(1) that the witness is dead; or (2) that the witness is at a distance 
greater than 100 miles from the place of hearing, unless it appears that 
the absence of the witness was procured by the party offering the 
deposition; or (3) that the witness is unable to attend or testify 
because

[[Page 20]]

of age, sickness, infirmity or imprisonment; or (4) that the party 
offering the deposition has endeavored to procure the attendance of the 
witness by subpena but has been unable to do so; or (5) that such 
exceptional circumstances exist as to make it desirable, in the 
interests of justice, to allow the deposition to be used. If a 
deposition has been taken, and the party upon whose application it was 
taken refuses to offer it in evidence, the other party may offer the 
deposition, or any part thereof, in evidence.

Sec. 900.62  Subpenas.

    (a) Issuance of subpenas. The attendance of witnesses and the 
production of documentary evidence from any place in the United States 
on behalf of any party to the proceeding may, by subpena, be required at 
any designated place of hearing. Subpenas may be issued by the Secretary 
or by the judge, under the facsimile signature of the Secretary, upon a 
reasonable showing by the applicant of the grounds, necessity, and 
reasonable scope thereof.
    (b) Application for subpena duces tecum. Subpenas for the production 
of documentary evidence, unless issued by the judge upon his own motion, 
shall be issued only upon a verified written application. Such 
application shall specify, as exactly as possible, the documents desired 
and shall show their competency, relevancy, and materiality and the 
necessity for their production.
    (c) Service of subpenas. Subpenas may be served (1) by a United 
States Marshal or his deputy, or (2) by any other person who is not less 
than 18 years of age, or (3) by registering and mailing a copy of the 
subpena addressed to the person to be served at his or its last known 
residence or principal place of business or residence. Proof of service 
may be made by the return of service on the subpena by the United States 
Marshal or his deputy; or, if served by an individual other than a 
United States Marshal or his deputy, by an affidavit of such person 
stating that he personally served a copy of the subpena upon the person 
named therein; or, if service was by registered mail, by an affidavit 
made by the person mailing the subpena that it was mailed as provided in 
this paragraph and by the signed return post-office receipt: Provided, 
That, if the subpena is issued on behalf of the Department, the return 
receipt without an affidavit of mailing shall be sufficient proof of 
service. In making personal service, the person making service shall 
leave a copy of the subpena with the person subpenaed; the original, 
bearing or accompanied by the required proof of service shall be 
returned to the official who issued the same.

Sec. 900.63  Fees and mileage.

    Witnesses who are subpenaed and who appear in such proceeding, 
including witnesses whose depositions are taken, shall be paid the same 
fees and mileage that are paid witnesses in the courts of the United 
States, and persons taking depositions shall be entitled to the same 
fees as are paid for like services in the courts of the United States, 
to be paid by the party at whose request the deposition is taken. 
Witness fees and mileage shall be paid by the party at whose instance 
the witnesses appear, and claims therefor, as to witnesses subpenaed on 
behalf of the Department, shall be proved before the person issuing the 
subpena, and, as to witnesses subpenaed on behalf of any other party, 
shall be presented to such party.

Sec. 900.64  The Administrative Law Judge's decision.

    (a) Corrections to and certification of transcript. (1) At such time 
as the judge may specify, but not later than the time fixed for filing 
proposed findings of fact, conclusions and order, or briefs, as the case 
may be, the parties may file with the judge proposed corrections to the 
transcript. (2) As soon as practicable after the filing of proposed 
findings of fact, conclusions and order, or briefs, as the case may be, 
the judge shall file with the hearing clerk his certificate indicating 
any corrections to be made in the transcript, and stating that, to the 
best of his knowledge and belief, the transcript, as corrected, is a 
true, correct, and complete transcript of the testimony given at the 
hearing, and that the exhibits are all the exhibits properly a part of 
the hearing record. The original of such certificate shall be attached 
to the original transcript and a copy of such certificate shall be 
served upon each of the parties by the hearing clerk who shall also 
enter onto the transcript (without obscuring the text) any correction 
noted in the certification.
    (b) Proposed findings of fact, conclusions, and orders. Within 10 
days (unless the judge shall have announced at the hearing a shorter or 
longer period of time) after the transcript has been filed with the 
hearing clerk, as provided in paragraph (a) of this section, each party 
may file with the hearing clerk proposed findings of fact, conclusions, 
and order, based solely upon the evidence of record, and briefs in 
support thereof.
    (c) Administrative Law Judge's decision. The judge, within a 
reasonable time after the termination of the period allowed for the 
filing of proposed findings of fact, conclusions, and orders, and briefs 
in support thereof, shall prepare upon the basis of the record, and 
shall file with the hearing clerk, his initial decision, a copy of which 
shall be served by the hearing clerk, upon each of the parties. Such 
decision shall become final without further proceedings 35 days after 
the date of service thereof, unless there is an appeal to the Secretary 
by a party to the proceeding: Provided, however, That no decision shall 
be

[[Page 21]]

final for the purpose of judicial review except a final decision issued 
by the Secretary pursuant to an appeal by a party to the proceeding.

[25 FR 5907, June 28, 1960, as amended at 38 FR 29799, Oct. 29, 1973]

Sec. 900.65  Appeals to Secretary: Transmittal of record.

    (a) Filing of appeal. Any party who disagrees with a judge's 
decision or any part thereof, may appeal the decision to the Secretary 
by transmitting an appeal petition to the hearing clerk within 30 days 
after service of said decision upon said party. Each issue set forth in 
the appeal, and the arguments thereon, shall be separately numbered; 
shall be plainly and concisely stated; and shall contain detailed 
citations of the record, statutes, regulations and authorities being 
relied upon in support thereof. The appeal petition shall be served upon 
the other party to the proceeding by the hearing clerk.
    (b) Argument before Secretary--(1) Oral argument. A party bringing 
an appeal may request within the prescribed time period for filing such 
appeal, an opportunity for oral argument before the Secretary. Failure 
to make such request in writing, within the prescribed time period, 
shall be deemed a waiver of oral argument. The Secretary, in his 
discretion, may grant, refuse or limit any request for oral argument on 
appeal.
    (2) Scope of argument. Argument to be heard on appeal, whether oral 
or in a written brief, shall be limited to the issues raised by the 
appeal, except that if the Secretary determines that additional issues 
should be argued, the parties shall be given reasonable notice of such 
determination, so as to permit preparation of adequate arguments on all 
the issues to be argued.
    (c) Response. Within 20 days after service of an appeal brought by a 
party to the proceeding, any other party may file a response in support 
of or in opposition to such appeal.
    (d) Transmittal of record. Whenever an appeal is filed by a party to 
the proceeding, the hearing clerk shall transmit to the Secretary the 
record of the proceeding. Such record shall include: The pleadings; any 
motions and requests filed, and the rulings thereon; the transcript of 
the testimony taken at the hearing, as well as the exhibits filed in 
connection therewith; any statements filed under the shortened 
procedure; any documents or papers filed in connection with prehearing 
conferences; such proposed findings of fact, conclusions, and orders, 
and briefs in support thereof, as may have been filed in connection with 
the hearing; the judge's initial decision; and the appeal petition; 
briefs in support thereof, and responses thereto as may have been filed 
in the proceeding.

[38 FR 29799, Oct. 29, 1973]

Sec. 900.66  Consideration of appeal by the Secretary and issuance of 
          final order.

    (a) Consideration of appeal. As soon as practicable after the 
receipt of the record from the hearing clerk, or, in case oral argument 
was had, as soon as practicable thereafter, the Secretary, upon the 
basis of and after due consideration of the record, shall rule on the 
appeal. If the Secretary decides that no change or modification of the 
judge's decision is warranted, he may adopt the Judge's decision as the 
final order of the Secretary, preserving any right of the party bringing 
the appeal to seek judicial review of such decision in the proper forum. 
At no stage of the proceeding between its institution and the issuance 
of the order shall the Secretary discuss ex parte the merits of the 
proceeding with any person who is connected with the proceeding in an 
advocative or an investigative capacity, or with any representative of 
such person: Provided, however, That the Secretary may discuss the 
merits of the proceeding with such a person if all parties to the 
proceeding, or their representatives, have been given an opportunity to 
be present. If, notwithstanding the foregoing provisions of this 
section, a memorandum or other communication from any party, or from any 
person acting on behalf of any party, which relates to the merits of the 
proceeding, receives the personal attention of the Secretary (or, if an 
official other than the Secretary is to issue the order, then of such 
other official) during the pendency of the proceeding, such memorandum 
or communication shall be regarded as argument made in the proceeding 
and shall be filed with the hearing clerk, who shall serve a copy 
thereof upon the opposite party to file a reply thereto.
    (b) Issuance of final order. A final order issued by the Secretary 
shall be filed with the hearing clerk, who shall serve it upon the 
parties: Provided, That, if the terms of the order differ substantially 
from those proposed in the decision of the judge, the Secretary shall, 
if he deems it advisable to do so, direct that a copy of the order be 
served upon the parties as a tentative order; and, in such event, 
opportunity shall be given the parties to file exceptions thereto and 
written arguments or briefs in support of such exceptions. In such case, 
if exceptions are filed within a period of time (to be fixed by the 
Secretary but not to exceed 20 days) following the service of the 
tentative order, the Secretary shall give consideration, to and shall 
make such changes in the tentative order as he deems to be appropriate; 
otherwise, the tentative order shall become final, as of the day 
following the date of expiration of the period fixed for the filing of 
exceptions.

[38 FR 29799, Oct. 29, 1973]

[[Page 22]]

Sec. 900.67  [Reserved]

Sec. 900.68  Applications for reopening hearings; for rehearings or 
          rearguments of proceedings; or for reconsideration of orders.

    (a) Petition requisite--(1) Filing; service. An application for 
reopening the hearing to take further evidence, or for rehearing or 
reargument of the proceeding, or for reconsideration of the order shall 
be made by petition addressed to the Secretary and filed with the 
hearing clerk, who immediately shall notify and serve a copy thereof 
upon the other party to the proceeding. Every such petition shall state 
specifically the grounds relied upon.
    (2) Petitions to reopen hearings. A petition to reopen the hearing 
for the purpose of taking additional evidence may be filed at any time 
prior to the issuance of the final order. Every such petition shall 
state briefly the nature and purpose of the evidence to be adduced, 
shall show that such evidence is not merely cumulative, and shall set 
forth a good reason why such evidence was not adduced at the hearing.
    (3) Petitions to rehear or reargue proceedings, or to reconsider 
orders. A petition to rehear or reargue the proceeding or to reconsider 
the final order shall be filed within 15 days after the date of the 
service of such order. Every such petition shall state specifically the 
matters claimed to have been erroneously decided, and alleged errors 
must be briefly stated.
    (b) Procedure for disposition of petitions. Within 10 days following 
the service of any petition provided for in this section, the other 
party to the proceeding shall file with the hearing clerk an answer 
thereto. As soon as practicable thereafter, the Secretary shall announce 
the decision granting or denying the petition. Unless the Secretary 
shall determine otherwise, the issuance or operation of the order shall 
not be stayed pending the decision of the Secretary upon the petition. 
In the event that any such petition is granted by the Secretary, the 
applicable rules of practice, as set out elsewhere in this subpart, 
shall be followed.

Sec. 900.69  Filing; service; extensions of time; effective date of 
          filing; and computation of time.

    (a) Filing; number of copies. Except as provided otherwise herein, 
all documents or papers required or authorized in this subpart to be 
filed with the hearing clerk shall be filed in quadruplicate: Provided, 
That, if there are more than two parties to the proceeding, a sufficient 
number of additional copies shall be filed so as to provide for service 
upon all the parties to the proceeding. Any document or paper, required 
or authorized in this subpart to be filed with the hearing clerk, shall, 
during the course of an oral hearing, be filed with the judge.
    (b) Service; proof of service. Copies of all such papers shall be 
served upon the parties by the hearing clerk, by the judge, or by some 
other employee of the Department or by a United States Marshal or his 
deputy. Service shall be made either (1) by delivering a copy of the 
document or paper to the individual to be served or to a member of the 
partnership to be served or to the president, secretary, or other 
executive officer or any director of the corporation, organization, or 
association to be served, or to the attorney or agent of record of such 
individual, partnership, corporation, organization, or association; or 
(2) by leaving a copy of the document or paper at the principal office 
or place of business of such individual, partnership, corporation, 
organization, or association, or of his or its attorney or agent of 
record; or (3) by registering and mailing a copy of the document or 
paper, addressed to such individual, partnership, corporation, 
organization, or association, or to his or its attorney or agent of 
record, at his or its last known principal office, place of business, or 
residence. Proof of service hereunder shall be made by the affidavit of 
the person who actually made the service. The affidavit contemplated 
herein shall be filed with the hearing clerk, and the fact of filing 
thereof shall be noted on the docket of the proceeding.
    (c) Extensions of time. The time for the filing of any documents or 
papers required or authorized in this subpart to be filed may be 
extended upon (1) a written stipulation between the parties, or (2) upon 
the request of a party, by the judge before the transmittal of the 
record to the Secretary, or by the Secretary at any other time if, in 
the judgment of the Secretary or the judge, as the case may be, there is 
good reason for the extension.
    (d) Effective date of filing. Any document or paper, except a 
petition filed pursuant to Sec. 900.52, required or authorized under 
these rules to be filed shall be deemed to have been filed when it is 
postmarked, or when it is received by the hearing clerk. Any petition 
filed under Sec. 900.52 shall be deemed to be filed when it is received 
by the hearing clerk.
    (e) Computation of time. Sundays and Federal holidays shall be 
included in computing the time allowed for the filing of any document or 
paper: Provided, That, when such time expires on a Sunday or legal 
holiday, such time shall be extended to include the next following 
business day.

Sec. 900.70  Applications for interim relief.

    (a) Filing the application. A person who has filed a petition 
pursuant to Sec. 900.52 may by separate application filed with the 
hearing clerk apply to the Secretary for an order

[[Page 23]]

postponing the effective date of, or suspending the application of, the 
marketing order or any provision thereof, or any obligation imposed in 
connection therewith, pending final determination of the proceeding.
    (b) Contents of the application. The application shall contain a 
statement of the facts upon which the relief is requested, including any 
facts showing irreparable injury. The application must be signed and 
sworn to by the petitioner and any facts alleged therein which are not 
within his personal knowledge shall be supported by affidavits of a 
person or persons having personal knowledge of such facts or by proper 
documentary evidence thereof.
    (c) Answer to application. Immediately upon receipt of the 
application, the hearing clerk shall transmit a copy thereof, together 
with all supporting papers, to the Administrator, who shall, within 20 
days, or such other time fixed by the Secretary, after the filing of the 
application file an answer thereto with the hearing clerk.
    (d) Contents of answer. The answer shall contain a statement of the 
objections, if any, of the Administrator to the application for interim 
relief, and may be supported by affidavits and documentary evidence.
    (e) Transmittal to Secretary. Upon receiving the answer of the 
Administrator or upon the expiration of the time for filing the answer, 
the hearing clerk shall transmit to the Secretary for his decision all 
papers filed in connection with the application.
    (f) Hearing and oral argument. The Secretary may, in his discretion, 
permit oral argument or the taking of testimony in connection with such 
application. However, unless written request therefor is filed with the 
hearing clerk prior to the transmittal of the papers to the Secretary, 
the parties shall be deemed to have waived oral argument and the taking 
of testimony.
    (g) Decision by Secretary. The Secretary may grant or deny the 
application. Any action taken by the Secretary shall be in the form of 
an order filed with the hearing clerk and shall contain a brief 
statement of the reasons for the action taken. The hearing clerk shall 
cause copies of the order to be served upon the parties.

Sec. 900.71  Hearing before Secretary.

    The Secretary may act in the place and stead of a judge in any 
proceeding hereunder. When he so acts the hearing clerk shall transmit 
the record to the Secretary at the expiration of the period provided for 
the filing of proposed findings of fact, conclusions and orders, and the 
Secretary shall thereupon, after due consideration of the record, issue 
his final order in the proceeding; Provided, That he may issue a 
tentative order in which event the parties shall be afforded an 
opportunity to file appeals before the issuance of the final order.

Subpart--Supplemental Rules of Practice for Marketing Orders, Marketing 
 Agreements, and Requirements Issued Pursuant to 7 U.S.C. 608b(b) and 7 
            U.S.C. 608e Covering Fruits, Vegetables, and Nuts

    Authority: 7 U.S.C. 601-74.

    Source: 61 FR 20717, May 8, 1996, unless otherwise noted.

 Sec. 900.80  Words in the singular form.

    Words in this subpart in the singular form shall be deemed to import 
the plural, and vice versa, as the case may demand.

Sec. 900.81  Definitions.

    As used in this subpart, the terms as defined in the act shall apply 
with equal force and effect. In addition, unless the context otherwise 
requires:
    (a) The term Act means Public Act No. 10, 73 Congress (48 Stat. 31) 
as amended and as reenacted and amended by the Agricultural Marketing 
Agreement Act of 1937 (50 Stat. 246), as amended.
    (b) The term Department means the United States Department of 
Agriculture.
    (c) The term Secretary means the Secretary of Agriculture of the 
United States, or any officer or employee of the Department to whom 
authority has heretofore been delegated, or to whom authority may 
hereafter be delegated, to act in his stead.
    (d) The term Administrator means the Administrator of the 
Agricultural Marketing Service, with power to redelegate, or any officer 
or employee of the Department to whom authority has been delegated or 
may hereafter be delegated to act in his stead.
    (e) The term proceeding means a proceeding before the Secretary 
arising under sections 8a, 8b(b), 8c(14), 8e, 10(c) and 10(h).
    (f) The term hearing means that part of the proceeding which 
involves the submission of evidence.
    (g) The term marketing agreement means any marketing agreement or 
any amendment thereto which may be entered into pursuant to section 8b 
of the act.
    (h) The term marketing order means any order or any amendment 
thereto which may be issued pursuant to section 8c of the act, and after 
notice and hearing as required by said section.
    (i) The term handler means any person who, by the terms of a 
marketing order or marketing agreement, is subject thereto, or to whom a 
marketing order or marketing agreement is sought to be made applicable.
    (j) The term importer means any person who, by the terms of section 
8e of the act, is subject thereto.

[[Page 24]]

    (k) The term person means any individual, corporation, partnership, 
association, or any other business unit.

Sec. 900.82  Stipulation procedures.

    The Administrator, or the Administrator's representative, may, at 
any time before the issuance of a complaint seeking a civil penalty 
under the Act, enter into a stipulation with any handler or importer in 
accordance with the following procedures:
    (a) The Administrator, or the Administrator's representative, shall 
give the handler or importer notice of the alleged violation of the 
applicable marketing order or marketing agreement, or the requirements 
issued pursuant to 7 U.S.C. 608b(b) and 7 U.S.C. 608e, and an 
opportunity for a hearing thereon as provided by the Act;
    (b) In agreeing to the proposed stipulation, the handler or importer 
expressly waives the opportunity for a hearing and agrees to pay a 
specified civil penalty within a designated time;
    (c) The Administrator, or the Administrator's representative, agrees 
to accept the specified civil penalty in settlement of the particular 
matter involved if it is paid within the designated time;
    (d) In cases where the handler or importer does not pay the 
specified civil penalty within the designated time, or the handler or 
importer does not agree to the stipulation, the Administrator may issue 
an administrative complaint; and
    (e) The civil penalty that the Administrator may have proposed in a 
stipulation agreement shall have no bearing on the civil penalty amount 
that the Department may seek in a formal administrative proceeding 
against the same handler or importer for the same alleged violation.

Subpart--Procedure Governing Meetings To Arbitrate and Mediate Disputes 
                Relating to Sales of Milk or Its Products

    Authority: Sec. 3, 50 Stat. 248; 7 U.S.C. 671.

Sec. 900.100  Words in the singular form.

    Words in this subpart in the singular form shall be deemed to import 
the plural, and vice versa, as the case may demand.

Sec. 900.101  Definitions.

    As used in this subpart, the terms as defined in the Act shall apply 
with equal force and effect. In addition, unless the context otherwise 
requires:
    (a) The term Act means section 3 of the Agricultural Marketing 
Agreement Act of 1937, as amended (50 Stat. 248, as amended; 7 U.S.C. 
671);
    (b) The term Department means the United States Department of 
Agriculture;
    (c) The term Secretary means the Secretary of Agriculture of the 
United States, or any officer or employee of the Department to whom 
authority has heretofore been delegated, or to whom authority may 
hereafter be delegated, to act in his stead;
    (d) The term General Counsel means the General Counsel of the 
Department;
    (e) The term Administrator means the Administrator of the 
Agricultural Marketing Service, with power to redelegate, or any officer 
or employee of the Department to whom authority has been delegated or 
may hereafter be delegated to act in his stead.
    (f) The term Service means the Agricultural Marketing Service.
    (g) The term Division means the Dairy Division of the Service.
    (h) The term cooperative means any association, incorporated or 
otherwise, which is in good faith owned or controlled by producers, or 
organizations thereof, of milk or its products, and which is bona fide 
engaged in the collective processing or preparing for market or handling 
or marketing, in the current of interstate or foreign commerce, of milk 
or its products;
    (i) The term arbitrator means any officer or employee of the Service 
designated by the Administrator, pursuant to the Act, to arbitrate a 
bona fide dispute with reference to the terms and conditions of the sale 
of milk or its products between a producer cooperative and purchasers, 
handlers, processors, or distributors of milk or its products;
    (j) The term mediator means any officer or employee of the Service 
designated by the Administrator, pursuant to the act, to mediate a bona 
fide dispute with reference to terms and conditions of the sale of milk 
or its products between a producer cooperative and purchasers, handlers, 
processors, or distributors of milk or its products;
    (k) The term hearing clerk means the hearing clerk, United States 
Department of Agriculture, Washington, DC.

[25 FR 5907, June 28, 1960, as amended at 26 FR 7797, Aug. 22, 1961, 28 
FR 579, Jan. 23, 1963; 37 FR 8059, Apr. 25, 1972]

Sec. 900.102  Filing of applications for mediation or arbitration.

    All applications for mediation or arbitration, all submissions, and 
all correspondence regarding mediation or arbitration shall be addressed 
to the Secretary, attention of the Division.

Sec. 900.103  Application for mediation.

    An application for mediation by cooperative shall be in writing and 
shall include the following information:
    (a) Names in full of the parties to the dispute and their addresses;
    (b) Description of the cooperative organization and business, 
including copies of the

[[Page 25]]

articles of incorporation or association, bylaws, and membership 
contract; information regarding the number of shares of outstanding 
stock and the approximate portion owned by active producers; a statement 
of the function performed in connection with the collective processing, 
preparing, handling, or marketing of milk or its products; and data 
relative to the distribution of membership by States, the distribution 
by States of plant facilities for collecting, processing, or disposing 
of milk or its products, and the business operations for the year last 
past, including the total quantity of milk and its products handled by 
the applicant and the proportion of that quantity that was sold in 
States other than the States of production;
    (c) Suggested time and place for meeting between parties and 
mediator.

Sec. 900.104  Inquiry by the Administrator.

    Upon receipt of an application for mediation, the Administrator, 
through such officers or employees of the Service as he may designate, 
may make any inquiry which is deemed to be necessary or proper in order 
to determine whether a bona fide dispute exists.

Sec. 900.105  Notification.

    The Administrator, acting on behalf of the Secretary will notify the 
applicant as to whether he considers that mediation will effectuate the 
purpose of the act and as to whether he will mediate.

Sec. 900.106  Assignment of mediator.

    The Director of the Division shall assign a mediator, from the group 
designated by the Administrator, to act in such capacity.

Sec. 900.107  Meetings.

    All meetings held pursuant to Secs. 900.103 to 900.109 shall be held 
with and under the direction of the mediator.

Sec. 900.108  Mediator's report.

    The mediator, upon the completion of mediation proceedings, shall 
submit to the Administrator a complete report on such proceedings.

Sec. 900.109  Mediation agreement.

    An agreement arrived at by mediation shall not become effective 
until approved by the Secretary, and the Secretary will not approve an 
agreement if there is evidence of fraud, if there is a lack of evidence 
to support the agreement, or if the agreement provides for any unfair 
trade practice.

Sec. 900.110  Application for arbitration.

    An application for arbitration by a cooperative shall be in writing 
and shall contain the following information:
    (a) Names in full of the parties to the dispute and their addresses;
    (b) The same information required under Sec. 900.103(b);
    (c) Concise statement of dispute to be submitted;
    (d) Originals or certified copies of all contracts, if any, involved 
in the dispute, and of correspondence which has passed between the 
parties and of any other documents or information relied upon;
    (e) Dates before which it is desired that the hearing shall be had 
and the award shall become effective;
    (f) Suggested time and place for arbitration hearing.
    The applicant shall send a copy of the application to each other 
party to the dispute.

Sec. 900.111  Inquiry by the Administrator.

    Upon receipt of an application for arbitration, the Administrator, 
through such officers or employees of the Service as he may designate, 
may make any inquiry deemed to be necessary or proper in order to 
determine whether a bona fide dispute exists, to assist the parties in 
reducing the dispute to well-defined issues, and to select an arbitrator 
who would be satisfactory to all parties.

Sec. 900.112  Notification.

    The Administrator, acting on behalf of the Secretary, within a 
reasonable time after the receipt of an application, will notify the 
applicant as to whether he will grant the application.

Sec. 900.113  Submission.

    Within a reasonable time after the receipt of the Administrator's 
consent to arbitrate, the parties to the dispute shall file with the 
Administrator a formal submission, which shall contain the following 
information:
    (a) Names in full of the parties;
    (b) Addresses of the parties to whom all notifications and 
communications concerning the arbitration shall be sent;
    (c) Description of the organization and businesses of all parties to 
the dispute, including sufficient information to show that the 
cooperative is a bona fide one, and that the parties are engaged in 
activities in the current of interstate or foreign commerce;
    (d) Concise statement of the specific questions submitted and a 
brief outline of the contentions of each party to the dispute, and a 
statement as to the period of time during which the award shall be in 
effect, said period to be not less than thirty days from the effective 
date of the award;
    (e) Name of arbitrator;
    (f) Time and place of arbitration, including street address;
    (g) Stipulation by the parties that they will produce any books, 
records, and correspondence required by the arbitrator as being 
necessary to a fair determination of the dispute;

[[Page 26]]

    (h) Agreement by the parties that they will consider the award as 
final and will comply therewith;
    (i) Stipulation by the parties that arbitration is to take place 
under rules and regulations issued by the Secretary, and that any such 
rules and regulations pertaining to mediation and arbitration shall be 
considered a part of the submission;
    (j) Stipulation that a stenographic report of the proceedings must 
be made.
    The submission shall be signed by each party before a notary public, 
and when the signature is that of an agent of a corporation or 
cooperative association, the same shall be accompanied by evidence of 
the authority to sign.
    A submission may be withdrawn at any time before the award, and any 
question held by the arbitrator to be a separable question may be 
withdrawn before award by agreement of all parties. When any question is 
so withdrawn, the parties shall file with the arbitrator the agreement 
on that question reached by the parties, showing all the details 
thereof, and the arbitrator shall include it in the record of the 
arbitration.

Sec. 900.114  Designation of arbitrator.

    The Administrator, after receiving the submission, will designate 
one or more persons to act as arbitrator.

Sec. 900.115  Hearing.

    The arbitrator shall have full discretion to conduct the hearing in 
such manner as will, in his opinion, enable him to ascertain all the 
facts in the case.
    Parties to the dispute may appear in person or by duly accredited 
agents and may be represented by counsel.
    All relevant and material evidence may be presented. The arbitrator 
shall not be bound by the legal rules of evidence.
    The arbitrator, in the presence of the parties, may require the 
production of books and records for examination by himself, but not for 
examination of confidential information by other parties to the dispute 
unless the party producing the same consents to its examination by the 
other parties to the dispute.
    No evidence offered by one party shall be received except in the 
presence of all parties unless the parties so agree in a submission 
specifying the nature of the evidence to be received.
    Final determination as to what will be considered confidential 
information shall be made by the arbitrator.
    The arbitrator may request the opinions of economists, marketing 
specialists, statisticians, lawyers, accountants, and other experts.
    When more than two arbitrators are designated to hear a dispute, and 
they disagree, the award of the majority shall be the final award. If 
the arbitrators are evenly divided, there shall be no award.
    A stenographic record of all the proceedings during an arbitration 
must be made.

Sec. 900.116  Award.

    An award shall be made within ten days after the close of the 
hearing.
    The award shall be in writing and shall cover only points of dispute 
raised in the submission.
    The arbitrator, in making the award, may use his own technical 
knowledge in addition to the evidence submitted by the parties.
    The award shall state the period during which it shall be in effect, 
said period to be not less than thirty days from the effective date 
thereof; and said period may be extended by agreement among the parties 
upon notification thereof to the Administrator, unless or until the 
Administrator withdraws his approval.
    The arbitrator shall sign the award in the presence of a notary 
public, or, when more than one arbitrator is designated the arbitrator 
shall sign in the presence of each other.
    Copies of the award shall be delivered to the parties by the 
Division.

Sec. 900.117  Approval of award.

    The award shall not become effective until approved by the 
Secretary, and the Secretary will not approve an award if there is 
evidence of fraud, or evidence of misconduct upon the part of the 
arbitrator, or lack of evidence to support the award, or if the award 
provides for any unfair trade practice.

Sec. 900.118  Costs.

    The parties jointly shall pay for the stenographic record. A copy of 
the record shall be furnished by the parties to the arbitrator and shall 
be forwarded by him to the Administrator, ultimately to be filed in the 
office of the hearing clerk.
    The arbitrator shall not receive compensation for parties to the 
dispute.

                   Subpart--Miscellaneous Regulations

    Authority: Sec. 10, 48 Stat. 37, as amended; 7 U.S.C. 610.

Sec. 900.200  Definitions.

    As used in this subpart, the terms as defined in the Act shall apply 
with equal force and effect. In addition, unless the context otherwise 
requires:
    (a) The term Act means Public Act No. 10, 73d Congress (48 Stat. 
31), as amended and as reenacted and amended by the Agricultural 
Marketing Agreement Act of 1937 (50 Stat. 246, 7 U.S.C. 601), as 
amended;
    (b) The term Department means the United States Department of 
Agriculture;

[[Page 27]]

    (c) The term Secretary means the Secretary of Agriculture of the 
United States, or any officer or employee of the Department to whom 
authority has heretofore been delegated, or to whom authority may 
hereafter be delegated, to act in his stead;
    (d) The term General Counsel means the General Counsel of the 
Department;
    (e) The term Administrator means the Administrator of the 
Agricultural Marketing Service, with power to redelegate, or any officer 
or employee of the Department to whom authority has been delegated or 
may hereafter be delegated to act in his stead.
    (f) [Reserved]
    (g) The term Federal Register means the publication provided for by 
the Act of July 26, 1935 (49 Stat. 500), and acts supplementary thereto 
and amendatory thereof;
    (h) The term marketing agreement means any marketing agreement or 
any amendment thereto which may be entered into pursuant to section 8b 
of the Act;
    (i) The term marketing order means any order or any amendment 
thereto which may be issued pursuant to section 8c of the Act;
    (j) The term person means any individual, corporation, partnership, 
association, or any other business unit;
    (k) The term official means the Secretary, any officer, employee, or 
other person employed or appointed by the Department, and any agency or 
agent appointed by the Secretary to administer a marketing agreement or 
a marketing order, and any agent or employee of any such agency or 
agent;
    (l) The term information means and includes reports, books, 
accounts, records, and the facts and information contained therein and 
required to be furnished to or acquired by any official pursuant to the 
provisions of any marketing agreement or marketing order.

[25 FR 5907, June 28, 1960, as amended at 26 FR 7796, Aug. 22, 1961; 28 
FR 579, Jan. 23, 1963]

Sec. 900.201  Investigation and disposition of alleged violations.

    Whenever the Administrator has reason to believe that any handler 
has violated, or is violating, the provisions of any marketing order, he 
may institute such investigation and, after due notice to such handler, 
conduct such hearing in order to determine the facts as, in his opinion, 
are warranted. If, in the opinion of the Administrator and the General 
Counsel, the facts developed as a result of such investigation or 
hearing warrant such action, the General Counsel shall refer the matter 
to the Attorney General for appropriate action.

Sec. 900.210  Disclosures of information.

    All information in the possession of any official which relates to 
the business or property of any person, and which was furnished by, or 
obtained from, such person pursuant to the provisions of any marketing 
agreement or marketing order, shall be kept confidential and shall not 
be disclosed, divulged, or made public, unless otherwise expressly 
provided in said marketing agreement or marketing order, or unless said 
person authorizes said official, in writing, to disclose such 
information, except that:
    (a) Such information may be disclosed, divulged, or made public if 
it has been obtained from or furnished by a person who is not the person 
to whose business or property such information relates or an employee of 
such latter person, or if such information is otherwise required by law 
to be furnished to an official;
    (b) Such information may be furnished to other officials for use in 
the regular course of their official duties;
    (c) Such information may be combined and published in the form of 
general statistical studies or data in which the identity of the person 
furnishing such information or from whom it was obtained shall not be 
disclosed;
    (d) Such information may be disclosed upon lawful demand made by the 
President or by either House of Congress or any committee thereof, or, 
if the Secretary determines that such disclosure is not contrary to the 
public interest, such information may be disclosed in response to a 
subpena by any court of competent jurisdiction.
    (e) Such information may be offered in evidence (whether or not it 
has been obtained from or furnished by the person against whom it is 
offered) by or on behalf of the Secretary, the United States, or the 
official who obtained it or to whom it was furnished, in any 
administrative hearing held pursuant to section 8c (15)(A) of the Act or 
in any action, suit, or proceeding, civil or criminal, in which the 
Secretary or the United States or any such official is a party, and (1) 
which is instituted (i) for the purpose of enforcing or restraining the 
violation of any marketing agreement or marketing order, or (ii) for the 
purpose of collecting any penalty or forfeiture provided for in the act, 
or (iii) for the purpose of collecting any monies due under a marketing 
agreement or marketing order, or (2) in which the validity of any 
marketing agreement or marketing order, or any provision of either, is 
challenged or involved.
    (f) Such information may be furnished to the duly constituted 
authorities of any State, pursuant to a written agreement made under 
authority of section 10(i) of the Act, to the extent that such 
information is relevant to transactions within the regulatory 
jurisdiction of such authorities.

Sec. 900.211  Penalties.

    Any official who shall have violated the provisions of Sec. 900.210 
by wilfully divulging, disclosing, or making public any information

[[Page 28]]

acquired by or furnished to or in the possession or custody of such 
official pursuant to the provisions of a marketing agreement or 
marketing order shall be subject to a penalty of $100 for each offense. 
(The civil penalty provided in this section is prescribed under the 
authority contained in sec. 10(c) of the Act (7 U.S.C. 610(c)); this 
provision is not intended to supersede the provision in sec. 8d(2) of 
the Act (7 U.S.C. 608d(2)) for criminal liability and removal from 
office.

   Subpart--Procedure for Conduct of Referenda To Determine Producer 
   Approval of Milk Marketing Orders To Be Made Effective Pursuant to 
        Agricultural Marketing Agreement Act of 1937, as Amended

    Authority: Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source: 30 FR 15412, Dec. 15, 1965, unless otherwise noted.

Sec. 900.300  General.

    Unless otherwise prescribed, the procedure contained in this subpart 
shall be applicable to each producer referendum conducted for the 
purpose of ascertaining whether the issuance by the Secretary of a milk 
marketing order is approved or favored, as required under the applicable 
provisions of the Agricultural Marketing Agreement Act of 1937, as 
amended (48 Stat. 31, as amended, 7 U.S.C. 601-674). The procedure in 
this subpart replaces the procedure for conducting similar referenda (15 
FR 5177) issued August 7, 1950.

Sec. 900.301  Definitions.

    As used in this subpart and in all supplementary instructions, 
forms, and documents, unless the context or subject matter otherwise 
requires, the following terms shall have the following meanings:
    (a) Act. ``Act'' means Public Act. No. 10, 73d Congress (48 Stat. 
31), as amended and as re-enacted and amended by the Agricultural 
Marketing Agreement Act of 1937 (50 Stat. 246), as amended.
    (b) Department. ``Department'' means the United States Department of 
Agriculture.
    (c) Secretary. ``Secretary'' means the Secretary of Agriculture of 
the United States, or any officer or employee of the Department to whom 
authority has heretofore been delegated, or to whom authority may 
hereafter be delegated, to act in his stead.
    (d) Administrator. ``Administrator'' means the Administrator of the 
Agricultural Marketing Service, with power to redelegate, or any officer 
or employee of the Department to whom authority has been delegated or 
may hereafter be delegated to act in his stead.
    (e) Person. ``Person'' includes any individual, partnership, 
corporation, association, and any other business unit.
    (f) Order. ``Order'' means the marketing order (including an 
amendatory order) with respect to which the Secretary has directed that 
a referendum be conducted.
    (g) Producer. ``Producer'' means any person who is a dairy farmer 
and who, during the representative period, met the requirements of the 
term ``producer'' as defined in the order had such order been in effect 
during the representative period.
    (h) Handler. ``Handler'' means any person who, during the 
representative period, met the requirements of the term ``handler'' as 
defined in the order had such order been in effect during the 
representative period.
    (i) Referendum agent. ``Referendum agent'' means the person 
designated by the Secretary to conduct the referendum.
    (j) Representative period. ``Representative period'' means the 
period designated by the Secretary pursuant to section 8c of the act (7 
U.S.C. 608c).
    (k) Cooperative association. ``Cooperative association'' means any 
association of producers that the administrator has found to be 
qualified pursuant to section 608c(12) of the Act.

[30 FR 15412, Dec. 5, 1965, as amended at 37 FR 8059, Apr. 25, 1972]

Sec. 900.302  Associations eligible to vote.

    (a) Any association of producers, not previously determined to be a 
cooperative association may file an application for a determination as 
to whether it is a cooperative association and thus eligible to vote in 
a referendum. Such application shall be filed with the Administrator at 
least 60 days prior to the holding of the referendum: Provided, however, 
That the Administrator may permit the filing of an application in less 
than 60 days when, in the opinion of the Administrator, such filing 
would not delay the conduct of the referendum.
    (b) Within a time fixed by the referendum agent, but not later than 
5 days prior to the final date for balloting, each cooperative 
association electing to vote shall, upon the request of the referendum 
agent, furnish to him a certified list showing the name and address of 
each producer for whom it claims the right to vote and the plant at 
which such person's milk was received during the representative period.

Sec. 900.303  Conduct of referendum.

    The referendum shall be conducted by mail in the manner prescribed 
in this subpart. The referendum agent may utilize such personnel or 
agencies of the Department as are deemed necessary by the Administrator.

[[Page 29]]

Sec. 900.304  Who may vote.

    (a) Each producer shall be entitled to only one vote and to cast one 
ballot in each referendum; and no person who may claim to be a producer 
shall be refused a ballot. Each producer casting more than one ballot 
with conflicting votes shall thereby invalidate all ballots cast by such 
producer in such referendum. Each ballot cast shall contain a 
certification by the person casting the ballot that he is a producer.
    (b) Except as provided in section 8c(5)(B) of the Act, as amended, 
any cooperative association eligible under Sec. 900.302 may, if it 
elects to do so, vote and cast one ballot for producers who are members 
of, stockholders in, or under contract with, such cooperative 
association. A cooperative association shall submit with its ballot, a 
certified copy of the resolution authorizing the casting of the ballot. 
Each such cooperative association entitled to vote in a referendum 
casting more than one ballot with conflicting votes shall thereby 
invalidate all ballots cast by such voter in such referendum.
    (c) Voting by proxy or agent, or in any manner, except by the 
producer or cooperative association will not be permitted; however, a 
producer which is other than an individual may cast its ballot by a 
person who is duly authorized and such ballot shall contain a 
certification by such person that the person on whose behalf the ballot 
is cast is a producer.

Sec. 900.305  Duties of referendum agent.

    The referendum agent shall also:
    (a) For purposes of mailing, prepare a record of producers which 
will disclose the name of each such person, his address, the name of the 
handler who received the producer's milk during the representative 
period, and the name of the cooperative association, if any, which 
claims the right to vote for the producer. Such record may be compiled 
from readily available sources, including the following:
    (1) Records of the Department;
    (2) Producer records supplied by handlers;
    (3) Health authority records;
    (4) Certifications signed by dairy farmers who claim to be 
producers;
    (5) Any other reliable sources of information which may be available 
to the referendum agent.
    (b) Apply, as a guide, the following criteria in preparing a record 
of producers:
    (1) When the order requires approval by an appropriate health 
authority before a person meets the definition of producer, only those 
persons having such approval and who otherwise meet the definition may 
be regarded as producers. When the definition of producer requires the 
shipment of milk to a handler or a plant as well as health authority 
approval, only those persons having such approval and whose milk was 
received by a handler or at a plant may be regarded as producers.
    (2) When the order requires shipment to a handler or to a plant, 
without regard to health authority approval, a person may not be 
regarded as a producer, except as provided in paragraph (b)(6) of this 
section, unless his name appears on the handler's producer records.
    (3) In the case of a producer that is other than an individual, the 
business unit shall be regarded as the producer.
    (4) No person may be included in the record more than once although 
he may operate more than one farm, hold more than one health authority 
approval, or appear on more than one handler's producer records.
    (5) In the event the health authority records are not available, are 
inaccurate, or are incomplete, the appearance of the producer's name on 
a handler's records as an approved producer shall be prima facie 
evidence of health authority approval.
    (6) In the event any handler refuses or fails to make his records 
available to the referendum agent, a certification signed by the 
producer shall be regarded by the referendum agent as prima facie 
evidence that such person is eligible to vote.
    (c) Verify the information supplied by each cooperative association 
which wishes to vote on behalf of producers, as follows:
    (1) Examine the records of the cooperative association for the 
prupose of ascertaining whether each producer claimed by the cooperative 
association is a member of, stockholder in, or under contract with the 
cooperative association.
    (2) Identify the persons ascertained to be members of, stockholders 
in, or under contract with a cooperative association which wishes to 
vote on behalf of its producers with the names of producers which appear 
on the record compiled pursuant to paragraph (a) of this section.
    (3) In determining whether a cooperative association may vote on 
behalf of a producer the following criteria shall be used:
    (i) The cooperative association may vote for each producer who is a 
member of, stockholder in, or under contract with such cooperative 
association on the date of the order directing that the referendum be 
conducted.
    (ii) The cooperative association may cast only one ballot for all 
such producers.
    (iii) Whenever more than one cooperative association claims the 
right to vote for a producer only the cooperative association which 
furnished evidence satisfactory to the referendum agent that such 
association was in fact marketing the milk of the producer on the date 
of the referendum order may vote for such producer.

Sec. 900.306  Notice of the referendum.

    (a) The referendum agent shall at least 5 days prior to the final 
date for balloting:

[[Page 30]]

    (1) Mail to each cooperative association which has elected to cast a 
ballot on behalf of its producers and to each of all other known 
producers, a notice of the referendum which will include instructions 
for completing the ballot, a statement as to the time within which the 
ballot must be mailed to, and received by, the referendum agent, a copy 
of the final decision, and a ballot containing a description of the 
terms and conditions of the order.
    (2) Give public notice of the referendum:
    (i) By furnishing press releases and other information to available 
media of public information (including but not limited to press, radio, 
and television facilities) serving the area, announcing the time within 
which ballots must be completed and mailed to and received by the 
referendum agent, eligibility requirements, where additional information 
may be procured, and other pertinent information; and
    (ii) By such other means as said agent may deem advisable.

Sec. 900.307  Time for voting.

    There shall be no voting except within the time specified by the 
referendum agent as stated in the notice of the referendum.

Sec. 900.308  Tabulation of ballots.

    (a) General. The referendum agent shall verify the information 
supplied with each ballot. If he ascertains that the person who cast the 
ballot was eligible to do so, that the ballot is complete and was mailed 
and received within the prescribed time, the ballot shall be eligible to 
be counted. If the referendum agent ascertains that the person who cast 
the ballot was not eligible to do so, or if the producer who cast the 
ballot was a member of, stockholder in, or under contract with a 
cooperative association which cast a valid ballot, or if the ballot is 
not completed or cast in accordance with instructions, or if the ballot 
was not mailed to or received by the referendum agent within the 
prescribed time, the ballot shall be marked ``disqualified'' with a 
notation on the ballot as to the reason for the disqualification. The 
total number of ballots cast, including the disqualified ballots, shall 
be ascertained. The number of eligible ballots cast approving and the 
number of eligible ballots cast disapproving the issuance of the order 
shall also be ascertained. The ballots marked ``disqualified'' shall not 
be considered as approving or disapproving the issuance of the order, 
and the persons who cast such ballots shall not be regarded as 
participating in the referendum.
    (b) Individual-handler pool provisions. Whenever separate approval 
of the pooling provisions of the order is required by section 
608c(5)(B)(i) of the Act, any ballot which approves the issuance of the 
order and disapproves the pooling provisions, or approves the pooling 
provisions and disapproves the issuance of the order, shall be 
disqualified; and the referendum agent shall mark the ballot 
accordingly.
    (c) Record of results of the referendum. The referendum agent shall 
notify the Administrator of the number of eligible ballots cast, the 
count of the votes, the number of disqualified ballots and the number of 
producers who were eligible to cast ballots. The referendum agent shall 
seal the ballots, including those marked ``disqualified'', the list of 
eligible voters and tabulation of ballots, and shall transmit to the 
Administrator a complete detailed report of all action taken in 
connection with the referendum together with all the ballots cast and 
all other information furnished to or compiled by the referendum agent.
    (d) Announcement of the results of the referendum. Announcement of 
the results of the referendum will be made only at the direction of the 
Secretary. The referendum agent, or others who assist in the referendum, 
shall not disclose the results of the referendum or the total number of 
ballots cast.

Sec. 900.309  Confidential information.

    The ballots cast, the identity of any person who voted, or the 
manner in which any person voted and all information furnished to, 
compiled by, or in the possession of the referendum agent, shall be 
regarded as confidential.

Sec. 900.310  Supplementary instructions.

    The Administrator is authorized to issue instructions and to 
prescribe forms and ballots, not inconsistent with the provisions of 
this subpart, to govern the conduct of referenda by referendum agents.

Sec. 900.311  Submittals or requests.

    Interested persons may secure information or make submittals or 
requests to the Administrator with respect to the provisions contained 
in this subpart.

Subpart--Procedure for Determining the Qualification of Cooperative Milk 
                         Marketing Associations

    Authority: Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source: 32 FR 9821, July 6, 1967, unless otherwise noted.

Sec. 900.350  General statement.

    Cooperative marketing associations apply for qualification by the 
Secretary under the Federal milk order program for certain privileges 
and exemptions. These privileges and exemptions are expressed in the 
Agricultural Marketing Agreement Act of 1937 (50

[[Page 31]]

Stat. 246) as amended, and the milk marketing orders issued pursuant to 
its provisions.

Sec. 900.351  Applications for qualification.

    Any association of producers may apply for determinations as to 
whether it is a qualified cooperative association with authority to 
represent producers in order referendums; has authorization to collect 
payment from handlers for members' milk; and is rendering specified 
marketing services to producers. Applicant associations should supply 
information for these determinations, using as a guide Application Form 
DA-25. The application form may be obtained from the Dairy Division, 
Agricultural Marketing Service, United States Department of Agriculture, 
Washington, DC 20250. Determinations required of the Secretary of 
Agriculture, or the Administrator of the Agricultural Marketing Service, 
by delegation are made by the Director of the Dairy Division. Once 
issued they are valid until amended, suspended or terminated.

Sec. 900.352  Confidential information.

    The documents and other information submitted by an applicant 
association and otherwise obtained by investigation, examination of 
books, documents, papers, records, files and facilities, and in reports 
filed subsequent to initial determinations of qualification, shall be 
regarded as confidential and shall be governed by Sec. 900.210.

Sec. 900.353  Qualification standards.

    Statutory requirements for qualification of cooperative associations 
are provided in subsections (5) and (12) of section 608c of the 
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601 
et seq.). The association must: (a) Be a cooperative marketing 
association of producers, qualified under the provisions of the Act of 
Congress of February 18, 1922, as amended, known as the ``Capper-
Volstead Act,'' (7 U.S.C. 291, 292); (b) have its entire organization 
and all of its activities under the control of its members; (c) have 
full authority in the sale of its members' milk; and (d) be engaged in 
making collective sales or marketing of milk or milk products for the 
producers thereof. Qualification for exemption from deductions for 
marketing service payments under specific marketing orders and payment 
for milk of members under specific orders shall be determined in 
accordance with the terms of the respective marketing orders.

Sec. 900.354  Inspection and investigation.

    The Secretary of Agriculture, or his duly authorized representative, 
shall have the right, at any time after an application is received, to 
examine all books, documents, papers, records, files and facilities of 
the association, to verify any of the information submitted and to 
procure such other information as may be required to determine whether 
the association is qualified in accordance with its application.

Sec. 900.355  Annual reporting.

    Determinations of qualification for privileges and exemptions are 
subject to amendment, termination or suspension if the association does 
not currently meet the qualification standards. An association found to 
be qualified pursuant to the Act is required to file an annual report 
after its annual meeting has been held following the close of its fiscal 
year. Form DA-24 is used for this purpose. The report form is available 
at the Dairy Division, Agricultural Marketing Service, U.S. Department 
of Agriculture, Washington, DC 20250. The association is required to 
file a copy of its report with the Dairy Division at Washington and with 
the market administrator of each order under which it operates.

Sec. 900.356  Listing of qualified associations.

    A copy of each determination of qualification is furnished to the 
respective association. Copies are also filed in the Dairy Division, 
Agricultural Marketing Service, and with the Hearing Clerk, Office of 
the Secretary, U.S. Department of Agriculture, Washington, DC 20250, 
where they are available for public inspection. A list of qualified 
associations engaged in marketing milk under a particular milk marketing 
order is maintained at the office of the market administrator of the 
order.

Sec. 900.357  Denial of application; suspension or revocation of 
          determination of qualification.

    Any cooperative association whose application has been wholly or 
partially denied, or whose determination of qualification has been 
wholly or partly revoked or suspended, may petition the Secretary for a 
review of such action. Such petition shall state facts relevant to the 
matter for which review is sought. After due notice to such cooperative 
association, the Director of the Dairy Division, or in his absence the 
Acting Director, shall hold, in the manner hereinafter specified, an 
informal hearing.
    (a) Notice. Notice shall be given in writing and shall be mailed to 
the last known address of the association, or of an officer thereof, at 
least 3 days before the date set for a hearing. Such notice shall 
contain: A statement of the time and place of the hearing, said place to 
be as convenient to the association as can reasonably be arranged, and 
may contain a statement of the reason for calling the hearing and the 
nature of the questions upon which evidence is desired or upon which 
argument may be presented.

[[Page 32]]

    (b) Parties. Hearings are not to be public and are to be attended 
only by representatives of the association and of the Government, and 
such other persons as either the association or the Government desires 
to have appear for purposes of submitting information or as counsel.
    (c) Conduct of hearing. The Director or Acting Director of the Dairy 
Division, or a person designated by him, shall preside at the hearing. 
The hearing shall be conducted in such manner as will be most conducive 
to the proper disposition of the matter. Written statements or briefs 
may be filed by the association within the time specified by the 
presiding officer.
    (d) Preliminary report. The presiding officer shall prepare a 
preliminary report setting forth a recommendation as to what action 
shall be taken and the basis for such action. A copy of said report 
shall be served upon the association by mail or in person. The 
association may file exceptions to said report within 10 days after 
service thereof.
    (e) Final report. After due consideration of all the facts and the 
exceptions, if any, the Director of the Dairy Division shall issue a 
final report setting forth the action to be taken and the basis for such 
action.

   Subpart--Procedure for the Conduct of Referenda in Connection With 
   Marketing Orders for Fruits, Vegetables, and Nuts Pursuant to the 
        Agricultural Marketing Agreement Act of 1937, as Amended

    Authority: Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source: 30 FR 15414, Dec. 15, 1965, unless otherwise noted.

Sec. 900.400  General.

    Referenda for the purpose of ascertaining whether the issuance by 
the Secretary of Agriculture of a marketing order to regulate the 
handling of any fruit, vegetable, or nut, or product thereof, or the 
continuance or termination of such an order, is approved or favored by 
producers or processors shall, unless supplemented or modified by the 
Secretary, be conducted in accordance with this subpart.

Sec. 900.401  Definitions.

    (a) Act means Public Act No. 10, 73d Congress (48 Stat. 31), as 
amended, and as reenacted and amended by the Agricultural Marketing 
Agreement Act of 1937 (50 Stat. 246), as amended (7 U.S.C. 601-674).
    (b) Secretary means the Secretary of Agriculture of the United 
States, or any officer or employee of the Department to whom authority 
has heretofore been delegated, or to whom authority may hereafter be 
delegated, to act in his stead; and Department means the United States 
Department of Agriculture.
    (c) Administrator means the Administrator of the Agricultural 
Marketing Service, with power to redelegate, or any officer or employee 
of the Department to whom authority has been delegated or may hereafter 
be delegated to act in his stead.
    (d) Order means the marketing order (including an amendatory order) 
with respect to which the Secretary has directed that a referendum be 
conducted.
    (e) Referendum agent means the individual or individuals designated 
by the Secretary to conduct the referendum.
    (f) Representative period means the period designated by the 
Secretary pursuant to section 8c of the Act (7 U.S.C. 608c).
    (g) Person means any individual, partnership, corporation, 
association, or other business unit. For the purpose of this definition, 
the term ``partnership'' includes (1) a husband and wife who have title 
to, or leasehold interest in, land as tenants in common, joint tenants, 
tenants by the entirety, or, under community property laws, as community 
property, and (2) so-called ``joint ventures,'' wherein one or more 
parties to the agreement, informal or otherwise, contributed capital and 
others contribute labor, management, equipment, or other services, or 
any variation of such contributions by two or more parties, so that it 
results in the growing of the commodity for market and the authority to 
transfer title to the commodity so produced.
    (h) Producer means any person defined as a producer in the order 
who: (1) Owns and farms land, resulting in his ownership of the 
commodity produced thereon; (2) rents and farms land, resulting in his 
ownership of all or a portion of the commodity produced thereon; or (3) 
owns land which he does not farm and, as rental for such land, obtains 
the ownership of a portion of the commodity produced thereon. Ownership 
of, or leasehold interest in, land and the acquisition, in any manner 
other than as hereinbefore set forth, of legal title to the commodity 
grown thereon shall not be deemed to result in such owners or lessees 
becoming producers.

[30 FR 15414, Dec. 15, 1965, as amended at 37 FR 8059, Apr. 25, 1972]

Sec. 900.402  Voting.

    (a) Each person who is a producer, as defined in this subpart, at 
the time of the referendum and who also was a producer during the 
representative period, shall be entitled to only one vote in the 
referendum, except that: (1) In a landlord-tenant relationship, wherein 
each of the parties is a producer, each such producer shall be entitled 
to one vote in the referendum; and (2) a cooperative association of 
producers, bona fide engaged in marketing the commodity or product

[[Page 33]]

thereof proposed to be regulated, or in rendering services for or 
advancing the interest of the producers of such commodity or product, 
may, if it elects to do so, vote, both by number and total volume, for 
the producers who are members of, stockholders in, or under contract 
with such association.
    (b) Whenever, as required by the act, processors vote on the 
issuance of an order, each processor who is engaged in canning or 
freezing within the production area of the commodity covered by the 
order shall be entitled to vote in the referendum the quantity of such 
commodity canned or frozen within the production area for market by him 
during the representative period determined by the Secretary.
    (c) Proxy voting is not authorized but an officer or employee of a 
corporate producer, processor or cooperative association, or an 
administrator, executor or trustee of a producing estate may cast a 
ballot on behalf of such producer, processor, estate, or cooperative 
association. Any individual so voting in a referendum shall certify that 
he is an officer or employee of the producer, processor, or cooperative 
association, or an administrator, executor, or trustee of a producing 
estate, and that he has the authority to take such action. Upon request 
of the referendum agent, the individual shall submit adequate evidence 
of such authority.
    (d) Each producer, cooperative association of producers, and 
processor entitled to vote in a referendum shall be entitled to cast one 
ballot in the referendum. Each producer, cooperative association of 
producers, and processor casting more than one ballot with conflicting 
votes shall thereby invalidate all ballots cast by such producer, 
cooperative association of producers, or processor in such referendum.

Sec. 900.403  Instructions.

    The referendum agent shall conduct the referendum, in the manner 
herein provided, under supervision of the Administrator. The 
Administrator may prescribe additional instructions, not inconsistent 
with the provisions hereof, to govern the procedure to be followed by 
the referendum agent. Such agent shall:
    (a) Determine the time of commencement and termination of the period 
of the referendum, and the time prior to which all ballots must be cast.
    (b) Determine whether ballots may be cast by mail, at polling 
places, at meetings of producers or processors, or by any combination of 
the foregoing.
    (c) Provide ballots and related material to be used in the 
referendum. Ballot material shall provide for recording essential 
information for ascertaining (1) whether the person voting, or on whose 
behalf the vote is cast, is an eligible voter, and (2) the total volume 
(i) produced for market during the representative period, or (ii) canned 
or frozen for market during the representative period.
    (d) Give reasonable advance notice of the referendum (1) by 
utilizing without advertising expense available media of public 
information (including, but not being limited to, press and radio 
facilities) serving the production area, announcing the dates, places, 
or methods of voting, eligibility requirements, and other pertinent 
information, and (2) by such other means as said agent may deem 
advisable.
    (e) Make available to producers and the aforesaid cooperative 
associations which indicate to the agent their intentions to vote, and 
to processors when required, instructions on voting, appropriate ballot 
and certification forms, and, except in the case of a referendum on the 
termination or continuance of an order, the text of the proposed order 
and a summary of its terms and conditions: Provided, That no person who 
claims to be qualified to vote shall be refused a ballot.
    (f) If ballots are to be cast by mail, cause all the material 
specified in paragraph (e) of this section to be mailed to each producer 
(and processor when required) whose name and address is known to the 
referendum agent.
    (g) If ballots are to be cast at polling places or meetings, 
determine the necessary number of polling or meeting places, designate 
them, announce the time of each meeting or the hours during which each 
polling place will be open, provide the material specified in paragraph 
(e) of this section, and provide for appropriate custody of ballot forms 
and delivery to the referendum agent of ballots cast.
    (h) At the conclusion of the referendum, canvass the ballots, 
tabulate the results, and, except as otherwise directed, report the 
outcome to the Administrator and promptly thereafter submit the 
following:
    (1) All ballots received by the agent and appointees, together with 
a certificate to the effect that the ballots forwarded are all of the 
ballots cast and received by such persons during the referendum period;
    (2) A list of all challenged ballots deemed to be invalid; and
    (3) A tabulation of the results of the referendum and a report 
thereon, including a detailed statement explaining the method used in 
giving publicity to the referendum and showing other information 
pertinent to the manner in which the referendum was conducted.

Sec. 900.404  Subagents.

    The referendum agent may appoint any person or persons deemed 
necessary or desirable to assist said agent in performing his functions 
hereunder. Each person so appointed may be authorized by said agent to

[[Page 34]]

perform, in accordance with the requirements herein set forth, any or 
all of the following functions (which, in the absence of such 
appointment, shall be performed by said agent):
    (a) Give public notice of the referendum in the manner specified 
herein;
    (b) Preside at a meeting where ballots are to be cast or as poll 
officer at a polling place;
    (c) Distribute ballots and the aforesaid texts to producers (and to 
processors when required) and receive any ballots which are cast; and
    (d) Record the name and address of each person receiving a ballot 
from, or casting a ballot with, said subagent and inquire into the 
eligibility of such person to vote in the referendum.

Sec. 900.405  Ballots.

    The referendum agent and his appointees shall accept all ballots 
cast; but, should they, or any of them, deem that a ballot should be 
challenged for any reason, said agent or appointee shall endorse above 
his signature, on said ballot, a statement to the effect that such 
ballot was challenged, by whom challenged, the reasons therefor, the 
results of any investigations made with respect thereto, and the 
disposition thereof. Invalid ballots shall not be counted.

Sec. 900.406  Referendum report.

    Except as otherwise directed, the Administrator shall prepare and 
submit to the Secretary a report on results of the referendum, the 
manner in which it was conducted, the extent and kind of public notice 
given, and other information pertinent to analysis of the referendum and 
its results.

Sec. 900.407  Confidential information.

    All ballots cast and the contents thereof (whether or not relating 
to the identity of any person who voted or the manner in which any 
person voted) and all information furnished to, compiled by, or in 
possession of, the referendum agent shall be treated as confidential.

                       Subpart--Public Information

    Authority: 5 U.S.C. 301, 552.

    Source: 40 FR 20267, May 9, 1975, unless otherwise noted.

Availability of Program Information, Staff Manuals and Instructions, and 
                            Related Material

Sec. 900.500  General.

    This subpart is issued in accordance with the regulations of the 
Secretary of Agriculture in part 1, subpart A, of subtitle A of this 
title (7 CFR 1.1-1.16), and appendix A thereto, implementing the Freedom 
of Information Act (5 U.S.C. 552). The Secretary's regulations, as 
implemented by the regulations of this subpart, govern the availability 
of records of AMS to the public.

Sec. 900.501  Public inspection and copying.

    (a) Facilities for public inspection and copying of the indexes and 
materials required to be made available under Sec. 1.2(a) of this title 
will be provided by AMS during normal hours of operation. Request for 
this information should be made to the Freedom of Information Act 
Officer at the following address:

Freedom of Information Act Officer, Agricultural Marketing Service, 
United States Department of Agriculture, Washington, DC 20250.

    (b) Copies of such material may be obtained in person or by mail. 
Applicable fees for copies will be charged in accordance with the 
regulations prescribed by the Director, Office of Operations and 
Finance, USDA.

[44 FR 39151, July 5, 1979]

Sec. 900.502  Indexes.

    Pursuant to the regulations in Sec. 1.4(b) of this title, AMS will 
maintain and make available for public inspection and copying current 
indexes of all material required to be made available in Sec. 1.2(a) of 
this title. Notice is hereby given that publication of these indexes is 
unnecessary and impractical, since the material is voluminous and does 
not change often enough to justify the expense of publication.

[44 FR 39151, July 5, 1979]

Sec. 900.503  Request for records.

    (a) Requests for records under 5 U.S.C. 552(a)(3) shall be made in 
accordance with Sec. 1.3(a) of this title. Authority to make 
determinations regarding initial requests in accordance with Sec. 1.4(c) 
of this title is delegated to the Freedom of Information Act Officer of 
AMS. Requests should be submitted to the FOIA Officer at the following 
address:

Freedom of Information Act Officer (FOIA Request), Agricultural 
Marketing Service, United States Department of Agriculture, Washington, 
DC 20250.

    (b) The request shall identify each record with reasonable 
specificity as prescribed in Sec. 1.3 of this title.
    (c) The FOIA Officer is authorized to receive requests and to 
exercise the authority to (1) make determinations to grant requests or 
deny initial requests, (2) extend the administrative deadline, (3) make 
discretionary release of exempt records, and (4) make determinations 
regarding charges pursuant to the fee schedule.

[44 FR 39151, July 5, 1979]

[[Page 35]]

Sec. 900.504  Appeals.

    Any person whose request under Sec. 900.503 above is denied shall 
have the right to appeal such denial in accordance with Sec. 1.3(e) of 
this title. Appeals shall be addressed to the Administrator, 
Agricultural Marketing Service, U.S. Department of Agriculture, 
Washington, DC 20250.

                     Subpart--Information Collection

    Authority: 44 U.S.C. Ch. 35.

Sec. 900.600  General.

    This subpart shall contain such requirements as pertain to the 
information collection provisions under the Paperwork Reduction Act of 
1995.

[63 FR 10492, Mar. 4, 1998]

Sec. 900.601  OMB control numbers assigned pursuant to the Paperwork 
          Reduction Act.

    (a) Purpose. This section collects and displays the control numbers 
assigned to information collection requirements by the Office of 
Management and Budget contained in 7 CFR parts 905 through 998 under the 
Paperwork Reduction Act of 1995.
    (b) Display.

------------------------------------------------------------------------
                                                                Current
                                                                  OMB
          7 CFR part where identified and described             control
                                                                  No.
------------------------------------------------------------------------
905, Florida Oranges, Grapefruit Tangerines, Tangelos.......   0581-0094
906, Texas Oranges & Grapefruit.............................   0581-0068
911, Florida Limes..........................................   0581-0091
915, Florida Avocados.......................................   0581-0078
916, California Nectarines..................................   0581-0072
917, California Pears and Peaches...........................   0581-0080
920, California Kiwifruit...................................   0581-0149
922, Washington Apricots....................................   0581-0095
923, Washington Sweet Cherries..............................   0581-0133
924, Washington-Oregon Fresh Prunes.........................   0581-0134
925, S.E. California Desert Grapes..........................   0581-0109
927, Oregon-Washington-California Winter Pears..............   0581-0089
928, Hawaiian Papayas.......................................   0581-0102
929, Cranberries Grown in Designated States.................   0581-0103
930, Red Tart Cherries......................................   0581-0177
931, Oregon-Washington Bartlett Pears.......................   0581-0092
932, California Olives......................................   0581-0142
945, Idaho-Eastern Oregon Potatoes..........................   0581-0178
946, Washington Potatoes....................................   0581-0178
947, Oregon-California Potatoes.............................   0581-0178
948, Colorado Potatoes......................................   0581-0178
953, Southeastern Potatoes..................................   0581-0178
955, Vidalia Onions.........................................   0581-0178
956, Walla Walla Onions.....................................   0581-0178
958, Idaho-Oregon Onions....................................   0581-0178
959, South Texas Onions.....................................   0581-0178
966, Florida Tomatoes.......................................   0581-0178
979, South Texas Melons.....................................   0581-0178
981, California Almonds.....................................   0581-0071
982, Oregon-Washington Hazelnuts............................   0581-0178
984, California Walnuts.....................................   0581-0178
985, Spearmint Oil..........................................   0581-0065
987, California Dates.......................................   0581-0178
989, California Raisins.....................................   0581-0178
993, California Dried Prunes................................   0581-0178
997, Domestic Peanuts Not Covered Under the Peanut Marketing   0581-0163
 Agreement..................................................
998, Domestic Peanuts Covered Under the Peanut Marketing       0581-0067
 Agreement..................................................
------------------------------------------------------------------------


[63 FR 10492, Mar. 4, 1998]

[[Page 36]]





PART 1000--GENERAL PROVISIONS OF FEDERAL MILK MARKETING ORDERS--Table of Contents




Sec.
1000.1  Scope and purpose of part 1000.
1000.2  Definitions.
1000.3  Market administrator.
1000.4  Continuity and separability of provisions.
1000.5  Handler responsibility for records and facilities.
1000.6  Termination of obligations.
1000.7  OMB control number assigned pursuant to the Paperwork Reduction 
          Act.

    Authority: Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source: 36 FR 9845, May 29, 1971, unless otherwise noted.



Sec. 1000.1  Scope and purpose of part 1000.

    This part sets forth certain terms, definitions, and provisions 
which shall be common to and part of each Federal milk marketing order 
except as specifically defined otherwise, or modified, or otherwise 
provided, in an individual order.



Sec. 1000.2  Definitions.

    The following terms shall have the following meanings as used in the 
order:
    (a) Act. ``Act'' means Public Act No. 10, 73d Congress, as amended 
and as reenacted and amended by the Agricultural Marketing Agreement Act 
of 1937, as amended (7 U.S.C. 601 et seq.).
    (b) Order. ``Order'' means the applicable part of Title 7 of the 
Code of Federal Regulations issued pursuant to section 8c of the Act as 
a Federal milk marketing order (as amended).
    (c) Department. ``Department'' means the U.S. Department of 
Agriculture.
    (d) Secretary. ``Secretary'' means the Secretary of Agriculture of 
the United States or any officer or employee of the Department to whom 
authority has heretofore been delegated, or to whom authority may 
hereafter be delegated to act in his stead.
    (e) Person. ``Person'' means any individual, partnership, 
corporation, association, or other business unit.



Sec. 1000.3  Market administrator.

    (a) Designation. The agency for the administration of the order 
shall be a market administrator selected by the Secretary and subject to 
removal at the Secretary's discretion. The market administrator shall be 
entitled to compensation determined by the Secretary.
    (b) Powers. The market administrator shall have the following powers 
with respect to each order under his administration:
    (1) Administer the order in accordance with its terms and 
provisions;
    (2) Make rules and regulations to effectuate the terms and 
provisions of the order;
    (3) Receive, investigate, and report complaints of violations to the 
Secretary; and
    (4) Recommend amendments to the Secretary.
    (c) Duties. The market administrator shall perform all the duties 
necessary to administer the terms and provisions of each order under his 
administration, including, but not limited to, the following:
    (1) [Reserved]
    (2) Employ and fix the compensation of persons necessary to enable 
him to exercise his powers and perform his duties;
    (3) Pay out of funds provided by the administrative assessment, 
except expenses associated with functions for which the order provides a 
separate charge, all expenses necessarily incurred in the maintenance 
and functioning of his office and in the performance of his duties, 
including his own compensation;
    (4) Keep records which will clearly reflect the transactions 
provided for in the order, and upon request by the Secretary, surrender 
the records to his successor or such other person as the Secretary may 
designate;
    (5) Furnish information and reports requested by the Secretary and 
submit his records to examination by the Secretary;
    (6) Announce publicly at his discretion, unless otherwise directed 
by the Secretary, by such means as he deems appropriate, the name of any 
handler who, after the date upon which he is required to perform such 
act, has not:

[[Page 37]]

    (i) Made reports required by the order;
    (ii) Made payments required by the order; or
    (iii) Made available records and facilities as required pursuant to 
Sec. 1000.5;
    (7) Prescribe reports required of each handler under the order. 
Verify such reports and the payments required by the order by examining 
records (including such papers as copies of income tax reports, fiscal 
and product accounts, correspondence, contracts, documents or memoranda 
of the handler, and the records of any other persons that are relevant 
to the handler's obligation under the order), by examining such 
handler's milk handling facilities; and by such other investigation as 
the market administrator deems necessary for the purpose of ascertaining 
the correctness of any report or any obligation under the order. 
Reclassify skim milk and butterfat received by any handler if such 
examination and investigation discloses that the original classification 
was incorrect.
    (8) Furnish each regulated handler a written statement of such 
handler's accounts with the market administrator promptly each month. 
Furnish a corrected statement to such handler if verification discloses 
that the original statement was incorrect; and
    (9) Prepare and disseminate publicly for the benefit of producers, 
handlers, and consumers such statistics and other information concerning 
operation of the order and facts relevant to the provisions thereof (or 
proposed provisions) as do not reveal confidential information.

[36 FR 9845, May 29, 1971, as amended at 45 FR 7777, Feb. 5, 1980]



Sec. 1000.4  Continuity and separability of provisions.

    (a) Effective time. The provisions of the order or any amendment to 
the order shall become effective at such time as the Secretary may 
declare and shall continue in force until suspended or terminated.
    (b) Suspension or termination. The Secretary shall suspend or 
terminate any or all of the provisions of the order whenever he finds 
that such provision(s) obstructs or does not tend to effectuate the 
declared policy of the Act. The order shall terminate whenever the 
provisions of the Act authorizing it cease to be in effect.
    (c) Continuing obligations. If upon the suspension or termination of 
any or all of the provisions of the order, there are any obligations 
arising under the order, the final accrual or ascertainment of which 
requires acts by any handler, by the market administrator, or by any 
other person, the power and duty to perform such further acts shall 
continue notwithstanding such suspension or termination.
    (d) Liquidation. (1) Upon the suspension or termination of any or 
all provisions of the order, the market administrator, or such other 
liquidating agent designated by the Secretary, shall if so directed by 
the Secretary liquidate the business of the market administrator's 
office, dispose of all property in his possession or control, including 
accounts receivable and execute and deliver all assignments or other 
instruments necessary or appropriate to effectuate any such disposition; 
and
    (2) If a liquidating agent is so designated, all assets and records 
of the market administrator shall be transferred promptly to such 
liquidating agent. If, upon such liquidation, the funds on hand exceed 
the amounts required to pay outstanding obligations of the office of the 
market administrator and to pay necessary expenses of liquidation and 
distribution, such excess shall be distributed to contributing handlers 
and producers in an equitable manner.
    (e) Separability of provisions. If any provision of the order or its 
application to any person or circumstances is held invalid, the 
application of such provision and of the remaining provisions of the 
order to other persons or circumstances shall not be affected thereby.



Sec. 1000.5  Handler responsibility for records and facilities.

    Each handler shall maintain and retain records of his operations and 
make such records and his facilities available to the market 
administrator. If adequate records of a handler, or of any other 
persons, that are relevant to the obligation of such handler are not 
maintained and made available, any

[[Page 38]]

skim milk and butterfat required to be reported by such handler for 
which adequate records are not available shall not be considered 
accounted for or established as used in a class other than the highest 
priced class.
    (a) Records to be maintained. (1) Each handler shall maintain 
records of his operations (including, but not limited to, records of 
purchases, sales, processing, packaging, and disposition) as are 
necessary to verify whether such handler has any obligation under the 
order, and if so, the amount of such obligation. Such records shall be 
such as to establish for each plant or other receiving point for each 
month:
    (i) The quantities of skim milk and butterfat contained in, or 
represented by, products received in any form, including inventories on 
hand at the beginning of the month, according to form, time, and source 
of each receipt;
    (ii) The utilization of all skim milk and butterfat showing the 
respective quantities of such skim milk and butterfat in each form 
disposed of or on hand at the end of the month; and
    (iii) Payments to producers, dairy farmers and cooperative 
associations, including the amount and nature of any deductions and the 
disbursement of money so deducted.
    (2) Each handler shall keep such other specific records as the 
market administrator deems necessary to verify or establish such 
handler's obligation under the order.
    (b) Availability of records and facilities. Each handler shall make 
available all records pertaining to such handler's operations and all 
facilities the market administrator finds are necessary for such market 
administrator to verify the information required to be reported by the 
order and/or to ascertain such handler's reporting, monetary or other 
obligation under the order. Each handler shall permit the market 
administrator to weigh, sample, and test milk and milk products and 
observe plant operations and equipment and make available to the market 
administrator such facilities as are necessary to carry out his duties.
    (c) Retention of records. All records required under the order to be 
made available to the market administrator shall be retained by the 
handler for a period of 3 years to begin at the end of the month to 
which such records pertain. If, within such 3-year period, the market 
administrator notifies the handler in writing that the retention of such 
records, or of specified records, is necessary in connection with a 
proceeding under section 8c(15)(A) of the Act or a court action 
specified in such notice, the handler shall retain such records, or 
specified records, until further written notification from the market 
administrator. The market administrator shall give further written 
notification to the handler promptly upon the termination of the 
litigation or when the records are no longer necessary in connection 
therewith.



Sec. 1000.6  Termination of obligations.

    The provisions of this section shall apply to any obligation under 
the order for the payment of money:
    (a) Except as provided in paragraphs (b) and (c) of this section, 
the obligation of any handler to pay money required to be paid under the 
terms of the order shall terminate 2 years after the last day of the 
month during which the market administrator receives the handler's 
report of receipts and utilization on which such obligation is based, 
unless within such 2-year period, the market administrator notifies the 
handler in writing that such money is due and payable. Service of such 
written notice shall be complete upon mailing to the handler's last 
known address and it shall contain but need not be limited to the 
following information:
    (1) The amount of the obligation;
    (2) The month(s) on which such obligation is based; and
    (3) If the obligation is payable to one or more producers or to a 
cooperative association (except an obligation to be prorated to 
producers under an individual handler pool), the name of such 
producer(s) or such cooperative association, or if the obligation is 
payable to the market administrator, the account for which it is to be 
paid;
    (b) If a handler fails or refuses, with respect to any obligation 
under the order, to make available to the market administrator all 
records required by the order to be made available, the market 
administrator may notify the handler in writing, within the 2-year

[[Page 39]]

period provided for in paragraph (a) of this section, of such failure or 
refusal. If the market administrator so notifies a handler, the said 2-
year period with respect to such obligation shall not begin to run until 
the first day of the month following the month during which all such 
records pertaining to such obligation are made available to the market 
administrator;
    (c) Notwithstanding the provisions of paragraphs (a) and (b) of this 
section, a handler's obligation under the order to pay money shall not 
be terminated with respect to any transaction involving fraud or willful 
concealment of a fact, material to the obligation, on the part of the 
handler against whom the obligation is sought to be imposed; and
    (d) Unless the handler files a petition pursuant to section 
8c(15)(A) of the Act and the applicable rules and regulations (7 CFR 
900.50 et seq.) within the applicable 2-year period indicated below, the 
obligation of the market administrator:
    (1) To pay a handler any money which such handler claims to be due 
him under the terms of the order shall terminate 2 years after the end 
of the month during which the skim milk and butterfat involved in the 
claim were received; or
    (2) To refund any payment made by a handler (including a deduction 
or offset by the market administrator) shall terminate 2 years after the 
end of the month during which payment was made by the handler.



Sec. 1000.7  OMB control number assigned pursuant to the Paperwork Reduction Act.

    The information collection requirements contained in this regulation 
have been approved by the Office of Management and Budget (OMB) under 
the provisions of Title 44 U.S.C. chapter 35 and have been assigned OMB 
control number 0581-0032.

[49 FR 7102, Feb. 27, 1984]



PART 1001--MILK IN THE NEW ENGLAND MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1001.1  General provisions.

                               Definitions

1001.2  New England marketing area.
1001.3  Route disposition.
1001.4  Plant.
1001.5  Distributing plant.
1001.6  Supply plant.
1001.7  Pool plant.
1001.8  Nonpool plant.
1001.9  Handler.
1001.10  Producer-handler.
1001.11  Dairy farmer for other markets.
1001.12  Producer.
1001.13  Producer milk.
1001.14  Other source milk.
1001.15  Diverted milk.
1001.16  Exempt milk.
1001.17  Fluid milk product.
1001.18  Fluid cream product.
1001.19  Filled milk.
1001.20  Cooperative association.
1001.21  [Reserved]
1001.22  Commercial food processing establishment.

                                 Reports

1001.30  Reports of receipts and utilization.
1001.31  Other reports of receipts and utilization.
1001.32  Reports regarding individual producers and dairy farmers.
1001.33  Notices to producers.

                         Classification of Milk

1001.40  Classes of utilization.
1001.41  Shrinkage.
1001.42  Classification of transfers and diversions.
1001.43  General classification rules.
1001.44  Classification of producer milk.
1001.45  Market administrator's reports and announcements concerning 
          classification.
1001.46-1001.48  [Reserved]

                              Class Prices

1001.50  Class prices.
1001.51  Basic formula price.
1001.52  Plant location adjustments.
1001.53  Determination of applicable zone locations for pricing 
          purposes.
1001.54  Announcement of class prices.
1001.55  Equivalent price.

                              Blended Price

1001.60  Handler's value of milk for computing basic blended price.
1001.61  Partially regulated distributing plant operator's value of milk 
          for computing basic blended price.
1001.62  Computation of basic blended price.
1001.63  Announcement of blended prices and butterfat differential.

[[Page 40]]

                            Payments for Milk

1001.70  Producer-settlement fund.
1001.71  Handlers' producer-settlement fund debits and credits.
1001.72  Payments to and from the producer-settlement fund.
1001.73  Payments to producers.
1001.74  Payments to cooperative associations.
1001.75  Statements to producers.
1001.76  Butterfat differential.
1001.77  Adjustment of accounts.
1001.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1001.85  Assessment for order administration.
1001.86  Deduction for marketing services.

    Authority: Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source: 41 FR 8357, Feb. 26, 1976, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1001.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1001.2  New England marketing area.

    New England marketing area, hereinafter called the ``marketing 
area,'' means all territory within the boundaries of the places set 
forth below, all waterfront facilities connected therewith and craft 
moored thereat, and all territory therein occupied by any governmental 
installation, institution, or other similar establishment:

                               Connecticut

    All of the State of Connecticut.

                              Massachusetts

Counties:
    Barnstable.
    Bristol.
    Essex.
    Franklin (except the towns of New Salem, Orange, and Warwick).
    Hampden (except the towns of Brimfield, Monson, Palmer, and Wales).
    Hampshire (except the town of Ware).
    Middlesex.
    Norfolk.
    Plymouth.
    Suffolk.
    Worcester (except the towns of Athol, Barre, Douglas, East 
Brookfield, Hardwick, New Braintree, North Brookfield, Northbridge, 
Petersham, Philipston, Royalston, Templeton, Uxbridge, Warren, West 
Brookfield, and Winchendon).

                              New Hampshire

Counties:
    Belknap.
    Cheshire.
    Grafton (the towns of Ashland, Bridgewater, Bristol, Holderness, and 
Plymouth only).
    Hillsborough.
    Merrimack.
    Rockingham.
    Stafford.
    Sullivan (except the town of Plainfield).

                              Rhode Island

    All cities and towns except New Shoreham (Block Island).

                                 Vermont

Counties:
    Bennington (the towns of Landgrove, Peru, and Winhall only).
    Windham (except Somerset).
    Windsor (the towns of Andover, Baltimore, Cavendish, Chester, 
Ludlow, Plymouth, Reading, Springfield, Weathersfield, Weston, West 
Windsor, and Windsor only).

[41 FR 8357, Feb. 26, 1976, as amended at 48 FR 32160, July 14, 1983]



Sec. 1001.3  Route disposition.

    Route disposition means distribution of Class I milk by a handler to 
retail or wholesale outlets, which include vending machines but do not 
include plants or distribution points. The route disposition of a 
handler shall be attributed to the processing and packaging plant from 
which the Class I milk is moved to retail or wholesale outlets without 
intermediate movement to another processing and packaging plant.



Sec. 1001.4  Plant.

    Plant means the land and buildings, together with their 
surroundings, facilities, and equipment, whether owned or operated by 
one or more persons, constituting a single operating unit or 
establishment for the receiving, processing, or packaging of milk or 
milk

[[Page 41]]

products. The term ``plant'' shall not include:
    (a) Distribution points (separate premises used primarily for the 
transfer to vehicles of packaged fluid milk products moved there from 
processing and packaging plants); or
    (b) Bulk reload points (separate premises used for the purpose of 
transferring bulk milk from one tank truck to another tank truck while 
en route from dairy farmers' farms to a plant). If stationary storage 
tanks are used for transferring milk at the premises, the operator of 
the facility shall make an advance written request to the market 
administrator that the facility be treated as a reload point; otherwise 
it shall be a plant. The cooling of milk, collection or testing of 
samples, and washing and sanitizing of tank trucks at the premises shall 
not disqualify it as a bulk reload point.

[43 FR 17459, Apr. 25, 1978, as amended at 46 FR 58642, Dec. 3, 1981]



Sec. 1001.5  Distributing plant.

    Distributing plant means a processing and packaging plant.

[56 FR 5309, Feb. 11, 1991]



Sec. 1001.6  Supply plant.

    Supply plant means a plant at which facilities are maintained and 
used for washing and sanitizing cans and to which milk is moved from 
dairy farmers' farms in cans and is there accepted, weighed or measured, 
sampled, and cooled, or it is a plant to which milk is moved from dairy 
farmers' farms in tank trucks.

[56 FR 5309, Feb. 11, 1991]



Sec. 1001.7  Pool plant.

    Except as provided in paragraph (d) of this section, pool plant 
means:
    (a) A distributing plant from which:
    (1) Not less than 40 percent of its total receipts of fluid milk 
products (except filled milk) in any month, or in either of the 2 
preceding months, are disposed of as Class I (except filled milk); and
    (2) Route disposition (except filled milk) in the marketing area in 
the month:
    (i) Is not less than 10 percent of its total receipts of fluid milk 
products (except filled milk);
    (ii) Exceeds its route disposition in any other Federal marketing 
area; and
    (iii) Exceeds 700 quarts on any day or a daily average of 300 
quarts.
    (b) A supply plant which meets the conditions specified in 
paragraphs (a)(1), (2), or (3) of this section. Receipts and disposition 
of filled milk shall be excluded in determining whether a plant has met 
these conditions. For the purposes of this paragraph, milk received at a 
plant from a cooperative association in its capacity as a handler under 
Sec. 1001.9(d) shall be considered as having been received at that plant 
from dairy farmers' farms.
    (1) It is a plant from which in any month of August and December at 
least 15 percent, and in any month of September through November at 
least 25 percent, of its total receipts of milk from dairy farmers' 
farms is shipped as fluid milk products, other than as diverted milk, to 
pool distributing plants.
    (2) For any month of August through December, it is one of a group 
of plants that meets the conditions specified in this paragraph.
    (i) The handler's written request for continuation of pool supply 
plant status, which the plant held under the handler's operation in the 
preceding month, is received by the market administrator on or before 
the 16th day of the month.
    (ii) The group of plants, considered as a unit, meets the shipping 
requirements specified in paragraph (b)(1) of this section.
    (iii) To qualify as a pool supply plant under this paragraph in 
December of any year, the plant, considered individually, shall have 
shipped at least 5 percent of its total receipts of milk from dairy 
farmers' farms as fluid milk products, other than as diverted milk, to 
pool distributing plants in one of the months of August through December 
of that year.
    (iv) In the event of the failure of a group of plants to meet fully 
the requirements of paragraph (b)(2)(ii) of this section, termination of 
pool supply plant status shall be limited to the

[[Page 42]]

least number of plants which will result in the remaining supply plants 
meeting the requirements of paragraph (b)(2)(ii) of this section. If 
such termination becomes necessary, the handler shall be permitted to 
designate which plants shall continue to have pool plant status for the 
month.
    (v) For the purposes of this paragraph, any supply plant operated by 
a cooperative association that is also a handler under Sec. 1001.9(d) 
may be considered as one of a group of plants. In that event, the 
group's total receipts of milk from dairy farmers' farms shall be the 
total of such receipts by the association other than at any of its 
plants that is not one of the group, and the group's qualifying 
shipments shall consist of the qualifying shipments from the plants in 
the group plus the quantity of milk moved by the association in its 
capacity as a handler under Sec. 1001.9(d) from farms of its members to 
pool distributing plants.
    (3) For any month of January through July, it is a plant from which 
at least 15 percent of its total receipts of milk from dairy farmers' 
farms is shipped as fluid milk products, other than as diverted milk, to 
pool distributing plants or it is a plant that meets the requirements 
for automatic pool plant status specified in this paragraph. The 
automatic pool plant status of a plant shall be revoked for any month 
for which the market administrator has received the handler's written 
request for revocation on or before the 16th day of that month. In that 
event, the plant shall not have automatic pool plant status in any 
subsequent month of the current January through July period.
    (i) The plant was a pool supply plant under this order in each of 
the preceding months of August through December; or
    (ii) The plant was a pool supply plant under this order in at least 
two of the preceding months of August through December and would have 
been such a plant in all other months in that period had it not been a 
pool plant under the New York-New Jersey Federal order.
    (4) No plant shall be a pool supply plant in any month in which it 
is operated as:
    (i) A pool distributing plant; or
    (ii) A regulated plant under another Federal order if its Class I 
disposition of fluid milk products, except filled milk, in the marketing 
area regulated by that order exceeds its shipments of fluid milk 
products, except filled milk, to pool distributing plants under this 
order.
    (c) Each plant, other than a plant operated as a pool distributing 
plant or a pool supply plant, that is located in the marketing area and 
operated by a cooperative association shall be a pool plant in any month 
in which its route disposition does not exceed 2 percent of its total 
receipts of fluid milk products. Receipts and disposition of filled milk 
shall be excluded in determining whether a plant has met these 
conditions.
    (d) The term ``pool plant'' shall not apply to the following plants:
    (1) An exempt distributing plant under Sec. 1001.8(e);
    (2) The plant of a producer-handler under any Federal order;
    (3) A plant designated as a regular pool plant under the New York-
New Jersey Federal order; or
    (4) Any plant for which the market administrator determines that a 
specified proportion or quantity of the receipts from dairy farmers and 
of milk from other sources handled at a plant is not available for Class 
I use because there is in force an unconditional contract for the plant 
to supply fluid milk products for Class II or Class III use, the plant 
shall not be a pool plant for the month in which the market 
administrator notifies the handler of the determination and for any 
subsequent month in which the contract is in force for any part of the 
month.

[56 FR 5310, Feb. 11, 1991]



Sec. 1001.8  Nonpool plant.

    Nonpool plant means a plant (except a pool plant) which receives 
milk from dairy farmers or is a milk or filled milk manufacturing, 
processing or bottling plant. The following categories of nonpool plants 
are further defined as follows:
    (a) Other order plant means a pool plant under another Federal order 
or any other plant at which all fluid milk products handled become 
subject to the

[[Page 43]]

classification and pricing provisions of another Federal order.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is not a regulated plant under another Federal order, a producer-
handler plant, or an exempt distributing plant, and from which there is 
route disposition in the marketing area during the month.
    (d) Unregulated supply plant means a nonpool plant that is not an 
other order plant, a producer-handler plant, or an exempt distributing 
plant from which fluid milk products are shipped during the month to a 
pool plant.
    (e) Exempt distributing plant means:
    (1) A plant, other than a pool supply plant or a regulated plant 
under another Federal order, that meets all the requirements for status 
as a pool distributing plant, except that its route disposition 
(exclusive of filled milk) in the marketing area in the month does not 
exceed 700 quarts on any day or a daily average of 300 quarts.
    (2) A plant that is operated by a governmental agency and from which 
there is route disposition in the marketing area.

[56 FR 5310, Feb. 11, 1991]



Sec. 1001.9  Handler.

    Handler means:
    (a) Any person who operates a pool plant;
    (b) Any person who operates any other plant, or a pool bulk tank 
unit as defined under another Federal order, from which fluid milk 
products are disposed of, directly or indirectly, in the marketing area;
    (c) Any person who does not operate a plant but who engages in the 
business of receiving fluid milk products for resale and distributes to 
retail or wholesale outlets packaged fluid milk products received from 
any plant described in paragraph (a) or (b) of this section; or
    (d) Any cooperative association with respect to the milk that is 
moved from farms in tank trucks operated by, or under contract to, the 
association to pool plants or as diverted milk to nonpool plants for the 
account of, and at the direction of, the association. The association 
shall be considered as the handler who received the milk from the dairy 
farmers. However, the cooperative association shall not be the handler 
with respect to the milk moved from any farm if the association and the 
operator of the pool plant to which milk from such farm is moved both 
submit a request in writing, on or before the due date for filing the 
monthly reports of receipts and utilization, that the operator of the 
pool plant be considered as the handler who received the milk from the 
dairy farmer, and the pool plant operator's request states that the pool 
plant operator is purchasing the milk from such farm on the basis of the 
farm bulk tank measurement readings and the butterfat tests of samples 
of the milk taken from the farm bulk tank.

[41 FR 8357, Feb. 26, 1976, as amended at 56 FR 5311, Feb. 11, 1991]



Sec. 1001.10  Producer-handler.

    Producer-handler means any person who, during the month, is both a 
dairy farmer and a handler and who meets all of the following 
conditions:
    (a) Provides as the person's own enterprise and at the person's own 
risk the maintenance, care, and management of the dairy herd and other 
resources and facilities that are used to produce milk, to process and 
package such milk at the producer-handler's own plant, and to distribute 
it as route disposition.
    (b) The person's own route disposition constitutes the majority of 
the route disposition from the plant.
    (c) The quantity of route disposition in the marketing area from the 
person's plant is greater than in any other Federal marketing area.
    (d) The producer-handler receives no fluid milk products except from 
such handler's own production and from pool handlers, either by transfer 
or diversion pursuant to Sec. 1001.15. If the producer-handler's 
receipts from own production and the total route disposition from the 
producer-handler's plant each exceed 4,300 pounds per day for the month, 
the producer-handler's receipts from pool plants are not in excess of 2

[[Page 44]]

percent of receipts from own production. For the purposes of this 
paragraph, the producer-handler's receipts of fluid milk products shall 
include receipts from plants of other persons at all retail and 
wholesale outlets that are located in a Federal marketing area and 
operated by the producer-handler, an affiliate, or any person who 
controls or is controlled by the producer-handler.

[56 FR 5311, Feb. 11, 1991]



Sec. 1001.11  Dairy farmer for other markets.

    Dairy farmer for other markets means any dairy farmer described in 
this section. For the purposes of this section, the acts of any person 
who is an affiliate of, or who controls or is controlled by, a handler 
or dealer shall be considered as having been performed by the handler or 
dealer. Receipts from a ``dairy farmer for other markets'' under 
paragraphs (a), (b), and (c) of this section shall be considered as 
receipts from the unregulated plant at which the greatest quantity of 
his milk was received in the most recent month.
    (a) The term includes a dairy farmer with respect to milk that is 
purchased from him during the month by a dealer who operates a plant but 
does not operate a pool plant, if the milk is moved to a pool plant 
directly from the dairy farmer's farm. The term shall not apply to the 
dairy farmer, however, if all the nonpool milk purchased from him during 
the month by the same dealer is a receipt of producer milk under the 
provisions of another Federal order or will be such if the dairy farmer 
is a producer under this order.
    (b) The term includes a dairy farmer with respect to milk that is 
purchased from him by a handler and moved to a pool plant or that is 
purchased from him by a cooperative association in its capacity as a 
handler under Sec. 1001.9(d), if that handler caused milk from the same 
farm to be moved as nonpool milk to any plant during the same month. The 
term shall not apply to the dairy farmer, however, if all the nonpool 
milk is a receipt of producer milk under the provisions of another 
Federal order or will be such if the dairy farmer is a producer under 
this order or if all the nonpool milk is excluded from producer milk 
under Sec. 1001.15.
    (c) The term includes a dairy farmer with respect to milk that is 
received from him by a handler at a pool plant or that is purchased from 
him by a cooperative association in its capacity as a handler under 
Sec. 1001.9(d) during any of the months of January through July, if the 
handler caused nonpool milk from the same farm to be received during any 
of the preceding months of August through December at a plant that is 
not a pool plant under any Federal order in the current month. The term 
shall not apply to the dairy farmer, however, if all the nonpool milk 
was a receipt of producer milk under the provisions of another Federal 
order or represented receipts from own production by a producer-handler 
under any Federal order, or was excluded from producer milk under 
Sec. 1001.15.
    (d) Notwithstanding the provisions of paragraphs (a), (b), and (c) 
of this section, the term shall apply to any dairy farmer with respect 
to milk moved from his farm to a handler's pool plant or purchased from 
him by a cooperative association in its capacity as a handler under 
Sec. 1001.9(d) during any month in which milk from that farm was 
received as base milk under another Federal order.

[41 FR 8357, Feb. 26, 1976, as amended at 43 FR 17460, Apr. 25, 1978]



Sec. 1001.12  Producer.

    Producer means a dairy farmer who produces milk that is moved, other 
than in packaged form, from his farm to a pool plant, or to any other 
plant as diverted milk. However, the term shall not include:
    (a) A producer-handler under any Federal order;
    (b) A dairy farmer with respect to milk caused to be moved from his 
farm to a pool plant under this order by a handler under another Federal 
order if all of the dairy farmer's milk so received is considered as a 
receipt from a producer under the provisions of the other Federal order;
    (c) A dairy farmer for other markets;
    (d) A dairy farmer who is a local or state government that has 
nonproducer status for the month under Sec. 1001.16(c);

[[Page 45]]

    (e) A dairy farmer who is a governmental agency that is operating an 
exempt distributing plant under Sec. 1001.8(e)(2);
    (f) A dairy farmer with respect to salvage product assigned under 
Sec. 1001.44(a)(7)(ii);
    (g) A dairy farmer with respect to milk that is excluded from 
producer milk under Sec. 1001.15; or
    (h) A dairy farmer with respect to milk that a handler causes to be 
moved from the dairy farmer's farm to a regulated plant under another 
Federal order if any portion of such dairy farmer's milk so moved is 
assigned to Class I milk under the provisions of such other order and 
all of the dairy farmer's milk so moved is considered as producer milk 
under the other order.

[41 FR 8357, Feb. 26, 1976, as amended at 56 FR 5311, Feb. 11, 1991]



Sec. 1001.13  Producer milk.

    Producer milk means milk that the handler has received from 
producers. The quantity of milk received by a handler from producers 
shall include any milk of a producer that was not received at any plant 
but which the handler or an agent of the handler has accepted, measured, 
sampled, and transferred from the producer's farm tank into a tank truck 
during the month. Such milk shall be considered as having been received 
at the pool plant at which other milk from the same farm of that 
producer is received by the handler during the month, except that in the 
case of a cooperative association in its capacity as a handler under 
Sec. 1001.9(d), the milk shall be considered as having been received at 
a plant in the zone location of the pool plant, or pool plants within 
the same zone, to which the greatest aggregate quantity of the milk of 
the cooperative association in such capacity was moved during the 
current month or the most recent month.



Sec. 1001.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1001.40(b)(1) from any source other than producers, handlers 
described in Sec. 1001.9(d), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1001.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1001.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1001.40(b)(1)) for which the handler fails 
to establish a disposition.

[56 FR 5311, Feb. 11, 1991]



Sec. 1001.15  Diverted milk.

    Diverted milk means milk, other than that excluded under 
Sec. 1001.12 from being considered as received from a producer, that 
meets the conditions set forth in paragraph (a) or (b) of this section 
and is not excluded from diverted milk under paragraph (c) of this 
section.
    (a) Milk that a handler in its capacity as the operator of a pool 
plant reports as having been moved from a dairy farmer's farm to the 
pool plant, but which the handler caused to be moved from the farm to 
another plant, if the handler specifically reports such movement to the 
other plant as a movement of diverted milk, and the conditions of 
paragraph (a) (1) or (2) of this section have been met. Milk that is 
diverted milk under this paragraph shall be considered to have been 
received at the pool plant from which it was diverted, but for pricing 
purposes the location adjustments for the zone location specified in 
Sec. 1001.53 shall be used.
    (1) During any 2 months subsequent to July of the preceding calendar 
year, or during the current month, on more than half of the days on 
which the handler caused milk to be moved from the dairy farmer's farm 
during the month, all of the milk that the handler caused to be moved 
from that farm was physically received as producer milk at the handler's 
pool plant or at another of the handler's pool plants that is no longer 
operated as a plant.

[[Page 46]]

    (2) During the current month and not more than 5 other months 
subsequent to July of the preceding calendar year, milk from the dairy 
farmer's farm was received at or diverted from the handler's pool plant 
as producer milk, and during the current month all of the milk from that 
farm that the handler reported as diverted milk was moved from the farm 
in a tank truck in which it was intermingled with milk from other farms, 
the milk from a majority of which farms was diverted from the same pool 
plant in accordance with the preceding provisions of this paragraph.
    (b) Milk that a cooperative association in its capacity as a handler 
under Sec. 1001.9(d) caused to be moved from a dairy farmer's farm to a 
nonpool plant if the association specifically reports the movement to 
such plant as a movement of diverted milk, and the conditions of 
paragraph (b) (1) or (2) of this section have been met. Milk that is 
diverted under this paragraph shall be considered to have been received 
by the cooperative association in its capacity as a handler under 
Sec. 1001.9(d), but for pricing purposes the location adjustments for 
the zone location specified in Sec. 1001.53 shall be used.
    (1) During any 2 months subsequent to July of the preceding calendar 
year, or during the current month, on more than half of the days on 
which the cooperative association in its capacity as a handler under 
Sec. 1001.9(d) caused milk to be moved from the farm as producer milk 
during the month, all of the milk that the association caused to be 
moved from the farm was physically received at a pool plant.
    (2) During the current month and not more than 5 other months 
subsequent to July of the preceding calendar year, the cooperative 
association in its capacity as a handler under Sec. 1001.9(d) caused 
milk to be moved from the dairy farmer's farm as producer milk, and 
during the current month all of the milk from that farm that the 
cooperative association in its capacity as a handler under 
Sec. 1001.9(d) reported as diverted milk was moved from the farm in a 
tank truck in which it was intermingled with milk from other farms, the 
milk from a majority of which farms was diverted by the association in 
accordance with the preceding provisions of this paragraph.
    (c) Milk moved, as described in paragraphs (a) and (b) of this 
section, from dairy farmers' farms to nonpool plants in excess of 35 
percent in the months of September through November and 45 percent in 
other months, of the total quantity of producer milk received (including 
diversions) by the handler during the month shall not be diverted milk. 
Such milk, and any other milk reported as diverted milk that fails to 
meet the requirements set forth in this section, shall be considered as 
having been moved directly from the dairy farmers' farms to the plant of 
physical receipt, and if that plant is a nonpool plant the milk shall be 
excluded from producer milk. If the handler fails to designate the dairy 
farmers whose milk is to be so excluded, the entire quantity of milk 
that the handler caused to be moved from dairy farmers' farms directly 
to nonpool plants during the month shall be excluded from producer milk.

[41 FR 8357, Feb. 26, 1976, as amended at 43 FR 17460, Apr. 25, 1978; 46 
FR 58642, Dec. 3, 1981; 56 FR 5311, Feb. 11, 1991]



Sec. 1001.16  Exempt milk.

    Exempt milk means:
    (a) Fluid milk products received at a pool plant in bulk from a 
nonpool plant to be processed and packaged, for which an equivalent 
quantity of packaged fluid milk products is returned to the operator of 
the nonpool plant during the same month, if the receipt of bulk fluid 
milk products and return of packaged fluid milk products occur during an 
interval in which the facilities of the nonpool plant at which the fluid 
milk products are usually processed and packaged are temporarily 
unusable because of fire, flood, storm, or similar extraordinary 
circumstances completely beyond the nonpool plant operator's control;
    (b) Packaged fluid milk products received at a pool plant from a 
nonpool plant in return for an equivalent quantity of bulk fluid milk 
products moved from a pool plant for processing and packaging during the 
same month, if the movement of bulk fluid milk products and receipt of 
packaged fluid milk products occur during an interval in

[[Page 47]]

which the facilities of the pool plant at which the fluid milk products 
are usually processed and packaged are temporarily unusable because of 
fire, flood, storm, or similar extraordinary circumstances completely 
beyond the pool plant operator's control;
    (c) Milk received at a pool plant in bulk from the dairy farmer who 
produced it, to the extent of the quantity of any packaged fluid milk 
products returned to the dairy farmer, if:
    (1) The dairy farmer is a State or local government that is not 
engaged in the route disposition of any of the returned products; and
    (2) The dairy farmer has, by written notice to the market 
administrator and the receiving handler, elected nonproducer status for 
a period of not less than 12 months beginning with the month in which 
the election was made and continuing for each subsequent month until 
canceled in writing, and the election is in effect for the current 
month.

[41 FR 8357, Feb. 26, 1976, as amended at 56 FR 5311, Feb. 11, 1991]



Sec. 1001.17  Fluid milk product.

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

[58 FR 27775, May 11, 1993]



Sec. 1001.18  Fluid cream product.

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

[58 FR 27775, May 11, 1993]



Sec. 1001.19  Filled milk.

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



Sec. 1001.20  Cooperative association.

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



Sec. 1001.21  [Reserved]



Sec. 1001.22  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to

[[Page 48]]

commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1001.15, 1001.41 and 1001.52.

[58 FR 27775, May 11, 1993]

                                 Reports



Sec. 1001.30  Reports of receipts and utilization.

    On or before the 8th day after the end of each month, or not later 
than the 10th day if the report is delivered in person to the office of 
the market administrator, each handler shall report for such month to 
the market administrator, in the detail and on the forms prescribed by 
the market administrator, as follows:
    (a) Each handler, with respect to each of the handler's pool plants, 
shall report the quantities of skim milk and butterfat contained in or 
represented by:
    (1) Receipts of producer milk (including the specific quantities of 
diverted milk and receipts from the handler's own production);
    (2) Receipts of milk from cooperative associations in their capacity 
as handlers under Sec. 1001.9(d);
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk;
    (5) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1001.40(b)(1);
    (6) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (c) Each handler described in Sec. 1001.9(d) shall report:
    (1) The quantities of all skim milk and butterfat contained in 
receipts of milk from producers; and
    (2) The utilization or disposition of all such receipts.
    (d) Each handler shall report bulk milk received at a handler's pool 
plant from a cooperative association in its capacity as the operator of 
a pool plant or as a handler under Sec. 1001.9(d), if such milk was 
rejected by the handler subsequent to such handler's receipt of the milk 
on the basis that it was not of marketable quality at the time the milk 
was delivered to the handler's plant, and such milk was removed from the 
plant in bulk form by the cooperative association and was replaced with 
other milk from the association. Except for purposes of this paragraph 
and Sec. 1001.31(b), such milk that was so removed from the handler's 
plant shall be treated for all other purposes of the order as though it 
had not been delivered to and received at the handler's plant.
    (e) Each handler not specified in paragraphs (a) through (c) of this 
section shall report with respect to the handler's receipts and 
utilization of milk, filled milk, and milk products in such manner as 
the market administrator may prescribe.

[56 FR 5312, Feb. 11, 1991]



Sec. 1001.31  Other reports of receipts and utilization.

    (a) Each handler who dumps fluid milk products at a pool plant 
shall:
    (1) Give the market administrator, at the request and in accordance 
with instructions of the market administrator, advance notice of the 
handler's intention to dump such products and the quantities involved; 
and
    (2) Submit to the market administrator at the time and in the manner 
prescribed by the market administrator such detailed reports of dumpage 
as the market administrator requests.
    (b) Each handler who intends to have a receipt of unmarketable milk 
replaced with other milk in the manner described under Sec. 1001.30(d) 
shall give

[[Page 49]]

the market administrator, at the request and in accordance with 
instructions of the market administrator, advance notice of the 
handler's intention to have such milk replaced.
    (c) In addition to the reports required pursuant to paragraphs (a) 
and (b) of this section and Secs. 1001.30 and 1001.32, each handler 
shall report such other information as the market administrator deems 
necessary to verify or establish such handler's obligation under the 
order.

[56 FR 5312, Feb. 11, 1991]



Sec. 1001.32  Reports regarding individual producers and dairy farmers.

    (a) Each handler shall report on or before the 15th day after the 
end of each month the information required by the market administrator 
with respect to producer additions, producer withdrawals, changes in 
farm locations, and changes in the name of farm operators.
    (b) Each handler that is not a cooperative association, upon request 
from any such association, shall furnish it with information with 
respect to each of its producer members from whose farm the handler 
begins, resumes, or stops receiving milk at his pool plant. Such 
information shall include the applicable date, the producer-member's 
post office address and farm location, and, if known, the plant at which 
his milk was previously received, or the reason for the handler's 
failure to continue receiving milk from his farm. In lieu of providing 
the information directly to the association, the handler may authorize 
the market administrator to furnish the association with such 
information, derived from the handler's reports and records.
    (c) Each handler shall submit to the market administrator, within 10 
days after his request made not earlier than 20 days after the end of 
the month, his producer payroll for the month, which shall show for each 
producer:
    (1) The daily and total pounds of milk delivered and its average 
butterfat test; and
    (2) The net amount of the handler's payments to the producer, with 
the prices, deductions, and charges involved.



Sec. 1001.33  Notices to producers.

    Each handler shall furnish each producer from whom he receives milk 
the following information regarding the weight and butterfat test of the 
milk:
    (a) Whenever he receives milk from the producer on the basis of farm 
bulk tank measurements, the handler shall give the producer at the time 
the milk is picked up at the farm a receipt indicating the measurement 
and the equivalent pounds of milk received;
    (b) Whenever he receives milk from the producer on a basis other 
than farm bulk tank measurements, the handler shall give the producer 
within 3 days after receipt of the milk a written notice of the quantity 
so received;
    (c) If butterfat tests of the producer's milk are determined from 
fresh milk samples, the handler shall give the producer within 10 days 
after the end of each month a written notice of the producer's average 
butterfat test for the month. Such notice shall not be required if the 
handler has given the producer a written notice of the butterfat test 
for each of the sampling periods within the month; and
    (d) If butterfat tests of the producer's milk are determined from 
composite milk samples, the handler shall give the producer within 7 
days after the end of each sampling period a written notice of the 
producer's average butterfat test for the period.

                         Classification of Milk



Sec. 1001.40  Classes of utilization.

    Except as provided in Sec. 1001.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1001.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged inventory of fluid milk products at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:

[[Page 50]]

    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1001.17 and the

[[Page 51]]

fluid cream product definition pursuant to Sec. 1001.18; and
    (7) In shrinkage assigned pursuant to Sec. 1001.41(a) to the 
receipts specified in Sec. 1001.41(a)(2) and in shrinkage specified in 
Sec. 1001.41 (b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.

[56 FR 5313, Feb. 11, 1991, as amended at 57 FR 174, Jan. 3, 1992; 58 FR 
27776, May 11, 1993]



Sec. 1001.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1001.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b)(1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraphs; 
and
    (2) In other source milk not specified in paragraphs (b)(1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant and milk received from a handler described in Sec. 1001.9(d));
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1001.9(d) and in milk 
diverted to such plant from another pool plant, except that if the 
operator of the plant to which the milk is delivered purchases such milk 
on the basis of weights determined from its measurement at the farm and 
butterfat tests determined from farm bulk tank samples, the applicable 
percentage under this paragraph shall be 2 percent:
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in receipts from dairy farmers for other markets and in bulk fluid milk 
products received from unregulated supply plants, excluding the quantity 
for which Class II or Class III classification is requested by the 
handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b) (1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1001.9(d), but not in excess of 0.5 percent 
of the skim milk and butterfat, respectively, in such milk. If the 
operator of the plant to which the milk is delivered purchases such milk 
on the basis of weights determined from its measurement at the farm and 
butterfat tests determined from farm bulk tank samples, the applicable 
percentage under this paragraph for the cooperative association shall be 
zero.

[56 FR 5313, Feb. 11, 1991]



Sec. 1001.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream

[[Page 52]]

product from a pool plant to another pool plant shall be classified as 
Class I milk unless the operators of both plants request the same 
classification in another class. In either case, the classification of 
such transfers or diversions shall be subject to the following 
conditions:
    (1) The skim milk and butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant or divertee-plant after 
the computations pursuant to Sec. 1001.44(a)(12) and the corresponding 
step of Sec. 1001.44(b). The amount of skim milk or butterfat classified 
in each class shall include the assigned utilization of skim milk or 
butterfat in transfers of concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1001.44(a)(7) 
or the corresponding step of Sec. 1001.44(b), the skim milk or butterfat 
so transferred or diverted shall be classified so as to allocate the 
least possible Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to Sec. 1001.44(a) 
(11) or (12) or the corresponding steps of Sec. 1001.44(b), the skim 
milk or butterfat so transferred or diverted, up to the total of the 
skim milk and butterfat, respectively, in such receipts of other source 
milk, shall not be classified as Class I milk to a greater extent than 
would be the case if the other source milk had been received at the 
transferee-plant or divertee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b) (1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1001.40.
    (c) Transfers and diversions to producer-handlers and to exempt 
distributing plants. Skim milk or butterfat in the following forms that 
is transferred or diverted from a pool plant to a producer-handler under 
this or any other Federal order or to an exempt distributing plant shall 
be classified:
    (1) As Class I milk, if so moved in the form of a fluid milk 
product; and

[[Page 53]]

    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant, a producer-
handler plant, or an exempt distributing plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (A) and (B) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (A) The transferor-handler or divertor-handler claims such 
classification in its report of receipts and utilization filed pursuant 
to Sec. 1001.30 for the month within which such transaction occurred; 
and
    (B) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (A) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (B) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (C) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (D) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (A) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (B) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (A) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of milk for 
such nonpool plant; and
    (B) To such nonpool plant's receipts of milk from plants not fully 
regulated under any Federal milk order which the market administrator 
determines constitute regular sources of milk for such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining

[[Page 54]]

Class I utilization, then to Class II utilization, and then to Class III 
utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a plant not fully regulated under 
any Federal milk order shall be classified on the basis of the second 
plant's utilization using the same assignment priorities at the second 
plant that are set forth in paragraph (d)(2) of this section.

[56 FR 5314, Feb. 11, 1991, as amended at 58 FR 27776, May 11, 1993]



Sec. 1001.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1001.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1001.30 and shall compute separately for each pool plant and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1001.9(d) the pounds of skim milk and 
butterfat, respectively, in each class in accordance with Secs. 1001.40, 
1001.41, and 1001.42;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids;
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1001.9(d) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative; and
    (d) If receipts from more than one pool plant are to be assigned, 
the receipts shall be assigned in sequence according to the zone 
locations of the plants, beginning with the plant in the lowest-numbered 
zone for assignments to Class I milk and beginning with the plant in the 
highest numbered zone for assignments to Class III milk; and
    (e) Receipts of other source milk from more than one plant shall be 
assigned in sequence according to the zone locations of the plants, 
beginning with the plant in the lowest-numbered zone for assignments to 
Class I milk and beginning with the plant in the highest-numbered zone 
for assignments to Class III milk.
    (f) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant.
    (g) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1001.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1001.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.

[56 FR 5315, Feb. 11, 1991, as amended at 57 FR 174, Jan. 3, 1992; 58 FR 
27776, May 11, 1993]



Sec. 1001.44  Classification of producer milk.

    For each month the market administrator shall determine the 
classification of producer milk of each handler described in 
Sec. 1001.9(a) for each of the handler's pool plants separately and of 
each handler described in Sec. 1001.9(d) by allocating the handler's 
receipts of skim milk and butterfat to the handler's utilization 
pursuant to paragraphs (a) through (c) of this section.

[[Page 55]]

    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1001.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
disposed of to such plant by handlers fully regulated under any Federal 
milk order is classified and priced as Class I milk and is not used as 
an offset for any other payment obligation under any order; and
    (ii) Receipts of exempt milk;
    (iii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1001.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1001.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph (a)(5) or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1001.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1001.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II;
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1001.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts from dairy farmers of fluid milk products which are 
rejected and segregated in the handler's normal operation for receiving 
milk, and which receipts are accepted and disposed of by the handler as 
salvage product rather than as milk;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order and from an exempt 
distributing plant;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section;
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant;

[[Page 56]]

    (vii) Receipts of fluid milk products (other than exempt milk) from 
a local or State government which has elected nonproducer status for the 
month pursuant to Sec. 1001.16(c); and
    (viii) Receipts of fluid milk products from dairy farmers for other 
markets;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii)(A) through (C) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount:
    (A) Multiply by 1.25 the pounds of skim milk remaining in Class I at 
this allocation step (exclusive of transfers between pool plants of the 
same handler) at all pool plants of the handler;
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
fluid milk products from pool plants of other handlers, and bulk fluid 
milk products from other order plants that were not subtracted pursuant 
to paragraph (a)(7)(vi) of this section; and
    (C) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants remaining at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1001.40(b)(1), in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(iii), (a)(5) and (7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11)(i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, prorata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (7)(v) and (8)(i) and (ii) of this section and that were not 
offset by transfers or diversions of fluid milk

[[Page 57]]

products to the same unregulated supply plant from which fluid milk 
products to be allocated at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to paragraph (a)(11) of this section 
exceed the pounds of skim milk remaining in such classes, the pounds of 
skim milk in Class II and Class III combined shall be increased 
(increasing as necessary Class III and then Class II to the extent of 
available utilization in such classes at the nearest other pool plant of 
the handler, and then at each successively more distant pool plant of 
the handler) by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class I shall be decreased by 
a like amount. In such case, the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall 
be adjusted in the reverse direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to paragraph (a)(11) of this section exceed the pounds of skim 
milk remaining in such class, the pounds of skim milk in Class I shall 
be increased by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class II and Class III 
combined shall be decreased by a like amount (decreasing as necessary 
Class III and then Class II). In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount, 
beginning with the nearest plant at which Class I utilization is 
available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from another order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(vi) and (8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12)(ii), (iii) and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II with respect to whichever of 
the following quantities represents the lower proportion of Class I 
milk:
    (A) The estimated utilization of skim milk of all handlers in each 
class, as announced for the month pursuant to Sec. 1001.45(a); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class II 
and Class III combined that exceeds the pounds of skim milk remaining in 
such classes, the pounds of skim milk in Class II and Class III combined 
shall be increased (increasing as necessary Class III and then Class II 
to the extent of available utilization in such classes at the nearest 
other pool plant of the handler, and then at each successively more 
distant pool plant of the handler) by an amount equal to such excess 
quantity to be subtracted, and the pounds of skim milk in Class I shall 
be decreased by a like amount. In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount; 
and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the

[[Page 58]]

computations pursuant to paragraph (a)(12)(i) or (ii) of this section 
result in a quantity of skim milk to be subtracted from Class I that 
exceeds the pounds of skim milk remaining in such class, the pounds of 
skim milk in Class I shall be increased by an amount equal to such 
excess quantity to be subtracted, and the pounds of skim milk in Class 
II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from other pool plants according to the 
classification of such products pursuant to Sec. 1001.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk and in receipts from 
handlers under Sec. 1001.9(d), subtract such excess from the pounds of 
skim milk remaining in each class in series beginning with Class III. 
Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.

[56 FR 5315, Feb. 11, 1991, as amended at 58 FR 27776, May 11, 1993]



Sec. 1001.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from a 
regulated plant or handler under another Federal order pursuant to 
Sec. 1001.44(a)(12) and the corresponding step of Sec. 1001.44(b), 
estimate and publicly announce the utilization (to the nearest whole 
percentage) in each class during the month of skim milk and butterfat, 
respectively, in producer milk of all handlers. Such estimate shall be 
based upon the most current available data and shall be final for such 
purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1001.43(g) and Sec. 1001.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.

[56 FR 5317, Feb. 11, 1991, as amended at 58 FR 27777, May 11, 1993]



Secs. 1001.46-1001.48  [Reserved]

                              Class Prices



Sec. 1001.50  Class prices.

    Subject to the provisions of Sec. 1001.52, the class prices per 
hundredweight of milk for the month shall be as follows:
    (a) Class I price. The Class I price in Zone 21 shall be the basic 
formula price for the second preceding month plus $2.52. The 
differential value for Zone 1 shall be $3.24.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. Subject to the adjustment set forth below for 
the applicable month, the Class III price shall

[[Page 59]]

be the basic formula price for the month.

------------------------------------------------------------------------
                             Month                                Amount
------------------------------------------------------------------------
January........................................................   +$0.03
February.......................................................     +.02
March..........................................................     -.05
April..........................................................     -.09
May............................................................     -.12
June...........................................................     -.11
July...........................................................     +.03
August.........................................................     +.10
September......................................................     +.06
October........................................................     +.06
November.......................................................     +.06
December.......................................................     +.06
------------------------------------------------------------------------

    (d) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential times 35 and rounded to 
the nearest cent, and subject to the adjustments set forth in paragraph 
(c) of this section for the applicable month.

[56 FR 5317, Feb. 11, 1991, as amended at 58 FR 63285, Dec. 1, 1993; 60 
FR 6607, Feb. 2, 1995]



Sec. 1001.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1001.76 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is

[[Page 60]]

of the total of the data represented in paragraphs (d)(1) and (d)(2) of 
this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent reporting period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent reporting period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.

[60 FR 18953, Apr. 14, 1995]



Sec. 1001.52  Plant location adjustments.

    The Class I and blended prices computed under Secs. 1001.50 and 
1001.61 shall be subject to plant location adjustments based upon the 
zone locations of plants. The zone location of any plant and the 
location adjustments applicable to each zone location shall be 
determined as specified in this section.
    (a) The following zones are defined for the purpose of determining 
location adjustments:
    (1) Zone 1 shall include the State of Rhode Island and the 
Massachusetts counties of Barnstable, Bristol, Dukes, Norfolk, Plymouth 
and Suffolk, and between Boston and Massachusetts highway route number 
128.
    (2) Zone 2 shall include the Massachusetts counties of Middlesex 
(only that portion south of Massachusetts highway route number 2 not 
included in Zone 1) and Worcester (only the townships of Berlin, 
Blackstone, Bolton, Douglas, Hopedale, Mendon, Milford, Millville, 
Northborough, Northbridge, Southborough, Sutton, Upton, Uxbridge, 
Westborough and that portion of Harvard township south of Massachusetts 
highway route number 2).
    (3) Zone 3 shall include: (i) The Connecticut counties of Middlesex 
(except the townships of Cromwell, Durham, Haddam, Middlefield, 
Middletown, and Portland), New London, Tolland (except the townships of 
Ellington and Somers), and Windham.
    (ii) The Massachusetts county of Worcester (only the townships of 
Auburn, Boylston, Charlton, Clinton, Dudley, Grafton, Holden, Lancaster, 
Leicester, Millbury, Oxford, Paxton, Shrewsbury, Southbridge, Sterling, 
Webster, West Boylston, and Worcester City).
    (4) Zone 5 shall include: (i) The Connecticut counties of Fairfield, 
Hartford, Litchfield, Middlesex (only the townships of Cromwell, Durham, 
Haddam, Middlefield, Middletown and Portland), New Haven, and Tolland 
(only the townships of Ellington and Somers).
    (ii) The Massachusetts counties of Hampden (only the townships of 
Brimfield, Holland, Monson, Palmer and Wales), Hampshire (only the 
township of Ware) and Worcester (only the townships of Brookfield, East 
Brookfield, Hardwick, New Braintree, North Brookfield, Oakham, Spencer, 
Sturbridge, Warren and West Brookfield).
    (5) Zone 6 shall include the Massachusetts counties of Hampden 
(except the townships of Brimfield, Holland, Monson, Palmer and Wales), 
and Hampshire (except the township of Ware).
    (b)-(c)  [Reserved]
    (d) The zone location of each plant in the State of Massachusetts 
(except Berkshire County) that is outside the areas specified in 
paragraph (a) of this section shall be based upon its highway mileage 
distance to Boston, Massachusetts. The distance for each plant shall be 
the mileage between Boston, Massachusetts, and the named point nearest 
to the plant, measured to the greatest extent possible over roads 
designated as principal roads, on the road maps specified in paragraph 
(e) of this section.
    (e) The zone location of each plant that is outside the areas 
specified in

[[Page 61]]

paragraphs (a) through (d) of this section shall be based upon its 
highway mileage distance to Boston, Mass., as determined by use of 
Mileage Guide No. 11, and supplements to and revisions thereof, issued 
by Household Goods Carriers' Bureau, Agent, Arlington, Va. The mileages 
used shall be those shown between designated key points in the mileage 
charts, and between named points on the appropriate State road maps, as 
published in the mileage guide. In any instance in which the map does 
not clearly show the mileage between points on a road, the mileage used 
shall be the mileage as determined by the highway authority for the 
State in which the road is located. The distance for each plant shall be 
the mileage between Boston and the named point nearest to the plant, as 
shown in the mileage charts. If that named point is not listed in the 
mileage charts, the distance for the plant shall be the lowest mileage 
distance between Boston and that named point, computed as follows:
    (1) Determine from the charts the mileage between Boston and each of 
the three key points nearest to the named point which are nearer to 
Boston than the named point; and
    (2) For each of these key points, add to the result in paragraph 
(e)(1) of this section the mileage between the key point and the named 
point, measured to the greatest extent possible over roads designated as 
principal roads.
    (f) Notwithstanding the provisions of paragraph (e) of this section, 
for any named point located in Maine, New Hampshire, Vermont, New York, 
or Berkshire County, Mass., determine the highway mileage distance 
between Boston and the named point by use of the appropriate State maps 
contained in Mileage Guide No. 7, issued by Household Goods Carriers' 
Bureau, Agent, Arlington, Va. Such distance shall be the lowest highway 
mileage between Boston and the named point on the map, over roads 
designated thereon as paved, all-weather roads. In the event that the 
named point is not located on a through, paved, all-weather road, such 
other roads shall be used to reach a through, paved, all-weather road as 
will result in the lowest highway mileage to Boston, except that such 
other roads shall not be used for a distance of more than 15 miles if it 
is otherwise possible to connect with a through, paved, all-weather 
road. In any instance in which the map does not clearly show the mileage 
between points on a road, the mileage used shall be the mileage as 
determined by the highway authority for the State in which the road is 
located. The mileage so determined, or the mileage determined under 
paragraph (e) of this section, whichever is less, shall be considered to 
be the lowest highway mileage distance between Boston and the named 
point.
    (g) The location adjustments for each plant shall be the amounts 
shown in the following table for the zone in which the plant is located:

          Location Adjustments for Determination of Zone Price
------------------------------------------------------------------------
                                                            Class I and
                                                  Plant    blended price
          Distance to Boston (miles)            location    adjustments
                                                  zone      (cents per
                                                          hundredweight)
------------------------------------------------------------------------
1 to 10.......................................        1           +72.0
11 to 20......................................        2           +69.5
21 to 30......................................        3           +67.0
31 to 40......................................        4           +64.5
41 to 50......................................        5           +62.0
51 to 60......................................        6           +59.5
61 to 70......................................        7           +57.0
71 to 80......................................        8           +54.5
81 to 90......................................        9           +52.0
91 to 100.....................................       10           +49.5
101 to 110....................................       11           +47.0
111 to 120....................................       12           +44.5
121 to 130....................................       13           +42.0
131 to 140....................................       14           +39.5
141 to 150....................................       15           +15.0
151 to 160....................................       16           +12.5
161 to 170....................................       17           +10.0
171 to 180....................................       18            +7.5
181 to 190....................................       19            +5.0
191 to 200....................................       20            +2.5
201 to 210....................................       21            +0.0
211 to 220....................................       22            -2.5
221 to 230....................................       23            -5.0
231 to 240....................................       24            -7.5
241 to 250....................................       25           -10.0
251 and over..................................   \2\ 26           (\1\)
------------------------------------------------------------------------
\1\ Class I and blended price location adjustments applicable to plants
  located in subsequent zones shall be obtained by extending the table
  at the rate of 2.5 cents for each additional 10 miles except that in
  no event shall the Class I or blended price at any zone be less than
  the Class II price for the month.
\2\ Includes 26 and over.


[43 FR 49972, Oct. 26, 1978, as amended at 46 FR 58642, Dec. 3, 1981; 56 
FR 5318, Feb. 11, 1991]

[[Page 62]]



Sec. 1001.53  Determination of applicable zone locations for pricing purposes.

    In computing the value of fluid milk products at claas prices under 
Secs. 1001.60 and 1001.61, the handlers' producer-settlement fund debits 
and credits under Sec. 1001.71, the minimum amounts payable to producers 
under Sec. 1001.73, and the minimum amounts payable to cooperative 
associations under Sec. 1001.74, the location adjustments specified in 
Sec. 1001.52 for the zone location of the plant for which the 
computation is being made shall be used except that for the following 
items the adjustments for the zone locations specified shall be used:
    (a) For producer milk diverted by any handler, including a 
cooperative association in its capacity as a handler under 
Sec. 1001.9(d), the zone location of the plant to which the milk was 
diverted;
    (b) For producer milk of a cooperative association in its capacity 
as a handler under Sec. 1001.9(d) moved to a pool plant, the zone 
location of the plant to which the milk was moved;
    (c) For milk of a cooperative association in its capacity as a 
handler under Sec. 1001.9(d) in shrinkage, overage, extraordinary loss, 
and ending inventory, the zone location of the pool plant, or pool 
plants within the same zone, to which the greatest aggregate quantity of 
such milk of the cooperative association was moved during the current 
month or the most recent month;
    (d) For beginning inventory of a cooperative association in its 
capacity as a handler under Sec. 1001.9(d), the zone location at which 
the milk was priced as ending inventory during the previous month;
    (e) [Reserved]
    (f) For receipts from unregulated supply plants assigned to Class I 
milk, the zone location of the plant from which the product was 
received;
    (g) For any excess of beginning inventory assigned to Class I milk 
under Sec. 1001.44(a)(2)(iii), (a)(5), (a)(7)(i), or (a)(9) over the 
quantities of producer milk and of milk from cooperative associations in 
their capacity as handlers under Sec. 1001.9(d) assigned to Class II and 
Class III milk in the preceding month, the zone location of the pool 
plants from which an equivalent quantity of receipts of fluid milk 
products were assigned to Class II or Class III milk in the preceding 
month in sequence beginning with the plant in the lowest-numbered zone; 
and
    (h) For purposes of computing the value of fluid milk products at 
class prices, any fluid milk products moved in bulk from a pool plant to 
another pool plant at which a higher Class I price applies and which is 
classified as Class I milk shall be priced at the Class I price 
applicable at the location of the plant to which the milk was moved 
subject to a location adjustment credit for the transferee-plant 
determined by the market administrator as follows:
    (1) After the allocation step of Sec. 1001.44(a)(12) for the 
transferee-plant, multiply the remaining pounds of Class I skim milk and 
Class I butterfat, plus the pounds of skim milk and butterfat in 
receipts of concentrated fluid milk products from other pool plants that 
are assigned to Class I use, by 110 percent and 150 percent, 
respectively;
    (2) Subtract the respective pounds of skim milk and butterfat in 
bulk fluid milk products physically received at the plant from the 
following sources:
    (i) Producers;
    (ii) Cooperative associations in their capacity as handlers under 
Sec. 1001.9(d);
    (iii) Receipts of diverted milk from pool plants; and
    (iv) Receipts (other than diverted milk) from pool plants at which 
the same or a higher Class I price applies;
    (3) Assign any pounds remaining (which are not in excess of Class I 
transfers) to skim milk and butterfat in bulk receipts of fluid milk 
products (except diverted milk) from other pool plants at which a lower 
Class I price applies in sequence according to the zone location of the 
plants, beginning with the plant in the lowest numbered zone; and
    (4) Multiply the hundredweight computed for each transferor-plant in 
paragraph (h)(3) of this section by the difference in the Class I prices 
applicable at the transferee-plant and transferor-plant and total such 
amounts.

[41 FR 8357, Feb. 26, 1976, as amended at 43 FR 49972, Oct. 26, 1978; 46 
FR 58643, Dec. 3, 1981; 56 FR 5318, Feb. 11, 1991; 58 FR 27777, May 11, 
1993]

[[Page 63]]



Sec. 1001.54  Announcement of class prices.

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

[60 FR 6607, Feb. 2, 1995]



Sec. 1001.55  Equivalent price.

    If, for any reason, a price specified in this part for use in 
computing class prices or for other purposes is not reported or 
published in the manner described in this part, the market administrator 
shall use one determined by the Secretary to be equivalent to the price 
that is specified.

                              Blended Price



Sec. 1001.60  Handler's value of milk for computing basic blended price.

    For the purpose of computing the basic blended price, the market 
administrator shall determine for each month the value of milk of each 
handler with respect to each of the handler's pool plants, and of each 
handler described in Sec. 1001.9(d) with respect to milk that was not 
received at a pool plant, as directed in this section. The prices used 
shall be those for the applicable zone locations as determined under 
Sec. 1001.53.
    (a) Multiply the pounds of producer milk and milk received from a 
handler described in Sec. 1001.9(d) that were classified in each class 
as determined pursuant to Sec. 1001.44 by the applicable class prices 
and add the resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1001.44(a)(14) and the 
corresponding step of Sec. 1001.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1001.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1001.44(a)(9) and the corresponding step of Sec. 1001.44(b).
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1001.43(g) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1001.44(a)(7) (i) through (iv), (vii), and (viii) and the 
corresponding step of Sec. 1001.44(b), excluding receipts of bulk fluid 
cream products from an other order plant and bulk concentrated fluid 
milk products from pool plants, other order plants and unregulated 
supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1001.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1001.44(b);
    (f) Add the amount obtained from multiplying the Class I price 
applicable at the location of the nearest unregulated supply plants from 
which an equivalent volume was received by the pounds of skim milk and 
butterfat in receipts of concentrated fluid milk products assigned to 
Class I pursuant to Sec. 1001.43(g) and Sec. 1001.44(a)(7)(i) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1001.44(a)(11) and the corresponding steps of Sec. 1001.44(b), 
excluding such skim milk and butterfat in receipts of bulk fluid milk 
products from an unregulated supply plant to the extent that an 
equivalent amount of skim milk or butterfat disposed of to such plant by 
handlers fully regulated under any Federal milk order is classified and 
priced as Class I milk and is not used as an offset for any other 
payment obligation under any order;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the

[[Page 64]]

hundredweight of skim milk and butterfat contained in receipts of 
nonfluid milk products that are allocated to Class I use pursuant to 
Sec. 1001.43(g);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1001.61(e); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.

[56 FR 5319, Feb. 11, 1991, as amended at 58 FR 27777, May 11, 1993]



Sec. 1001.61  Partially regulated distributing plant operator's value of milk for computing basic blended price.

    For the purpose of computing the basic blended price, the market 
administrator shall determine for each month the value of milk 
distributed as route disposition in the marketing area by the operator 
of a partially regulated distributing plant, as follows:
    (a) Subtract from the quantity of route disposition, except 
reconstituted milk products, distributed in the marketing area by the 
partially regulated distributing plant operator the quantity of fluid 
milk products (except reconstituted milk products and those described in 
paragraph (b) of this section) received at the plant during the month 
that is classified and priced as Class I milk or the equivalent thereof 
under any marketwide pool Federal order and that is not used to offset 
route disposition in any other marketing area, and multiply the result 
by the applicable Class I price;
    (b) Multiply by the difference between the applicable Class I price 
and the Class III price for the month the quantity of filled milk 
distributed as route disposition in the marketing area from the 
partially regulated distributing plant which is not proved to have been 
made from other fresh fluid milk products; and
    (c) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant. Add the amount obtained from multiplying the pounds 
of labeled reconstituted milk included previously in this paragraph by 
the difference between the Class I price applicable at the location of 
the partially regulated distributing plant less $1.00 (but not to be 
less than the Class III price) and the Class III price. For any 
reconstituted milk that is not so labeled, the Class I price shall not 
be reduced by $1.00. Alternatively, for such disposition, payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
    (d) Add the values pursuant to paragraphs (a) through (c) of this 
section.
    (e) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1001.43(g). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the

[[Page 65]]

nonfluid milk ingredients at the difference between the Class I price 
applicable under the other order at the location of the plant where the 
nonfluid milk ingredients were processed (but not to be less than the 
Class III price) and the Class III price. This payment option shall 
apply only if a majority of the total milk received at the plant that 
processed the nonfluid milk ingredients is regulated under one or more 
Federal orders and payment may only be made to the producer-settlement 
fund of the order pricing a plurality of the milk used to produce the 
nonfluid milk ingredients. This payment option shall not apply if the 
source of the nonfluid ingredients used in reconstituted fluid milk 
products cannot be determined by the market administrator.

[56 FR 5319, Feb. 11, 1991, as amended at 58 FR 27777, May 11, 1993]



Sec. 1001.62  Computation of basic blended price.

    The market administrator shall compute the basic blended price per 
hundredweight applicable to milk received at plants located in zone 21 
and containing 3.5 percent butterfat as follows:
    (a) Combine into one total the values computed pursuant to 
Secs. 1001.60 and 1001.61 for all handlers from whom the market 
administrator has received at the market administrator's office prior to 
the 11th day after the end of the month the reports for the month 
prescribed in Sec. 1001.30 and the payments for the preceding month 
required under Sec. 1001.72(a);
    (b) Deduct the amount of the plus adjustments, and add the amount of 
the minus adjustments, that are applicable under Secs. 1001.52 and 
1001.53;
    (c)-(d) [Reserved]
    (e) Add an amount equal to not less than one-half of the unobligated 
balance of the producer-settlement fund at the close of business on the 
10th day after the end of the month;
    (f) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk;
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1001.60(f); and
    (3) The total hundredweight for which a value is computed pursuant 
to Sec. 1001.61(a); and
    (g) Subtract not less than 4 cents nor more than 5 cents for the 
purpose of retaining a cash balance in the producer-settlement fund. The 
result shall be the basic blended price for the month.

[56 FR 5319, Feb. 11, 1991, as amended at 59 FR 16512, Apr. 7, 1994]



Sec. 1001.63  Announcement of blended prices and butterfat differential.

    The market administrator shall announce publicly on or before:
    (a) The fifth day after the end of each month the butterfat 
differential for such month; and
    (b) The 13th day after the end of each month the zone blended prices 
resulting from the adjustment of the basic blended price for such month, 
as computed under Sec. 1001.62, by the location adjustments set forth in 
Sec. 1001.52.

[56 FR 5320, Feb. 11, 1991]

                            Payments for Milk



Sec. 1001.70  Producer-settlement fund.

    (a) The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund.'' He shall deposit into 
the fund all amounts received from handlers under Secs. 1001.72, 
1001.77, and 1001.78 and the amount subtracted under Sec. 1001.62(c). He 
shall pay from the fund all amounts due handlers under Secs. 1001.72, 
1001.77, and 1001.78 and the amount added under Sec. 1001.62(d), subject 
to his right to offset any amounts due from the handler under these 
sections and under Secs. 1001.85 and 1001.86.
    (b) All amounts subtracted under Sec. 1001.62(c), including interest 
earned thereon, shall remain in the producer-settlement fund as an 
obligated balance until it is withdrawn for the purpose of effectuating 
Sec. 1001.62(d).
    (c) The market administrator shall place all monies subtracted under 
Sec. 1001.62(c) in an interest-bearing bank account or accounts in a 
bank or banks duly approved as a Federal depository for such monies, or 
invest them in short-term U.S. Government securities.

[41 FR 8357, Feb. 26, 1976, as amended by 56 FR 5320, Feb. 11, 1991]

[[Page 66]]



Sec. 1001.71  Handlers' producer-settlement fund debits and credits.

    On or before the 15th day after the end of the month, the market 
administrator shall render a statement to each handler showing the 
amount of the handler's producer-settlement fund debit or credit, as 
calculated in this section.
    (a) The producer-settlement fund debit or credit for each plant and 
each cooperative association in its capacity as a handler under 
Sec. 1001.9(d) shall be computed as specified in this paragraph.
    (1) Multiply the quantities of producer milk, the quantities of 
fluid milk products received at the pool plant from cooperative 
associations in their capacity as handlers under Sec. 1001.9(d), the 
quantities of other source fluid milk receipts at pool plants that were 
allocated to Class I pursuant to Sec. 1001.44; and the quantities of 
route disposition in the marketing area by partially regulated 
distributing plants for which a value was determined pursuant to 
Sec. 1001.61(a) by the basic blended price computed under Sec. 1001.62 
adjusted by any location adjustments applicable under Secs. 1001.52 and 
1001.53.
    (2) For any cooperative association in its capacity as a handler 
under Sec. 1001.9(d), multiply the quantities of milk moved to each pool 
plant by the basic blended price computed under Sec. 1001.62 adjusted by 
any location adjustments applicable under Secs. 1001.52 and 1001.53; and 
to the result add the value determined under Sec. 1001.60.
    (3) If the value of fluid milk products, as determined under 
Sec. 1001.60 for any pool plant, under Sec. 1001.61 for any partially 
regulated distributing plant, or under paragraph (a)(2) of this section 
for any cooperative association in its capacity as a handler under 
Sec. 1001.9(d), is greater than the credit as determined under paragraph 
(a)(1) of this section, the difference shall be the producer-settlement 
fund debit for the plant or the cooperative association in its capacity 
as a handler under Sec. 1001.9(d).
    (4) If the value of fluid milk products, as determined under 
Sec. 1001.60 or 1001.61 for any plant, or as determined under paragraph 
(a)(2) of this section for any cooperative association in its capacity 
as a handler under Sec. 1001.9(d), is less than the credit as determined 
under paragraph (a)(1) of this section, the difference shall be the 
producer-settlement fund credit for the plant or the cooperative 
association in its capacity as a handler under Sec. 1001.9(d).
    (b) The producer-settlement fund debit or credit of any handler 
shall be the net of the producer-settlement fund debits and credits as 
computed for all of its operations under paragraph (a) of this section.

[41 FR 8357, Feb. 26, 1976, as amended by 56 FR 5320, Feb. 11, 1991]



Sec. 1001.72  Payments to and from the producer-settlement fund.

    (a) On or before the 18th day after the end of the month, each 
handler shall pay to the market administrator the handler's producer-
settlement fund debit for the month as determined under Sec. 1001.71.
    (b) On or before the 20th day after the end of the month, the market 
administrator shall pay to each handler the handler's producer-
settlement fund credit for the month as determined under Sec. 1001.71. 
If the unobligated balance in the producer-settlement fund is 
insufficient to make such payments, the market administrator shall 
reduce uniformly such payments and shall complete them as soon as the 
funds are available.



Sec. 1001.73  Payments to producers.

    (a) On or before the 5th day after the end of the month, each 
handler shall pay each producer for milk received from him during the 
first 15 days of the month at a rate that is not less than the Class III 
price for the preceding month.
    (b) On or before the 20th day after the end of the month, each 
handler shall make final payment to each producer for the total value of 
milk received from him during the month at not less than the basic 
blended price per hundredweight computed under Sec. 1001.62, adjusted by 
the location adjustment applicable under Secs. 1001.52 and 1001.53 and 
the butterfat differential applicable under Sec. 1001.76, minus the 
amount of the payment made to the producer under paragraph (a) of this 
section. If

[[Page 67]]

the handler has not received full payment from the market administrator 
under Sec. 1001.72(b) by the date payments are due under this paragraph, 
he may reduce pro rata his payments to producers by an amount not to 
exceed such underpayment. Such payments shall be completed after receipt 
of the balance due from the market administrator by the next following 
date for making payments under this paragraph.
    (c) If the handler's net payment to a producer is for an amount less 
than the total amount due the producer under this section, the burden 
shall rest upon the handler to prove to the market administrator that 
each deduction from the total amount due is properly authorized and 
properly chargeable to the producer.
    (d) In making payment to producers under paragraph (b) of this 
section for milk diverted from a pool plant the handler may elect to pay 
such producers at the price applicable at the zone location of the plant 
from which the milk was diverted, if the resulting net payment to each 
producer is not less than that otherwise required under this section and 
the rate of payment and the deductions shown on the statement required 
to be furnished under Sec. 1001.75 are those used in computing the 
payment.

[41 FR 8357, Feb. 26, 1976, as amended at 43 FR 17461, Apr. 25, 1978; 43 
FR 49972, Oct. 26, 1978; 56 FR 5320, Feb. 11, 1991]



Sec. 1001.74  Payments to cooperative associations.

    (a) Each cooperative association may file with a handler who is not 
a cooperative association a claim either for the payments that the 
handler is required to make to the association's producer members under 
Sec. 1001.73 or for authorized deductions from such payments. The claim 
shall contain a list of the producers to whom the payments are due or to 
whom the deductions apply, an agreement to indemnify the handler in the 
making of such payments or deductions, and a certification that the 
association has for each producer listed an unterminated membership 
contract authorizing the payment or deduction.
    (b) The handler shall withhold from the association's producer 
members the payments or the deductions specified in paragraph (a) of 
this section in accordance with the association's claim. He shall pay 
the amounts withheld to the association on or before the dates on which 
such amounts otherwise would have been due to the producer members under 
Sec. 1001.73.
    (c) For each producer member from whom payment was withheld, the 
handler shall furnish the association a supporting statement showing the 
information required to be furnished to the producer under Sec. 1001.75. 
Such information with respect to milk received during the first 15 days 
of the month shall be furnished not later than the 27th day of the month 
and with respect to milk received during the remainder of the month not 
later than the 12th day of the following month. For each producer member 
from whom a deduction is made under this section, the handler shall 
furnish the association a statement showing the pounds of milk received.
    (d) Each handler who receives fluid milk products at his plant from 
a cooperative association in its capacity as the operator of a pool 
plant or in its capacity as a handler under Sec. 1001.9(d) shall make 
payment to the association for such receipts as follows:
    (1) On or before the 5th day after the end of the month, for the 
fluid milk products received from the association during the first 15 
days of the month at a rate that is not less than the Class III price 
for the preceding month. The payment made to the association under this 
subparagraph shall constitute partial payment of the total amount 
required to be paid under this paragraph.
    (2) On or before the 20th day after the end of the month, for not 
less than the total value of fluid milk products received from the 
association's pool plants, as determined by multiplying the respective 
quantities assigned to each class under Sec. 1001.44 by the class price 
for the month, adjusted by the location adjustments applicable under 
Secs. 1001.52 and 1001.53 and the butterfat differential applicable 
under Sec. 1001.76, minus the amount of the payment made to the 
association under paragraph (d)(1) of this section.
    (3) On or before the 20th day after the end of the month, for not 
less than the

[[Page 68]]

total value of milk received from the cooperative association in its 
capacity as a handler under Sec. 1001.9(d), at the basic blended price 
per hundredweight for the month computed under Sec. 1001.62, adjusted by 
the location adjustment applicable under Secs. 1001.52 and 1001.53 and 
the butterfat differential applicable under Sec. 1001.76, minus the 
amount of the payment made to the association under paragraph (d)(1) of 
this section. If the handler has not received full payment from the 
market administrator under Sec. 1001.72(b) by the date payment is due 
under this paragraph, he may reduce his payment to the association by an 
amount not to exceed such underpayment. Such payment shall be completed 
after receipt of the balance due from the market administrator by the 
next following date for making payment under this paragraph.

[41 FR 8357, Feb. 26, 1976, as amended at 43 FR 17461, Apr. 25, 1978; 56 
FR 5320, Feb. 11, 1991]



Sec. 1001.75  Statements to producers.

    In making the payments to producers required under Sec. 1001.73, 
each handler shall furnish each producer with a supporting statement, in 
such form that it may be retained by the producer, which shall show:
    (a) The month and the identity of the handler and of the producer;
    (b) The pounds and butterfat test of milk that is received from the 
producer, or if more than one minimum rate of payment is applicable to 
the producer's milk under Sec. 1001.73, the respective pounds and test 
to which each minimum rate of payment applies;
    (c) The minimum rate or rates, including the butterfat differential, 
at which payment to the producer is required under Sec. 1001.73;
    (d) The rate that is used in making the payment, if such rate is 
other than the applicable minimum rate;
    (e) The amount or the rate per hundredweight of each deduction 
claimed by the handler, including any deductions claimed under 
Secs. 1001.74 and 1001.86, together with a description of the respective 
deductions; and
    (f) The net amount of payment to the producer.



Sec. 1001.76  Butterfat differential.

    (a) In making the payments to producers required under Sec. 1001.73 
and the payments to cooperative associations required under 
Sec. 1001.74(d), each handler shall add for each one-tenth of one 
percent of average butterfat content above 3.5 percent, or may deduct 
for each one-tenth of one percent of average butterfat content below 3.5 
percent, as a butterfat differential, an amount per hundredweight that 
shall be computed by the market administrator under paragraph (b) of 
this section.
    (b) Round to the nearest one-tenth cent, which shall be 0.138 times 
the current month's butter price less 0.0028 times the preceding month's 
average pay price per hundredweight, at test, for manufacturing grade 
milk in Minnesota and Wisconsin, using the ``base month'' series, 
adjusted pursuant to Sec. 1001.51 (a) through (e), as reported by the 
Department. The butter price means the simple average for the month of 
the Chicago Mercantile Exchange, Grade A butter price as reported by the 
Department.

[41 FR 8357, Feb. 26, 1976, as amended at 60 FR 18954, Apr. 14, 1995]



Sec. 1001.77  Adjustment of accounts.

    (a) Whenever the market administrator's verification of a handler's 
reports or payments discloses an error in payments to or from the market 
administrator under Sec. 1001.72, Sec. 1001.85, or Sec. 1001.86, the 
market administrator shall promptly issue to the handler a charge bill 
or a credit, as the case may be, for the amount of the error. Adjustment 
charge bills issued during the period beginning with the 11th day of the 
prior month and ending with the 10th day of the current month shall be 
payable by the handler to the market administrator on or before the 18th 
day of the current month. Adjustment credits issued during that period 
shall be payable by the market administrator to the handler on or before 
the 20th day of the current month.
    (b) Whenever the market administrator's verification of a handler's 
payments discloses payment to a producer or a cooperative association of 
an amount less than is required by Secs. 1001.73 and 1001.74, the 
handler shall

[[Page 69]]

make payment of the balance due the producer or the cooperative 
association not later than the 20th day after the end of the month in 
which the handler is notified of the deficiency.



Sec. 1001.78  Charges on overdue accounts.

    Any producer-settlement fund account balance due from or to a 
handler under Sec. 1001.72, Sec. 1001.77, or Sec. 1001.78, for which 
remittance has not been received in or paid from the market 
administrator's office by the close of business on the 20th day of any 
month, shall be increased one percent effective the following day.

[56 FR 5320, Feb. 11, 1991]

        Administrative Assessment and Marketing Service Deduction



Sec. 1001.85  Assessment for order administration.

    On or before the 18th day after the end of the month, each handler 
shall pay to the market administrator his pro rata share of the expense 
of administration of this order. The payment shall be at the rate of 4 
cents per hundredweight, or such lesser rate as the Secretary may 
prescribe. The payment shall apply to:
    (a) All of a handler's receipts at pool plants during the month of 
fluid milk products from all sources, except receipts from pool plants, 
receipts from regulated plants or pool bulk tank units under other 
Federal orders if such receipts were subject to an administrative 
expense assessment under the other order, and receipts of exempt milk 
processed at plants other than pool plants;
    (b) All receipts and beginning inventory of a cooperative 
association in its capacity as a handler under Sec. 1001.9(d) for the 
month less its disposition to pool plants and ending inventory for the 
month; and
    (c) The quantity distributed as route disposition in the marketing 
area from a partially regulated distributing plant for which a value is 
determined under Sec. 1001.61.

[41 FR 8357, Feb. 26, 1976, as amended by 56 FR 5320, Feb. 11, 1991]



Sec. 1001.86  Deduction for marketing services.

    (a) In making the payments required by Sec. 1001.73 to producers, 
other than himself and any producer who is a member of a cooperative 
association that the Secretary determines is performing the services 
specified in this section, each handler shall deduct 5 cents per 
hundredweight, or such lesser rate as the Secretary shall determine to 
be sufficient, for marketing services. The handler shall pay the amount 
deducted to the market administrator on or before the 18th day after the 
end of the month.
    (b) The market administrator shall expend amounts received under 
paragraph (a) of this section only in providing for market information 
to such producers and for verification of weights, samples, and tests of 
milk received from them. The market administrator may contract with a 
cooperative association for the furnishing of the whole or any part of 
these services.

[41 FR 8357, Feb. 26, 1976, as amended at 43 FR 17461, Apr. 25, 1978]



PART 1002--MILK IN NEW YORK-NEW JERSEY MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                   General Provisions and Definitions

Sec.
1002.1  General provisions.
1002.3  Marketing area.
1002.5  Dairy farmer.
1002.6  Producer.
1002.7  Handler.
1002.8  Plant.
1002.9  Unit.
1002.10  Farm.
1002.11  Own farm milk.
1002.12  Producer-handler.
1002.13  Other order.
1002.14  Pool milk.
1002.15  Fluid milk product.
1002.16  Other source milk.
1002.17  Filled milk.
1002.18  Fluid cream product.
1002.19  [Reserved]
1002.20  Commercial food processing establishment.

                          Market Administrator

1002.22  Additional duties of the market administrator.

[[Page 70]]

                     Pool Plants and Bulk Tank Units

1002.24  Regular pool plants.
1002.25  Bulk tank units.
1002.26  Operating requirements.
1002.27  Suspension and cancellation of designation.
1002.28  Temporary pool plants.
1002.29  Partial pool plants.

                                 Reports

1002.30  Reports of receipts and utilization.
1002.31  Producer payroll reports.
1002.32  Other reports.

                             Classification

1002.40  General classification rules.
1002.41  Classes of utilization.
1002.42  Shrinkage.
1002.44  Transfers.
1002.45  Allocation of skim milk and butterfat classified.
1002.46  Rules and regulations.

                             Minimum Prices

1002.50  Class prices.
1002.51  Basic formula price.
1002.52  Transportation differentials.
1002.53  Producer-handler price differential.
1002.54  Use of equivalent price or index.
1002.55  Transportation credit on bulk unit pool milk.
1002.56  Announcement of class prices and butterfat differential.

                     Determination of Uniform Price

1002.60  Net pool obligation of handlers.
1002.61  Computation of the uniform price.
1002.62  Announcement of uniform price.

               Producer Settlement Fund and Its Operation

1002.70  Producer settlement fund.
1002.71  Handler's accounts.
1002.72  Payments to the producer-settlement fund.
1002.73  Payments out of the producer-settlement fund.
1002.74  Handler's pool debit or credit.
1002.75  Adjustments of errors in payments.
1002.76   Charges on overdue accounts.
1002.77  Cooperative payments for marketwide services.

                Payment by Handlers Directly to Producers

1002.80  Time and rate of payments.
1002.81  Butterfat differential.
1002.82  Transportation differentials.

                        Expense of Administration

1002.85  Payment by handlers.

    Authority: Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.



                   Subpart--Order Regulating Handling

    Source: 33 FR 8201, June 1, 1968, unless otherwise noted.

                   General Provisions and Definitions



Sec. 1002.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

[36 FR 9847, May 29, 1971]



Sec. 1002.3  Marketing area.

    New York-New Jersey milk marketing area (hereinafter called the 
``marketing area'') means all of the territory within the boundaries of 
the city of New York, and the counties and parts of counties set forth 
below together with all piers, docks, and wharves connected therewith, 
and all craft moored thereat, and including territory within such 
boundaries which is occupied by Government (municipal, State, Federal, 
or international) reservations, installations, institutions, or other 
establishments.

                            New York Counties

Albany.
Broome.
Cayuga (except the townships of Sterling, Victory, Conquest, and 
Montezuma).
Chemung.
Chenango.
Columbia.
Cortland.
Delaware.
Dutchess.
Essex (Schroon, Ticonderoga, Crown Point, and Moriah townships only).
Fulton (except the township of Stratford).
Greene.
Herkimer (except the townships of Webb, Ohio, and Salisbury).
Madison.
Montgomery.
Nassau.
Oneida (except the townships of Ava, Boonville, Forestport, and 
Florence).
Onondaga.
Orange.
Oswego (except the townships of Redfield and Boylston).
Otsego
Putnam.
Rensselaer.
Rockland.

[[Page 71]]

Saratoga (except the townships of Day, Edinburg, and Providence).
Schenectady.
Schoharie.
Schuyler.
Steuben (Addison, Corning, and Erwin townships only).
Suffolk (except Fisher's Island).
Sullivan.
Tioga.
Tompkins.
Ulster.
Warren (except the townships of Johnsburg, Thurman, and Stony Creek).
Washington.
Westchester.
Yates (except the townships of Italy, Middlesex, and Potter).

                           New Jersey Counties

Bergen.
Essex.
Hudson.
Hunterdon.
Middlesex.
Monmouth.
Morris.
Ocean (except the boroughs of Barnegat Light, Beach Haven, Harvey, 
Cedars, Ship Bottom, Surf City, Tuckerton, and the townships of 
Eagleswood, Lacery, Little Egg Harbor, Long Beach, Ocean, Stafford, and 
Union).
Passaic.
Somerset.
Sussex.
Union.
Warren.



Sec. 1002.5  Dairy farmer.

    Dairy farmer means any person who produces milk.



Sec. 1002.6  Producer.

    Producer means any dairy farmer who produces milk approved by a duly 
constituted regulatory agency for fluid consumption and who delivers 
pool milk as specified in Sec. 1002.14 to a pool plant, a pool unit, a 
plant specified in Sec. 1002.28 (f)(2) which is a partial pool plant, or 
a partial pool unit whose pool designation was canceled for failure to 
meet the requirements specified in Sec. 1002.26(a), except that it shall 
not include any such dairy farmer delivering to such partial pool plant 
or partial pool unit unless at least 50 percent of such dairy farmer's 
milk delivered to such plant or unit is pool milk pursuant to 
Sec. 1002.14. Each dairy farmer delivering milk to a partial pool plant 
or a partial pool unit shall be considered to have delivered pool milk 
for such dairy farmer's proportionate share of total milk delivered by 
dairy farmers to such plant or unit.

[56 FR 5320, Feb. 11, 1991]



Sec. 1002.7  Handler.

    Handler means:
    (a) Any person who engages in the handling of skim milk or butterfat 
which was received at a pool plant, a partial pool plant, a pool unit or 
a partial pool unit or at a plant approved by any health authority as a 
source of skim milk or butterfat for disposition as fluid milk products 
in the marketing area;
    (b) Any person who engages in the handling of fluid milk products, 
all or a portion of which is shipped to, or received in, the marketing 
area; or
    (c) Any cooperative association with respect to milk which it causes 
to be delivered from producers to any other handler for the account of 
such association and for which such association receives payment.



Sec. 1002.8  Plant.

    (a) Plant means the land, buildings, surroundings, facilities, and 
equipment, whether owned or operated by one or more persons, 
constituting a single operating unit or establishment for the receiving, 
handling, or processing of milk or milk products as determined by the 
market administrator.
    (b) Pool plant means any plant which is designated as a pool plant 
pursuant to Secs. 1002.24 to 1002.28 and any plant, except an other 
order plant, which receives no milk from dairy farmers or units and from 
which 50 percent or more of the gross receipts of skim milk and 
butterfat in the form of fluid milk products is disposed of in consumer 
packages or dispenser inserts in the marketing area by direct 
distribution or is moved either in packaged form or bulk to other plants 
in the marketing area.
    (c) Partial pool plant means a plant which is so designated pursuant 
to Sec. 1002.29.
    (d) Other order plant means a plant which is fully subject to the 
pricing and payment provisions of an other order.

[[Page 72]]



Sec. 1002.9  Unit.

    (a) Pool unit means a bulk tank unit established pursuant to 
Sec. 1002.25 and which meets the requirements of a pool unit pursuant to 
such section.
    (b) Partial pool unit means a bulk tank unit so designated pursuant 
to Sec. 1002.25(k).



Sec. 1002.10  Farm.

    Farm means the production facilities and resources supplying milk to 
a milk house of a dairy farmer. The location of the farm shall be deemed 
to be the same as the location of the milk house, and in the event of a 
change in the location of the dairy farmer's milk house, any question as 
to whether milk received from the new milk house is from the same or a 
different farm shall be determined by the market administrator.



Sec. 1002.11  Own farm milk.

    (a) Own farm milk means milk received at a plant from a farm 
operated by the person who is the operator of such plant.
    (b) The market administrator shall publicly announce the name of any 
handler operating a pool plant receiving own farm milk and the location 
of the plant operated by such handler. This public announcement shall 
not include the name of:
    (1) Any person meeting the definition of producer-handler as set 
forth in Sec. 1002.12;
    (2) Any person receiving no milk from other dairy farmers and 
selling no more than 100 quarts per day of Class I-A milk to persons in 
the marketing area other than to other plants; or
    (3) A charitable, religious, educational, or governmental 
institution which is not engaged in the practice of receiving bulk milk 
from other sources for processing or packaging and is not engaged in the 
practice of selling packaged milk to persons not associated with such 
institution.



Sec. 1002.12  Producer-handler.

    Producer-handler means a handler who, following the filing of an 
application pursuant to paragraph (a) of this section, has been so 
designated by the market administrator upon determination that the 
requirements of paragraph (b) of this section have been met. Such 
designation shall be effective on the first of the month after receipt 
by the market administrator of an application containing complete 
information on the basis of which the market administrator determines 
that the requirements of paragraph (b) of this section are being met. 
The effective date of designation shall be governed by the date of 
filing new applications in instances where applications previously filed 
have been denied. All designations shall remain in effect until 
cancelled pursuant to paragraph (c) of this section.
    (a) Application. Any handler claiming to meet the requirements of 
paragraph (b) of this section may file with the market administrator, on 
forms prescribed by the market administrator, an application for 
designation as a producer-handler. The application shall contain the 
following information:
    (1) A listing and description of all resources and facilities used 
for the production of milk which are owned or directly or indirectly 
operated or controlled by the applicant.
    (2) A listing and description of all resources and facilities used 
for the processing or distribution of milk or milk products which are 
owned, or directly or indirectly operated or controlled by the 
applicant.
    (3) A description of any other resources and facilities used in the 
production, handling, or processing of milk or milk products in which 
the applicant in any way has an interest, including any contractual 
arrangement, and the names of any other persons having or exercising any 
degree of ownership, management, or control in, or with whom there 
exists any contractual arrangement with respect to, the applicant's 
operation either in his capacity as a handler or in his capacity as a 
dairy farmer.
    (4) A listing and description of the resources and facilities used 
in the production, processing, and distribution of milk or milk products 
which the applicant desires to be determined as his milk production, 
processing, and distribution unit in connection with his

[[Page 73]]

designation as a producer-handler: Provided, That all milk production 
resources and facilities owned, operated, or controlled by the applicant 
either directly or indirectly shall be considered as constituting a part 
of the applicant's milk production unit in the absence of proof 
satisfactory to the market administrator that some portion of such 
facilities or resources do not constitute an actual or potential source 
of milk supply for the applicant's operation as a producer-handler.
    (5) Such other information as may be required by the market 
administrator.
    (b) Requirements. (1) The handler has and exercises (in his capacity 
as a handler) complete and exclusive control over the operation and 
management of a plant at which he handles milk received from production 
facilities and resources (milking herd, buildings housing such herd, and 
the land on which such buildings are located) the operation and 
management of which also are under the complete and exclusive control of 
the handler (in his capacity as a dairy farmer), all of which facilities 
and resources for the production, processing, and distribution of milk 
and milk products constitute an integrated operation over which the 
handler (in his capacity as a producer-handler) has and exercises 
complete and exclusive control.
    (2) The handler, in his capacity as a handler, handles no fluid milk 
products other than those derived from the milk production facilities 
and resources designated as constituting the applicant's operation as a 
producer-handler.
    (3) The handler is not, either directly or indirectly, associated 
with control or management of the operation of another plant or another 
handler, nor is another handler so associated with his operation.
    (4) The handler sells more than an average of 100 quarts per day of 
Class I-A milk to persons in the marketing area other than to other 
plants.
    (5) In case the plant of the applicant was operated by a handler 
whose designation as a producer-handler previously had been cancelled 
pursuant to paragraph (c) of this section, the quantity of fluid milk 
products handled during the 12 months preceding the application which 
was derived from sources other than the designated milk production 
facilities and resources constituting the applicant's operation as a 
producer-handler is less than the volume set forth for cancellation 
pursuant to paragraph (c)(3) or (4) of this section.
    (c) Cancellation. The designation as a producer-handler shall be 
cancelled under conditions set forth in paragraphs (c)(1) and (2) of 
this section or, except as specified in paragraphs (c)(3) and (4) of 
this section, upon determination by the market administrator that any of 
the requirements of paragraph (b) of this section are not continuing to 
be met, such cancellation to be effective on the first day of the month 
following the month in which the requirements were not met.
    (1) Milk from the designated production facilities and resources of 
the producer-handler is delivered in the name of another person as pool 
milk to another handler or except in the months of June through November 
with prior notice to the market administrator, a dairy herd, cattle 
barn, or milking parlor is transferred to another person who uses such 
facilities or resources for producing milk which is delivered as pool 
milk to another handler. This provision, however, shall not be deemed to 
preclude the occasional sale of individual cows from the herd.
    (2) A dairy herd, cattle barn, or milking parlor, previously used 
for the production of milk delivered as pool milk to another handler, is 
added to the designated milk production facilities and resources of the 
producer-handler, except in the months of December through May, with 
prior notice to the market administrator, or if such facilities and 
resources were a part of the designated production facilities and 
resources during any of the preceding 12 months. This provision, 
however, shall not be deemed to preclude the occasional purchase of 
individual cows for the herd.
    (3) If the producer-handler handles an average of more than 150 
product pounds per day of fluid milk products which are derived from 
sources other than the designated milk production facilities and 
resources, the cancellation of designation shall be effective

[[Page 74]]

the first of the month in which he handled such fluid milk products.
    (4) If the producer-handler handles fluid milk products derived from 
sources other than the designated milk production facilities and 
resources in a volume less than specified in paragraph (c)(3) of this 
section, the designation shall be cancelled effective on the first of 
the month following the third month in any six-month period in which the 
producer-handler handled such fluid milk products: Provided, That the 
receipt of up to an average of ten pounds per day of packaged fluid milk 
products in the form of fluid skim milk, or of any volume of other 
packaged fluid milk products (except milk) from pool plants, shall not 
be counted for purposes of this paragraph (c)(4).
    (d) Public announcement. The market administrator shall publicly 
announce the name, plant, and farm location of persons designated as 
producer-handlers, and those whose designations have been canceled. Such 
announcements shall be controlling with respect to the accounting at 
plants of other handlers for fluid milk products received from such 
producer-handler on and after the first of the month following the date 
of such announcement.
    (e) Burden of establishing and maintaining producer-handler status. 
The burden rests upon the handler who is designated as a producer-
handler (and upon the applicant for such designation) to establish 
through records required pursuant to Sec. 1000.5 that the requirements 
set forth in paragraph (b) 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 designation do not exist.

[33 FR 8201, June 1, 1968, as amended at 35 FR 16789, Oct. 30, 1970; 36 
FR 9847, May 29, 1971]



Sec. 1002.13  Other order.

    Other order means an order issued by the Secretary pursuant to the 
Act, which order regulates the handling of milk in a marketing area 
other than that defined in this part.



Sec. 1002.14  Pool milk.

    Pool milk means all skim milk and butterfat contained in milk except 
as set forth in paragraphs (a) through (k) of this section which is 
pumped at the farm into a tank mounted on a truck or trailer for a 
handler who has included such milk in a pool unit, or a partial pool 
unit or which is delivered direct from a farm to a pool plant or a 
partial pool plant but is not put into a tank truck prior to such 
delivery. This definition shall include any milk so delivered by a 
person defined in Sec. 1002.11(b)(2), by an institution defined in 
Sec. 1002.11(b)(3), or by a producer-handler designated pursuant to 
Sec. 1002.12 which milk is produced in accordance with methods and 
standards of the American Association of Medical Milk Commissions for 
the production of certified milk and which is delivered in bulk to 
another handler but for marketing as other than certified milk.
    (a) Milk first received at a pool plant which otherwise would be 
considered producer milk under an other order if all of such milk is 
assigned to Class II or Class III pursuant to Sec. 1002.45(a)(9) and the 
corresponding step of Sec. 1002.45(b).
    (b) Milk not approved by a duly constituted regulatory agency for 
fluid consumption.
    (c) Milk delivered by a pool unit direct to a plant other than a 
pool plant or a partial pool plant if such milk is pooled as producer 
milk under an other order.
    (d) Milk which is pumped into a tank truck at the farm for delivery 
to a handler during any of the months of December through June if any 
milk from such farm was delivered to such handler as producer milk under 
an other order during any of the preceding months of July through 
November unless such farm becomes part of a partial pool unit.
    (e) Milk delivered to a partial pool plant set forth in 
Sec. 1002.29(a) and milk of a partial pool unit pursuant to 
Sec. 1002.25(k)(1) in excess of the quantity of such milk classified as 
Class I-A and Class I-B.
    (f) Milk delivered to a partial pool plant set forth in 
Sec. 1002.29(b) and milk of a partial pool unit pursuant to 
Sec. 1002.25(k)(2) in excess of the quantity of such milk classified as 
Class I-A in the marketing area or at a pool plant, except that if milk 
is shipped from a partial pool plant in the 401 miles and

[[Page 75]]

over freight zone to a plant from which 50 percent or more of the gross 
receipts of skim milk and butterfat in the form of fluid milk products 
is disposed of in consumer packages and dispenser inserts in the 
marketing area either by direct distribution or to other plants, all of 
the milk so shipped shall be considered to be pool milk except as set 
forth in paragraph (g) of this section.
    (g) Milk delivered to a partial pool plant or a partial pool unit if 
in either case there is a monetary obligation on such milk under an 
other order.
    (h) Milk received from farms in Nassau and Suffolk Counties in New 
York, which farms are not approved for sale of milk in New York City, 
and milk received from farms in New York City.
    (i) Own farm milk of a handler listed pursuant to Sec. 1002.11(b) 
not in excess of an average of 800 pounds per day if the handler is not 
a producer-handler designated pursuant to Sec. 1002.12, and if the 
volume of skim milk and butterfat in milk handled, other than that 
derived from own farm milk, does not exceed an average of 1,600 pounds 
per day.
    (j) Own farm milk of an institution as defined pursuant to 
Sec. 1002.11(b)(3) if such milk is not delivered to a pool plant, a 
partial pool plant, a pool unit or a partial pool unit.
    (k) All skim milk and butterfat handled by:
    (1) A producer-handler designated pursuant to Sec. 1002.12 which is 
derived from such producer-handler's production resources and facilities 
except as provided in the preamble of this section; or
    (2) A producer-handler pursuant to an other order.

[33 FR 8201, June 1, 1968, as amended at 41 FR 8367, Feb. 26, 1976; 56 
FR 5320, Feb. 11, 1991]



Sec. 1002.15  Fluid milk product.

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

[58 FR 27778, May 11, 1993]



Sec. 1002.16  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts in the form of fluid milk products from any source 
other than receipts of pool milk from dairy farmers, receipts from other 
pool plants and pool units, and receipts of pool milk from partial pool 
plants and partial pool units;
    (b) Receipts in a form other than as a fluid milk product (including 
those produced at the plant during a prior month) which are reprocessed, 
converted or combined with another product during the month; and
    (c) Receipts in a form other than a fluid milk product for which the 
handler fails to establish a disposition.



Sec. 1002.17  Filled milk.

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

[34 FR 18604, Nov. 22, 1969]

[[Page 76]]



Sec. 1002.18  Fluid cream product.

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

[58 FR 27778, May 11, 1993]



Sec. 1002.19  [Reserved]



Sec. 1002.20  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of that uses such receipts as 
ingredients in food products and has no disposition of fluid milk 
products or fluid cream products other than those received in consumer-
type packages.

[58 FR 27778, May 11, 1993]

                          Market Administrator



Sec. 1002.22  Additional duties of the market administrator.

    In addition to the duties specified in Sec. 1000.3(c) of this 
chapter, the market administrator shall perform the following duties:
    (a) Maintain a main office and such branch offices as may be 
necessary;
    (b) Promptly notify a handler, upon receipt of the handler's written 
request therefor, of the market administrator's determination: as to 
whether one or more plants exist at a specified location, as to whether 
any specified item constitutes a part of the handler's plant, or as to 
which plant a specified item is a part in the event that the particular 
premises in question constitutes more than one plant: Provided, That if 
the request of the handler is for revision or affirmation of a previous 
determination, there is set forth in the request a statement of what the 
handler believes to be the changed conditions which make a new 
determination necessary. If a handler has been notified in writing of a 
determination with respect to an establishment operated by him, any 
revision of such determination shall not be effective prior to the date 
on which such handler is notified of the revised determination;
    (c) Place the sums deducted under Sec. 1002.61(d) and retained 
pursuant to Sec. 1002.70 in an interest-bearing account or accounts in a 
bank or banks duly approved as a Federal depository for such sums or 
invest them in short-term United States Government securities;
    (d) For the purpose of allocating receipts from other Federal order 
plants under Sec. 1002.45(a)(15) and the corresponding step of 
Sec. 1002.45(b), publicly announce the market administrator's estimate 
of the utilization (to the nearest whole percentage) in each class 
during the month of skim milk and butterfat, respectively, in pool milk 
of all handlers. Such estimate shall be final for such purpose.
    (e) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from another order plant, the class to which such 
receipts are allocated pursuant to Secs. 1002.40(c) and 1002.45 on the 
basis of such report, (including any reclassification of inventories of 
bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.

[56 FR 5321, Feb. 11, 1991, as amended at 58 FR 27778, May 11, 1993]

                     Pool Plants and Bulk Tank Units



Sec. 1002.24  Regular pool plants.

    A plant may be designated a regular pool plant pursuant to either 
paragraph (a) or paragraph (b) of this section. Designation shall be 
applicable to the plant as such and subject to cancellation only 
pursuant to Sec. 1002.27, regardless of change in the person owning or 
operating the plant. The market administrator shall be notified by the 
handlers involved of any transfer from one person to another of 
ownership or operation of a pool plant.
    (a) Any plant shall be designated a pool plant upon determination by 
the Secretary that the provisions of paragraphs (a)(1) through (4) of 
this section have been met. Not later than the end

[[Page 77]]

of the month following the month in which an application is received by 
the Secretary pursuant to paragraph (a)(1) of this section, the 
Secretary shall either determine that the provisions of paragraphs 
(a)(1) through (4) of this section either have been met or have not been 
met, or notify the applicant that additional information is needed prior 
to making a determination. Such designation shall be effective the first 
of the month following the date of designation and shall continue until 
such designation is canceled pursuant to Sec. 1002.27: Provided, That 
notwithstanding the provisions of paragraphs (a)(1) through (4) of this 
section, any plant which for the month immediately preceding the 
effective date of this section, had a designation pursuant to 
Sec. 1002.24 as then in effect, is hereby designated a regular pool 
plant from the effective date of this section until such designation is 
canceled pursuant to Sec. 1002.27.
    (1) An application by the operator of the plant for such 
determination has been addressed to the Secretary and filed at the 
office of the market administrator: Provided, That if 50 percent or more 
of the dairy farmers delivering milk at such plant deliver such milk for 
the account of a cooperative association which does not operate the 
plant but for which milk such association receives payment, an 
application must be filed by such cooperative association as well as the 
person operating the plant.
    (2) The plant is located in New York, New Jersey, or Pennsylvania.
    (3) The plant was a pool plant pursuant to paragraph (a) or (b) of 
Sec. 1002.28 for each of the 12 months immediately preceding the month 
during which an application is filed.
    (4) The operating requirements of Sec. 1002.26 are being met.
    (b) A plant may be designated at any time as a regular pool plant 
upon application made by the person operating the plant to the Secretary 
showing that the plant is a replacement for one or more pool plants, 
designated pursuant to this section, which are operated by him and that 
substantially all of the dairy farmers delivering milk at the plant 
previously delivered milk to the pool plant or plants replaced.



Sec. 1002.25  Bulk tank units.

    Any handler receiving milk from farms in a tank truck shall 
establish such farms in one or more bulk tank units (hereinafter called 
``units'') each consisting of one or more farms, in accordance with 
provisions of this section. The milk of any farm included in a unit 
shall be considered for pricing purposes as having been received by the 
handler in the unit at the nearest point of the township (as determined 
pursuant to Sec. 1002.52(b)) in which such farm is located. Any handler 
who receives milk at a pool plant or a plant distributing Class I-A milk 
in the marketing area which is delivered from a farm to such plant in a 
tank truck shall be deemed to have received such milk from a unit, pool, 
partial pool, or nonpool, and any handler who receives bulk milk from a 
farm in a tank truck containing pool milk shall be deemed to have 
received such milk from a farm of a unit either pool, partial pool, or 
nonpool.
    (a) Handlers who may establish, maintain, and be responsible for 
pool units are as follows:
    (1) A handler who operates a pool plant or a handler who operates a 
plant from which Class I-A milk is distributed in the marketing area 
other than to another plant: Provided, That a handler who is affiliated 
with or is a subsidiary of a handler operating a pool plant may also 
operate pool units if both handlers notify the market administrator in 
writing of such relationship: Provided further, That such handler who 
operates a distributing plant but not a pool plant, to be eligible to 
maintain a pool unit for any month, must have combined receipts of skim 
milk and butterfat from such unit for such month classified as Classes 
I-A and I-B in a percentage at least as great as the market percentage 
of pool milk in Classes I-A and I-B for the same month of the preceding 
year.
    (2) A cooperative handler who does not operate a plant but who 
receives milk from farms in a tank truck and delivers such milk to 
plants of other handlers if such cooperative for 12 months has been 
qualified as a basis for payments pursuant to Sec. 1002.77 or if such 
cooperative has operated a pool

[[Page 78]]

unit for 12 consecutive months: Provided, That such cooperative must 
meet the definition of a cooperative set forth in Sec. 1002.77(a)(1).
    (3) Any other cooperative handler who does not operate a plant if 
such cooperative meets the definition of a cooperative set forth in 
Sec. 1002.77(a)(1) subject to the conditions of this section.
    (4) For the months specified in paragraph (a)(4)(i) or (ii) of this 
section, any other handler operating a unit in any of the months of 
April, May, or June which unit had for such month any skim milk or 
butterfat classified as Class I-A milk in the marketing area (on some 
basis other than failure to account for such milk) and had a total Class 
I-A and Class I-B classification in a percentage at least as great as 
the market percentage of pool milk in Classes I-A and I-B for the same 
month in the preceding year.
    (i) Such month.
    (ii) Each of the months through March following such month except 
for any month when the Class I-B or combined Class I-A and Class I-B of 
such unit is less than 60 percent.
    (b) The handler may establish the units in any manner chosen by him, 
subject to the following limitations:
    (1) Each unit shall have a headquarters where the basic record of 
receipts and butterfat tests of milk from each farm are maintained and 
where there is maintained the basic record of each receipt and each 
delivery of milk by each tank truck receiving milk from farms of the 
unit and related details with respect to the movement of such milk.
    (2) Each unit shall be given a name indicating the general 
geographic area in which farms comprising such unit are located.
    (3) The handler shall declare whether each unit is to be operated as 
a pool unit. Farms from which the milk is to be pooled shall be 
established in a separate unit from those which are not to be pooled.
    (4) Farms in the area specified in paragraph (e) of this section 
shall be in units separate from farms in the area specified in paragraph 
(f) of this section.
    (c) Except as set forth in paragraphs (c)(1) through (5) of this 
section, a handler may declare that a unit is to be operated as a pool 
unit and at any time may add a farm to a pool unit: Provided, That a 
handler pursuant to paragraph (a)(4) of this section may not add farms 
to a pool unit during the months of July through March unless such 
handler's Class I-A skim milk or butterfat utilization exceeds the total 
receipts of skim milk or butterfat, respectively, in milk from the pool 
unit, and in the latter case he may add only the smallest number of 
farms necessary to provide sufficient milk to cover such Class I-A 
utilization.
    (1) If the unit is a declared nonpool unit or if the farm is a part 
of a declared nonpool unit of such handler, the unit or farm may be 
changed to a pool status, except as excluded from the pool milk 
definition pursuant to Sec. 1002.14(d), only beginning the first day of 
a month upon notice to the market administrator by not later than the 
10th day of such month. If the notice is filed after the 10th day of the 
month, the effective date shall be the first day of the following month 
except as specified in paragraph (c)(5) of this section.
    (2) In the period of December through June, no new pool unit may be 
established, no nonpool or partial pool unit may be declared to be a 
pool unit, and no farm may be added to a pool unit if the handler 
caused, as specified in paragraph (d) of this section, any pool unit or 
any farm of a pool unit to become nonpool in the period of July through 
November immediately preceding: Provided, That this limitation shall not 
prevent the handler from including in a pool unit a farm which for the 
first time has converted from can delivery to bulk tank delivery and 
from which the handler received as pool milk all milk delivered by such 
farm in cans for a period of 30 days immediately preceding: Provided 
further, That, except in the case set forth in paragraph (d)(3) of this 
section, this paragraph (c)(2) shall not be applicable if the farm which 
is caused to become nonpool thereby becomes a producer farm under 
another order with a provision for marketwide equalization.
    (3) No farm which was caused to become nonpool may be made a part of 
a pool unit by a handler set forth in paragraphs (c)(3)(i) through (iv) 
of this

[[Page 79]]

section until after the passage of a complete April-May-June period 
following the time such farm was caused to become nonpool:
    (i) The handler who caused the farm to become nonpool.
    (ii) The handler or other person who received the milk as nonpool 
milk.
    (iii) A handler who is substantially under the same management 
control, or ownership as the handler or other person set forth in 
paragraph (c)(3)(i) or (ii) of this section.
    (iv) A handler who receives the milk through arrangement with the 
handler or other person set forth in paragraph (c)(3)(i), (ii), or 
(c)(3)(iii) of this section.
    (4) A handler may transfer a farm from one pool unit to another of 
his pool units on the first day of any month upon notice to the market 
administrator by not later than the 10th day of such month.
    (5) A farm shall automatically be added to a pool unit or a nonpool 
unit shall automatically become a pool unit effective the first day of 
any month in which any of the skim milk or butterfat in milk of such 
farm or unit is assigned pursuant to Sec. 1002.45 to Class I-A milk 
unless the handler is precluded from doing so pursuant to paragraph 
(c)(2) or (c)(3) of this section or unless such milk is considered 
producer milk under an other order with a provision for marketwide 
equalization. If some but not all skim milk or butterfat in milk 
received from such farms previously a part of a nonpool unit is assigned 
to Class I-A milk the handler operating such unit has until the time of 
filing the report required pursuant to Sec. 1002.30 to specify which 
farms are to be added to a pool unit and if upon verification by audit 
the market admininstrator finds that other skim milk or butterfat in 
milk of a declared nonpool unit is assigned to Class I-A milk, the 
handler operating such unit has until ten days after notification by the 
market administrator to specify which farms are to be added to a pool 
unit. In absence of such specification, all eligible farms shall be 
added to the pool unit.
    (d) A handler may cause a pool unit or a farm which is a part of a 
pool unit to become nonpool by the methods set forth in paragraphs 
(d)(1) through (4) of this section: Provided, That the failure of a unit 
to meet the pool requirements set forth in paragraph (f) of this section 
shall not be considered for purposes of this paragraph to be a change of 
pool status caused by the handler: Provided further, That a handler 
pursuant to paragraph (a)(4) of this section must continue in a pool 
unit any farm which was a part of such handler's pool unit in any of the 
months of April, May, or June preceding from which he receives milk or 
from which any other handler receives milk through arrangement with him: 
Provided further, That if a unit operated by a handler is reported by 
another handler which is a cooperative, the actions specified in 
paragraphs (d)(1), (2), and (4) of this section must be concurred in by 
such cooperative handler.
    (1) The handler may change the status of a declared pool unit to a 
declared nonpool unit effective the first day of any month upon notice 
to the market administrator by not later than the 10th day of such 
month. If the notice is filed after the 10th day of the month, the 
effective date shall be the first day of the following month.
    (2) The handler may transfer a farm from a pool unit to a nonpool 
unit effective the first day of any month upon notice to the market 
administrator by not later than the 10th day of such month. If the 
notice is filed after the 10th day of the month, the effective date 
shall be the first day of the following month.
    (3) The handler may so operate a unit located in the area specified 
in paragraph (e) of this section that its pool status is cancelled 
pursuant to Sec. 1002.27.
    (4) The handler may arrange for the milk of a farm in his pool unit 
to be delivered to another person as nonpool milk. Any delivery of milk 
by a farm in a handler's pool unit to another person as nonpool milk 
shall be considered to have been arranged by such handler unless such 
handler can establish that such other person is not substantially under 
the same management, control or ownership as such handler and that such 
handler was in no way a party to such nonpool delivery.
    (e) A declared pool unit must be operated to meet the requirements 
set

[[Page 80]]

forth in Sec. 1002.26 if the farms of such unit are located in the 
following area: New York, New Jersey, the counties of Addison, Rutland, 
and Bennington in Vermont, the county of Berkshire in Massachusetts, or 
in Pennsylvania. Failure to meet such requirements shall make such 
declared pool unit subject to suspension and cancellation pursuant to 
the procedure set forth in Sec. 1002.27. This paragraph shall not be 
applicable to a cooperative handler specified in paragraph (a)(3) of 
this section.
    (f) A declared pool unit made up of farms located outside the area 
specified in paragraph (e) of this section or a declared pool unit made 
up of farms specified in paragraph (e) of this section and operated by a 
cooperative handler specified in paragraph (a)(3) of this section shall 
be a pool unit in the months of July through March if at least 25 
percent of the milk in such unit is delivered in such month to pool 
plants, and shall be a pool unit in the months of April through June 
only if 60 percent of the milk of such unit was received at pool plants 
during the period of October through December immediately preceding or 
if such handler received no milk of such unit or from farms of such unit 
in the preceding October through December.
    (g) Any unit declared to be a pool unit shall be designated a pool 
unit in any month (1) if the handler is qualified in such month pursuant 
to paragraph (a) of this section, (2) if such unit meets all the 
requirements of this section applicable to it to be a pool unit, or (3) 
if the designation of such unit has not been cancelled pursuant to 
Sec. 1002.27.
    (h) Each handler shall report by not later than the 10th day of the 
month any changes in units during the preceding month and as of the 
first day of such month.
    (i) Whenever the market administrator finds that a handler has 
received bulk tank milk from a farm required to be included in an 
established unit but which has not been so included, he shall 
tentatively assign such farm to a unit and promptly notify the handler 
of such action. Unless otherwise requested by the handler within 10 days 
of such notice, the tentative assignment by the market administrator 
will become final.
    (j) Whenever the market administrator finds that a handler has 
caused milk to become nonpool pursuant to paragraph (d)(4) of this 
section he shall promptly notify the handler of such finding. Within 10 
days of such notice the handler may, except as to any such milk pooled 
under another order, (1) make a written claim that the failure to 
include the milk involved as pool milk was an error and, in such event, 
the market administrator shall pool such milk and rescind his finding, 
or (2) make a written offer to submit proof that he had not caused such 
milk to become nonpool. In the latter event, the market administrator 
shall examine such proof and shall either rescind his original finding 
or confirm it. Failure to respond to the market administrator's notice 
shall be deemed to confirm the finding.
    (k) Units other than those which are pool units pursuant to 
paragraph (g) of this section shall be designated partial pool units if 
they meet the provisions set forth in paragraphs (k)(1) and (2) of this 
section.
    (1) Any nonpool unit which would have been automatically made a pool 
unit pursuant to paragraph (c)(5) of this section except that the 
handler is precluded from adding farms thereof to a pool unit pursuant 
to paragraph (c)(2) or (c)(3) of this section. If a unit of a handler 
becomes a partial pool unit pursuant to this paragraph, all of the 
handler's pool units and partial pool units shall be combined and the 
skim milk and butterfat in milk of the partial pool units assigned to 
Class II and Class III of such combined total prior to any skim milk and 
butterfat in the partial pool unit milk being assigned to Class I-A.
    (2) Any unit the milk of which fails to meet the pooling 
requirements of paragraph (f) of this section, or any unit operated by a 
handler not specified in paragraph (a) of this section, as being 
eligible to establish and maintain pool units, or any unit made up of 
farms located in the 401 miles and over freight zone unless the handlers 
operating such unit is eligible to establish a pool unit and has 
specifically requested such unit to be so designated.

[[Page 81]]

    (l) The market administrator shall publicly announce the names of 
handlers establishing pool units and the names and headquarters of such 
units. He shall also publicly announce any change in the pool status of 
such units, and the names of handlers who are ineligible to add farms to 
a pool unit under the terms set forth in paragraph (c)(2) of this 
section.

[33 FR 8201, June 1, 1968, as amended at 56 FR 5321, Feb. 11, 1991]



Sec. 1002.26  Operating requirements.

    The person operating a pool plant designated pursuant to 
Sec. 1002.24 or a declared pool unit consisting of farms in the area 
specified in Sec. 1002.25(e) shall stipulate to each of the following 
requirements:
    (a) Be willing to dispose of as Class I-A milk in the marketing area 
milk received at the plant or on the unit from dairy farmers and agree 
that if a plant designation is canceled for failure to meet this 
requirement, the Class I-A and Class I-B milk of such plant through the 
partial pool plant and partial pool unit provisions shall be priced and 
equalized from the effective date of cancellation through the following 
June 30;
    (b) Keep such control over the sanitary conditions under which milk 
received at the plant or on the unit is produced and handled that the 
milk can meet the requirements of a source of milk for the marketing 
area: Provided, That approval by a health authority of the plant as a 
source of milk for the marketing area shall constitute sufficient 
evidence that this requirement is being met even though such approval is 
restricted to prohibit shipment to the marketing area of milk for 
specified periods during which permission is given by such health 
authority for receiving unapproved milk or skim milk at the plant or for 
shipment of approved skim milk from such plant; and
    (c) Have no commitments for disposition of milk that prevent him 
from utilizing milk as set forth in Sec. 1002.27(g).

[33 FR 8201, June 1, 1968, as amended at 56 FR 5322, Feb. 11, 1991]



Sec. 1002.27  Suspension and cancellation of designation.

    The designation of a pool plant pursuant to Sec. 1002.24 or of a 
declared pool unit consisting of farms in the area specified in 
Sec. 1002.25(e) may be suspended or canceled under any of the following 
provisions:
    (a) The designation shall be canceled effective on the first of the 
month following the filing with the market administrator, and on a form 
prescribed by him, of an application by the handler operating the plant: 
Provided, That a plant whose designation is so canceled on the first of 
any of the months of August through November shall be a pool plant if it 
meets the provisions of paragraph (e) of Sec. 1002.28, and shall not be 
a pool plant pursuant to any other provision of this order prior to 
December 1 following such cancellation: Provided further, That such 
application for cancellation shall be accompanied by proof that the 
handler, if not a cooperative association qualified pursuant to 
Sec. 1002.77 has notified any qualified cooperative association which 
has any members who deliver milk to such plant, and has notified 
individually all producers delivering to such plant who are not members 
of such qualified cooperative association, of his intention to make such 
application: Provided further, That if 50 percent or more of the 
producers delivering milk at such plant deliver such milk for the 
account of a cooperative association which does not operate the plant 
but for which milk such association receives payment, an application 
must be made by such cooperative association as well as by the handler 
operating the plant: Provided further, That if a handler applies for a 
replacement designation pursuant to Sec. 1002.24(b), the designation of 
the plant or plants replaced shall be canceled automatically at the time 
the replacement designation becomes effective.
    (b) The designation of any plant which in any month is not approved 
by a health authority as a source of milk for the marketing area shall 
be automatically suspended at the beginning of the second month 
following the month that the handler receives notice that the plant does 
not have health approval as a source of milk for the marketing area 
unless the absence of

[[Page 82]]

health approval is a temporary condition covering a period of not more 
than 15 days: Provided, That the designation of a plant approved by a 
health authority as a source of milk for the marketing area, even though 
such approval is restricted to prohibit shipment to the marketing area 
of milk for specified periods during which permission is given by such 
health authority for receiving unapproved milk or skim milk at the plant 
or for shipment of approved skim milk from such plant, shall not be 
suspended pursuant to this provision.
    (c) The designation of a plant pursuant to Sec. 1002.24 shall be 
suspended at the beginning of the second month following any consecutive 
12-month period in which the plant failed to receive any pool milk or at 
the beginning of the second month following a month in which there is a 
failure to maintain the facilities and equipment that constitute a plant 
pursuant to Sec. 1002.8(a).
    (d) The designation of any plant or unit shall be suspended, 
effective no sooner than 10 days nor later than 20 days after the date 
of mailing of notice, by registered letter, to the handler, whenever the 
market administrator, subject to the limitations set forth in paragraphs 
(h) and (j) of this section, finds on the basis of available information 
that the handler operating the plant or unit is not meeting the 
requirements set forth in Sec. 1002.26: Provided, That, if the handler 
operating the plant or unit is not a cooperative association qualified 
pursuant to Sec. 1002.77, the market administrator shall notify any 
qualified cooperative association which has any members who deliver milk 
to such plant or unit, and shall also notify individually all producers 
delivering to such plant or unit who are not members of such qualified 
cooperative association, of such suspension of designation.
    (e) In the case of suspension pursuant to this section of the 
designation of one or more plants or units for failure to meet the 
requirements of Sec. 1002.26(a) or (c) the handler operating such plant 
or unit may select, prior to the effective date of such suspension, one 
or more other pool plants or pool units consisting of farms in the area 
specified in Sec. 1002.25(e) for suspension in lieu thereof if, during 
the preceding month, the quantity of pool milk received from producers 
at such substituted plants or units was not less than the quantity of 
pool milk received from producers at the plants or units named for 
suspension. The handler may also select the order in which plant or unit 
designations are to be canceled in the event of a later determination by 
the Secretary canceling the designation of some but not all of the 
plants or units suspended.
    (f) Not later than 10 days after the effective date of suspension of 
designation pursuant to this section, the handler operating the plant or 
unit may apply to the Secretary for a review. If the handler fails to so 
apply for such review, the designation shall be canceled as of the 
effective date of the suspension. If the handler does so apply, the 
Secretary shall, after review, either determine that the requirements 
set forth in Sec. 1002.26 have been met and order the suspension 
revoked, or determine that such requirements have not been met and order 
the designation canceled as of the effective date of the suspension: 
Provided, That, if the Secretary has made no determination within two 
months after the end of the month in which the suspension was made 
effective, but later orders the designation canceled, such cancellation 
shall be effective as of the first of the month following the date of 
such determination.
    (g) Beginning with the effective date of a suspension pursuant to 
this section, and until the Secretary has either ordered the designation 
canceled or ordered the suspension revoked, the plant or unit shall be 
treated as a pool plant or pool unit: Provided, That all payments into 
or out of the producer settlement fund (except such payments on the 
basis of operations during a month in which the plant meets the 
requirements of Sec. 1002.28 or the unit meets the requirements of 
Sec. 1002.25(g)) shall be held in reserve by the market administrator 
until an order is issued by the Secretary, but not longer than 2 months 
after the end of the month in which the suspension was made effective.
    (h) No pool plant or pool unit designation shall be suspended for 
failure

[[Page 83]]

to meet the requirements of Sec. 1002.26(a) except under the following 
conditions or pursuant to paragraph (l) of this section:
    (1) A meeting has been held no sooner than three days after notice 
by the market administrator to all handlers operating pool plants 
designated pursuant to Sec. 1002.24 or pool units consisting of farms in 
the area specified in Sec. 1002.25(e) for consideration of the desirable 
utilization of milk received from producers during a period ending not 
later than the end of the second month after the month during which such 
meeting is held.
    (2) There has been issued by the market administrator, following 
such meeting, and mailed to all handlers operating pool plants 
designated pursuant to Sec. 1002.24 or pool units consisting of farms in 
the area specified in Sec. 1002.25(e) the market administrator's 
determination of the desirable utilization of milk received from 
producers each month during all or a part of the period set forth in 
paragraph (h)(1) of this section. Such determination shall include a 
schedule setting forth, by months, the desired minimum percentage of 
pool milk received from producers to be utilized in specified classes. 
Such specified classes shall include Class I-A in the marketing area, 
and may include all or a part of other Class I-A and Class I-B.
    (3) The market administrator finds on the basis of available 
information that the handler operating a plant or unit or the 
cooperative reporting a plant or unit is not utilizing milk received 
from producers in accordance with the minimum percentage set forth in 
the determination of the market administrator previously announced 
pursuant to paragraph (h)(2) of this section: Provided, That the 
suspension of the designation of a plant or unit may be made effective 
during the months of November and December if the market administrator 
finds that the handler is utilizing any milk received from producers in 
classes other than those set forth in the determination of the market 
administrator announced pursuant to paragraph (h)(2) of this section.
    (i) The cancellation of pool plant or pool unit designation for 
failure to meet the requirements of Sec. 1002.26(a) shall be subject to 
the following conditions:
    (1) No pool plant or pool unit designation shall be canceled if the 
handler operating the plant or unit utilized the milk received by the 
handler from producers during the month in which the suspension is made 
effective in accordance with the minimum percentage set forth in the 
determination of the market administrator announced pursuant to 
paragraph (h)(2) or paragraph (l) of this section.
    (2) No pool plant or pool unit designation shall be canceled if the 
handler operating the plant or unit utilized in the specified classes 
set forth in the determination of the market administrator announced 
pursuant to paragraph (h)(2) of this section a percentage of the total 
milk received by such handler from producers during the month in which 
the suspension is made effective which is not less than the percentage 
of the total pool milk reported by all handlers for such month to have 
been used in the specified classes.
    (3) In the event that all milk received from producers at a plant or 
unit is reported to the market administrator by a cooperative 
association qualified pursuant to Sec. 1002.77 and such association pays 
the producer for such milk, the pool plant or pool unit designation 
shall not be canceled if a percentage of all milk reported by such 
cooperative association is utilized in accordance with the minimum 
percentage set forth in the determination of the market administrator 
announced pursuant to paragraph (h)(2) of this section, or in accordance 
with the percentage set forth in paragraph (i)(2) of this section.
    (4) Cancellation of designations shall be limited to those plants or 
units necessary to result in a utilization of milk received at the 
remaining pool plants and pool units operated by the handler, or 
reported by the cooperative, as the case may be, in accordance with the 
minimum percentage set forth in paragraph (l) of this section, or in the 
determination of the market administrator announced pursuant to 
paragraph (h)(2) of this section.
    (j) Loss of approval by health authorities of a plant as a source of 
milk for the marketing area may in itself constitute adequate reason for 
the

[[Page 84]]

market administrator to suspend the designation of the plant for failure 
to meet the requirements of Sec. 1002.26(b) only if the absence of such 
approval continues for more than 15 days.
    (k) The designation shall be canceled effective on the first of the 
month following three consecutive months if in the absence of this 
designation milk received from dairy farmers and units at the plant 
would have been classified and priced under another order with a 
provision for marketwide equalization and if in each of such months the 
percentage of milk received from dairy farmers and units at the plant 
which is classified as Class I-A and disposed of in the marketing area 
defined in such other order is greater than the percentage of such milk 
so classified and disposed of in this marketing area.
    (l) The designation of any pool plant pursuant to Sec. 1002.24 or 
any pool unit pursuant to Sec. 1002.25(e) shall be canceled unless 5 
percent or more of the pool milk received from producers at such plant 
or by such unit during each of the months of December and January, and 
10 percent during each of the months of September through November, is 
utilized as Class I-A milk unless the percentage has been revised 
pursuant to paragraph (h) of this section.

[33 FR 8201, June 1, 1968, as amended at 56 FR 5322, Feb. 11, 1991]



Sec. 1002.28  Temporary pool plants.

    Except for plants which, pursuant to paragraph (f) of this section, 
are not eligible for designation, any plant not designated pursuant to 
Sec. 1002.24 shall automatically be designated a pool plant in 
accordance with provisions of paragraphs (a) through (e) of this 
section: Provided, That no plant shall be a pool plant pursuant to this 
section if, in the absence of this provision, milk received from dairy 
farmers and units at the plant would be classified and priced under 
another order with a provision for marketwide equalization, and if the 
percentage of the milk received from dairy farmers and units at the 
plant which is classified in Class I-A and disposed of in the marketing 
area defined in such other order is greater than the percentage of such 
milk so classified and disposed of in this marketing area: Provided, 
further, That for purposes of the computations of percentages set forth 
in this section, skim milk and butterfat in filled milk shall be 
excluded from skim milk and butterfat classified in Class I-A and Class 
I-B.
    (a) For any of the months of January through March and July through 
December, any plant at which 25 percent or more of the combined receipts 
of skim milk and butterfat in milk from dairy farmers and units is 
classified as Class I-A in the marketing area or as Class I-A on the 
basis of a transfer to a pool plant on some basis other than the failure 
to account for such milk shall automatically be designated a pool plant 
for such month: Provided, That at the option of the handler the plant 
shall not be a pool plant if less than 25 percent of such combined 
receipts of skim milk and butterfat in milk from other than pool units 
is classified in such Class I-A.
    (b) For any of the months of April, May, or June, any plant at which 
during the preceding period of October, November, and December either 
(1) no milk was received from dairy farmers or units, or (2) 60 percent 
or more of the combined receipts of skim milk and butterfat in milk 
received from dairy farmers and units was classified in Class I-A in the 
marketing area or as Class I-A on the basis of a transfer to a pool 
plant, on some basis other than the failure to account for such milk, 
shall automatically be designated a pool plant for any of such months of 
April, May, or June in which 10 percent or more of the combined receipts 
of skim milk and butterfat in milk received from dairy farmers and units 
is classified in Class I-A in the marketing area or as Class I-A on the 
basis of a transfer to a pool plant, on some basis other than the 
failure to account for such milk: Provided, That at the option of the 
handler the plant shall not be a pool plant if less than 10 percent of 
combined receipts of skim milk and butterfat in such milk from other 
than pool units as classified in such Class I-A.
    (c) Any plant which is a pool plant in any of the months of April, 
May, or June on the basis of paragraph (b) of

[[Page 85]]

this section or on the basis of paragraph (d) of this section and in the 
latter case, the percentage of combined receipts of skim milk and 
butterfat in milk from dairy farmers and units classified in Class I-A 
in the marketing area or as Class I-A on the basis of a transfer to a 
pool plant, is at least as great as the market percentage of pool milk 
in Classes I-A and I-B for the same month of the previous year, shall be 
a pool plant in any of the months of July through March following in 
which 60 percent or more of the combined receipts of skim milk and 
butterfat in milk received at the plant from dairy farmers and units is 
classified in Class I-A, Class I-B, or Classes I-A and I-B combined.
    (d) Any plant which for any month is not a pool plant because of 
failure to meet the requirements of paragraph (a), (b), or (c) of this 
section shall be a pool plant in any month in which a daily average of 
at least 800 pounds of combined receipts of skim milk and butterfat in 
milk received from dairy farmers and units is classified as Class I-A in 
the marketing area or as Class I-A on the basis of a transfer to a pool 
plant, on some basis other than failure to account for such milk and if 
the percentage of combined receipts of skim milk and butterfat in milk 
classified as Class I-A and Class I-B is at least as great as the market 
percentage of pool milk in Classes I-A and I-B for the same month in the 
preceding year: Provided, That at the option of the handler, the plant 
shall not be a pool plant if none of the skim milk or butterfat in such 
milk from other than pool units is classified in such Class I-A: 
Provided further, That such plant shall not be a pool plant on the basis 
of this paragraph if it is located in the 401 miles and over freight 
zone.
    (e) A plant whose regular pool plant designation has been canceled 
at the request of the handler on the first of any of the months of 
August through November shall be a pool plant in any month through 
November 30 following such cancellation if the percentage of the 
combined receipts of skim milk and butterfat in milk received from dairy 
farmers and units classified in Class I-A, Class I-B or Classes I-A and 
I-B combined is at least as great as the market percentage of pool milk 
in Classes I-A and I-B for the same month in the preceding year unless 
such plant qualifies as a pool plant under an other order with a 
provision for marketwide equalization.
    (f) A plant shall not be a pool plant on the basis of this section 
for the periods and under the conditions set forth in paragraphs (f)(1) 
and (2) of this section:
    (1) If the pool plant designation was canceled on the first of 
August, September, October, or November pursuant to Sec. 1002.27(a), for 
the period through November 30 except as specified in paragraph (e) of 
this section.
    (2) If the pool plant designation was canceled pursuant Sec. 1002.27 
for failure to meet the requirements of Sec. 1002.26(a), for the period 
from the date the cancellation was effective through the following June 
30.
    (g) At the time of announcing the uniform price for each month, the 
market administrator shall make public the location and name of the 
operator of any plant for which a report of receipts from dairy farmers 
was used in the computation of that uniform price.

[33 FR 8201, June 1, 1968, as amended at 34 FR 18604, Nov. 22, 1969; 41 
FR 8367, Feb. 26, 1976]



Sec. 1002.29  Partial pool plants.

    The following plants not designated pool plants pursuant to 
Secs. 1002.24 and 1002.28, which plants distribute fluid milk products 
in the marketing area or transfer fluid milk products to a pool plant 
shall be designated partial pool plants:
    (a) Plants set forth in Sec. 1002.28(f).
    (b) Plants other than those set forth in paragraph (a) of this 
section which have some skim milk or butterfat in milk received from 
dairy farmers or nonpool units classified in Class I-A on some basis 
other than failure to account for such milk, except a plant which would 
otherwise qualify as a pool plant pursuant to Sec. 1002.28(d) but which 
has less than a daily average of 800 pounds of skim milk or butterfat in 
milk received from dairy farmers or

[[Page 86]]

units classified in Class I-A in the marketing area on some basis other 
than failure to account for such milk.

[33 FR 8201, June 1, 1968, as amended at 41 FR 8367, Feb. 26, 1976]

                                 Reports



Sec. 1002.30  Reports of receipts and utilization.

    Each handler, except a handler receiving own farm milk and not 
required to be listed pursuant either to Sec. 1002.11 or Sec. 1002.12, 
shall report each month to the market administrator for the preceding 
month in the manner and on the forms prescribed by the market 
administrator with respect to each pool plant, partial pool plant, pool 
unit or partial pool unit operated by such person, the information set 
forth in paragraphs (a) through (d) of this section. Such report shall 
be physically received at the office of the market administrator no 
later than the close of business on the 10th day of the month. Other 
information required to be reported no later than the 10th day of the 
month pursuant to Secs. 1002.25 and 1002.31 must also be physically 
received by the market administrator no later than the 10th day of the 
month.
    (a) The quantity of skim milk and butterfat contained in:
    (1) Receipts of milk from producers;
    (2) Receipts of fluid milk products from other pool plants or 
partial pool plants and from pool units or partial pool units; and
    (3) Receipts of other source milk.
    (b) Inventories at the beginning and the end of the month of fluid 
milk products and products specified in Sec. 1002.41(c)(1);
    (c) The utilization of all skim milk and butterfat required to be 
reported pursuant to this section, including the destination of any 
fluid milk product, the classification of which wholly or partially 
depends upon its destination; and
    (d) The computation pursuant to Sec. 1002.60 of such handler's net 
pool obligation.

[33 FR 8201, June 1, 1968, as amended at 55 FR 3199, Jan. 31, 1990; 56 
FR 5323, Feb. 11, 1991]



Sec. 1002.31  Producer payroll reports.

    Each handler shall report with respect to producers as set forth in 
paragraphs (a) and (b) of this section:
    (a) On or before the 10th day after the end of each month, the 
information required by the market administrator with respect to 
producer additions, producer withdrawals, and changes in names of farm 
operators; and
    (b) On or before the last day of each month such handler's producer 
payroll for the preceding month, which shall show for each producer:
    (1) The total pounds of milk from such producer;
    (2) The average butterfat content of such milk: Provided, That if no 
butterfat tests are made on any of the milk received from producers, and 
if such milk is received by the handler from no more than 10 producers, 
3.5 percent shall be reported as the average butterfat test of milk 
received from producers;
    (3) The amount of payment due each producer;
    (4) The nature and amount of any deductions and charges made by the 
handler;
    (5) The net amount of payment to such producer; and
    (6) Such other information with respect thereto as the market 
administrator shall require.



Sec. 1002.32  Other reports.

    At such time as the market administrator may request, each handler 
shall report to the market administrator in the manner and on forms 
prescribed by the market administrator:
    (a) The quantities of skim milk and butterfat in milk and each milk 
product received at his nonpool plants, from dairy farmers, from other 
plants or nonpool units, from such handler's own farm, from other 
handlers, and from other sources;
    (b) The quantities of skim milk and butterfat in milk and each milk 
product moved out of, or on hand at, his nonpool plants and the 
destination of such skim milk and butterfat;
    (c) Information concerning land, buildings, surroundings, facilities 
and equipment at any of his plants;

[[Page 87]]

    (d) The current receipts and utilization of skim milk and butterfat 
at each of his pool plants and pool units; and
    (e) Such other information as may be necessary for the 
administration of the provisions of this part.

                             Classification



Sec. 1002.40  General classification rules.

    All skim milk and butterfat required to be reported by each handler 
pursuant to Secs. 1002.30 and 1002.32 shall be classified each month 
pursuant to the provisions of Secs. 1002.41 through 1002.46, subject to 
the following conditions:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1002.30, including the pounds of skim milk and butterfat, 
respectively, in each class in accordance with Secs. 1002.40 through 
1002.44;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk used or disposed of in such product 
shall be considered to be an amount equivalent to the nonfat milk solids 
contained in such products plus all the water originally associated with 
such solids; and
    (c) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1002.45. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1002.45 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
    (d) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant or 
unit.

[58 FR 27778, May 11, 1993, as amended at 58 FR 63285, Dec. 1, 1993]



Sec. 1002.41  Classes of utilization.

    Subject to the conditions set forth in Secs. 1002.42 through 
1002.46, the classes of utilization shall be as follows:
    (a) Class I-A milk. Class I-A milk shall be all skim milk and 
butterfat:
    (1) Disposed of as a fluid milk product, except as otherwise 
provided in paragraphs (c) and (d) of this section:
    (i) Inside the marketing area;
    (ii) As route disposition in an other order marketing area;
    (iii) To an other order plant and assigned under such other order to 
Class I;
    (iv) In packaged form to an other order plant if such product is not 
defined as a fluid milk product under such other order; and
    (v) To a partially regulated plant under an other order and there 
applied as an offset to Class I sales in any other order market;
    (2) In packaged inventory of fluid milk products at the end of the 
month;
    (3) In shrinkage assigned to Class I-A pursuant to Sec. 1002.42(c); 
and
    (4) Not specifically accounted for as Class I-B, Class II or Class 
III milk.
    (b) Class I-B milk. Class I-B milk shall be all skim milk and 
butterfat:
    (1) Disposed of as a fluid milk product outside this or any other 
Federal order marketing area, except for:
    (i) Milk moved to a partially regulated plant under an other order 
and there applied as an offset to Class I sales in any other order 
market; and
    (ii) Inventory of packaged fluid milk products at nonpool plants 
that are not other order plants.
    (2) In shrinkage assigned to Class I-B pursuant to Sec. 1002.42(c).
    (c) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (d) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified

[[Page 88]]

in paragraph (c)(1) of this section and in bulk concentrated fluid milk 
products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of to a commercial food processor if the market administrator 
is permitted to audit the records of the commercial food processing 
establishment for the purpose of verification. Otherwise, such uses 
shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (d) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (c)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (c)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (c)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (c)(4)(i) through (iv) of this section, that 
are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (c)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (c)(4)(i) through (iv) of this section, that 
are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(c)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (c)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1002.15 and the fluid 
cream product definition pursuant to Sec. 1002.18; and
    (7) In shrinkage assigned pursuant to Sec. 1002.42(a) to the 
receipts specified in Sec. 1002.42(a)(2) and in shrinkage specified in 
Sec. 1002.42(b) and (c).

[[Page 89]]

    (e) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.

[56 FR 5323, Feb. 11, 1991, as amended at 58 FR 27778, May 11, 1993; 58 
FR 63285, Dec. 1, 1993]



Sec. 1002.42  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1002.30, the following shall be 
determined:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b)(1) through (5) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraph (b)(1) through 
(5) of this section, which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
pool milk received from producers, in milk received from pool units, and 
in milk received from units other than pool units, exclusive of the 
quantity for which Class II or Class III utilization was requested by 
the handler;
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in receipts of fluid milk products in bulk from other pool plants;
    (3) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in receipts of fluid milk products in bulk from plants other than those 
defined in Sec. 1002.8(b) or (d), excluding the quantity for which Class 
II or Class III classification is requested by the handler; and
    (5) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraph (b)(1) through (4) of this section; 
and
    (c) Shrinkage in excess of the amounts assigned to Class III 
pursuant to paragraphs (a) and (b) of this section shall be assigned pro 
rata to Class I-A and Class I-B in accordance with the respective 
volumes of skim milk and butterfat actually accounted for in each such 
class.

[56 FR 5323, Feb. 11, 1991]



Sec. 1002.44  Transfers.

    (a) Transfers to pool plants. Skim milk or butterfat transferred in 
the form of a fluid milk product or a bulk fluid cream product from a 
pool plant or a pool unit to another pool plant shall be classified as 
Class I-A milk unless the operators of both plants request the same 
classification in another class. In either case, the classification of 
such transfers shall be subject to the following conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant after the computations 
pursuant to Sec. 1002.45(a)(17) and the corresponding step of 
Sec. 1002.45(b). The amount of skim milk or butterfat classified in each 
class shall include the assigned utilization of skim milk or butterfat 
in transfers of concentrated fluid milk products;
    (2) If the transferor-plant received during the month other source 
milk to be allocated pursuant to Sec. 1002.45(a)(8) or the corresponding 
step of Sec. 1002.45(b), the skim milk or butterfat so transferred shall 
be classified so as to allocate the least possible Class I utilization 
to such other source milk; and
    (3) If the transferor-handler received during the month other source 
milk to be allocated pursuant to Sec. 1002.45(a) (13) or (15) or the 
corresponding steps of Sec. 1002.45(b), the skim milk or butterfat so 
transferred, up to the total of the skim milk and butterfat, 
respectively, in such receipts of other source milk,

[[Page 90]]

shall not be classified as Class I milk to a greater extent than would 
be the case if the other source milk had been received at the 
transferee-plant.
    (b) Transfers to other order plants. Skim milk or butterfat 
transferred in the form of a fluid milk product or a bulk fluid cream 
product from a pool plant to an other order plant shall be classified in 
the following manner:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes (either Class I-A, II or III) to which allocated 
as a fluid milk product under the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both the transferor and the transferee 
plants so request in the reports of receipts and utilization filed with 
their respective market administrators, transfers in bulk form shall be 
classified as Class II or Class III milk to the extent of such 
utilization available for such classification pursuant to the allocation 
provisions of the other order;
    (4) If information concerning the classes to which such transfers 
were allocated under the other order is not available to the market 
administrator for the purpose of establishing classification under this 
paragraph, classification shall be as Class I-A, subject to adjustment 
at a later date;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class 1-A milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1002.41.
    (c) Transfers to producer-handlers. Skim milk or butterfat in the 
following forms that is transferred from a pool plant to a producer-
handler under this or any other Federal order shall be classified:
    (1) As Class I-A milk, if transferred in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers to other nonpool plants. Skim milk or butterfat 
transferred in the following forms from a pool plant or a pool unit to a 
nonpool plant that is not an other order plant or a producer-handler 
plant shall be classified:
    (1) As Class I-A milk, if transferred in the form of a packaged 
fluid milk product; and
    (2) As Class I-A milk, if transferred in the form of a bulk fluid 
milk product or a bulk fluid cream product, unless the following 
conditions apply:
    (i) The transferring handler claims classification pursuant to the 
assignment set forth in paragraph (d)(3) of this section in the 
handler's report submitted to the market administrator pursuant to 
Sec. 1002.30 for the month within which such transaction occurred;
    (ii) The operator of such transferee plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for the purpose of verification;
    (iii) In determining the nonpool plant's utilization for purposes of 
this section, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a second nonpool plant shall be 
classified pursuant to the same assignment procedure with respect to 
receipts and utilization at such second nonpool plant, except that 
classification of such transfers in Class I-A and I-B shall not be less 
than the quantities which would be assigned to those classes if the 
transfer of such products had been directly from a pool plant or pool 
unit.

[[Page 91]]

    (3) Skim milk and butterfat so transferred shall be classified on 
the basis of the following assignment of utilization at the transferee 
plant pursuant to paragraph (d)(2)(ii) of this section:
    (i) Packaged receipts of fluid milk products from Federal order 
sources shall first be assigned to route disposition in Federal order 
marketing areas (assigning receipts to sales in the same market to the 
extent possible) and any residual shall be assigned to Class 1-B route 
sales.
    (ii) Such bulk transfers and other bulk receipts of fluid milk 
products at such transferee plant from pool plants and units and from 
other order plants shall next be assigned to any remaining route 
disposition in any Federal order marketing area. For this purpose 
receipts from each Federal order market shall first be assigned to 
remaining route sales in such marketing area and any remainder of such 
receipts shall be prorated with all Federal order receipts to remaining 
route disposition in all Federal order marketing areas.
    (iii) Receipts from dairy farmers shall then be assigned to any 
remaining route sales in the marketing area.
    (iv) Remaining receipts from dairy farmers and other unregulated 
other source receipts (excluding opening inventory) in the form of fluid 
milk products shall be assigned pro rata to Class I-B, Class II and 
Class III utilization at such plant to the extent of such utilization 
available at such plant and any remainder of such receipts shall be 
assigned pro rata to Class I-A bulk sales to plants regulated under this 
order and Class I bulk sales to plants regulated under other orders.
    (v) Receipts of bulk fluid cream products from plants defined 
pursuant to Sec. 1002.8 (b) and (d) shall be assigned pro rata among 
such plants to any remaining Class II and Class III utilization on a pro 
rata basis, then to any remaining Class I-A disposition and finally any 
Class I-B disposition.
    (vi) Any remaining receipts of fluid milk products or bulk fluid 
cream products being assigned pursuant to this paragraph shall be 
assigned pro rata with remaining receipts from other order plants, first 
to remaining Class I-A utilization, then to Class I-B utilization, then 
to Class II utilization, and finally to Class III utilization at such 
plant: Provided, That if on inspection of the books and records of such 
plant the market administrator finds that there is insufficient 
utilization to cover such receipts, the remainder shall be classified as 
Class I-A.
    (vii) Any remaining Class I-A route disposition in any Federal 
marketing area shall be subject to the pricing specified in 
Sec. 1002.60(d)(2).

[56 FR 5324, Feb. 11, 1991, as amended at 58 FR 27779, May 11, 1993]



Sec. 1002.45  Allocation of skim milk and butterfat classified.

    The classification of milk received from producers at each pool 
plant or pool unit for each handler shall be determined each month 
pursuant to paragraphs (a), (b), and (c) of this section: Provided, That 
for the purpose of establishing the pool status of any plant with Class 
I-A route disposition in the marketing area which is not a pool plant 
pursuant to Sec. 1002.24, skim milk and butterfat in milk received at 
such plant directly from dairy farmers or units up to an amount 
sufficient to qualify such plant as a pool plant pursuant to 
Sec. 1002.28 (a) or (b) shall be considered the source of such Class I-A 
route disposition of such plant and be subtracted from Class I-A prior 
to the application of the allocation sequence set forth in paragraphs 
(a) and (b) of this section, unless at the time of filing the handler's 
report pursuant to Sec. 1002.30 the handler elects not to have it so 
allocated.
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk classified as Class III pursuant to Sec. 1002.42(b);
    (2) Subtract the pounds of skim milk received in packaged form from 
a producer-handler for marketing as certified fluid milk products from 
the total pounds of skim milk in Class I-A and Class 1-B milk, 
respectively, in accordance with its proportionate disposition in such 
classes;
    (3) Subtract from the remaining pounds of skim milk in Class III, 2 
percent of the pounds of skim milk in packaged fluid milk products 
received

[[Page 92]]

from other order plants, and subtract the balance from Class I-A;
    (4) Subtract from the remaining pounds of skim milk in Class 1-A the 
pounds of skim milk in packaged fluid milk products in inventory at the 
beginning of the month. This paragraph shall apply only if the pool 
plant was subject to the provisions of this paragraph (a)(4) or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (5) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1002.41(c)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1002.41(c)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph (a)(6) or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (7) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1002.41(c) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1002.41(d)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class I-A, Class II and Class III milk, in series 
beginning with Class III, the pounds of skim milk in:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(6) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1002.41(c)(1) that was not subtracted pursuant to paragraphs 
(a)(5), (a)(6) and (a)(7) of this section;
    (ii) Receipts of fluid milk products not approved by a duly 
constituted health authority which are excepted from the pool milk 
definition pursuant to Sec. 1002.14(b);
    (iii) Receipts of fluid milk products from a producer-handler 
pursuant to an other order or a producer-handler defined pursuant to 
Sec. 1002.12 (except pool milk designated in the preamble of 
Sec. 1002.14).
    (iv) Receipts of fluid milk products from a handler's plant at which 
milk is excepted from the pool milk definition pursuant to 
Sec. 1002.14(h).
    (v) Receipts of fluid milk products from a handler with own farm 
milk, which milk is excepted from the pool milk definition pursuant to 
Sec. 1002.14(i).
    (9) Subtract in series beginning with Class III from the pounds of 
skim milk remaining in Class II and Class III milk the pounds of skim 
milk in receipts of other source milk in the form of fluid milk products 
from plants other than those defined in Sec. 1002.8 (b) or (d) and units 
other than pool units for which the handler requests a Class II or Class 
III classification, but not in any case to exceed the pounds of skim 
milk remaining in such class;
    (10) Subtract from the remaining pounds of skim milk in Class II or 
Class III milk the pounds of skim milk in bulk receipts of fluid milk 
products from other order plants not previously assigned and for which a 
Class II or Class III classification is requested by both the transferor 
and transferee handler in filing reports of receipts and utilization for 
the month with their respective market administrators, but not in any 
case to exceed the pounds of skim milk remaining in such class;
    (11) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1002.41(c)(1), in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(4), (6) and (8)(i) of this section;

[[Page 93]]

    (12) Add to the remaining pounds of skim milk in Class III the 
pounds subtracted pursuant to paragraph (a)(1) of this section;
    (13)(i) Subtract pro rata from the pounds of skim milk remaining in 
Class I-B, Class II and Class III milk the remaining pounds of skim milk 
in receipts of other source milk in the form of fluid milk products from 
plants not defined pursuant to Sec. 1002.8 (b) or (d) and from units 
other than pool units: Provided, That if the pounds of skim milk to be 
assigned pursuant to this paragraph (a)(13)(i) exceed the available 
pounds of skim milk in Class I-B, Class II, and Class III the handler 
shall designate the priority of sources to be assigned to such classes;
    (ii) No assignment shall be made pursuant to this paragraph with 
respect to milk received from a plant not defined pursuant to 
Sec. 1002.8 (b) or (d) in the 401 miles and over freight zone at a plant 
from which 50 percent or more of the gross receipts of skim milk and 
butterfat leaves the plant in the form of fluid milk products in 
consumer packages or dispenser inserts and is classified as Class I-A;
    (14) Subtract pro rata from the remaining pounds of skim milk in 
each class the pounds of skim milk in receipts from dairy farmers and 
from the handler's own farm which are excepted from the pool milk 
definition pursuant to Sec. 1002.14 (h) and (i);
    (15) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of 
fluid milk products from other order plants not previously assigned 
pursuant to paragraph (a) (3) and (10) of this section:
    (i) Subject to the provisions of this paragraph, such subtraction 
shall be pro rata to the pounds of skim milk in each class with respect 
to whichever of the following quantities represents the higher 
proportion of Class II and Class III milk combined:
    (A) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1002.22(d); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(15)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I-A 
milk and Class I-B milk after such proration at the pool plants at which 
such other source milk was received;
    (iii) Except as provided in paragraph (a)(15)(ii) of this section, 
should the computations pursuant to paragraph (a)(15) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and Class 
III combined shall be increased (increasing as necessary Class III and 
then Class II to the extent of available utilization in such classes at 
the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I-A milk and Class I-B milk combined shall be decreased by a like 
amount, pro rata to remaining utilization in each such class. In such 
case, the pounds of skim milk remaining in each class at this allocation 
step at the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount; and
    (iv) Except as provided in paragraph (a)(15)(ii) of this section, 
should the computations pursuant to paragraph (a)(15) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class I-A milk or Class I-B milk that exceeds the pounds of skim milk 
remaining in that class, the pounds of skim milk in such class shall be 
increased by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class II and Class III combined shall be 
decreased by a like amount (decreasing

[[Page 94]]

as necessary Class III and then Class II). In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount in sequence beginning with the nearest other pool plant 
of such handler at which Class I-A or Class I-B utilization is 
available;
    (16) If the plant at which assignment is being made is a plant from 
which 50 percent or more of the gross receipts of skim milk and 
butterfat in the form of fluid milk products left the plant in the form 
of fluid milk products in consumer packages or dispenser inserts and was 
classified as Class I-A, subtract pro rata from the remaining pounds of 
skim milk in each class the pounds of skim milk in receipts of fluid 
milk products from plants in the 401 miles and over freight zone, not 
defined pursuant to Sec. 1002.8 (b) or (d);
    (17) Subtract from the remaining pounds of skim milk in Class I-A 
milk the pounds of skim milk in remaining receipts from plants (except 
other order plants) or units the pool status of which has not yet been 
established and which receipts have not previously been assigned 
pursuant to paragraph (a) (13) and (16) of this section;
    (18) Subtract from the remaining pounds of skim milk in each class 
the pounds of skim milk received in the form of fluid milk products and 
bulk fluid cream products from other pool plants and from pool units 
(not previously assigned pursuant to the preamble of this section), in 
accordance with the classification assigned by the transferee handler 
subject to the conditions of paragraph (a)(18) (i) through (iii) of this 
section:
    (i) The skim milk so assigned to any class of utilization shall be 
limited to the amount thereof remaining in such class in the transferee 
plant;
    (ii) If the transferor plant received during the month other source 
milk to be allocated pursuant to paragraph (a)(7) of this section the 
skim milk so transferred shall be classified so as to allocate the least 
possible Class I-A or I-B utilization to such other source milk; and
    (iii) If the transferor handler received during the month other 
source milk to be allocated pursuant to paragraph (a)(13) of this 
section, the skim milk so transferred shall not be classified as Class 
I-A or I-B to a greater extent than would be applicable to a like 
quantity of such other source milk received at the transferee plant;
    (19) Add to the remaining pounds of skim milk in Class I-A the 
pounds of skim milk received directly from dairy farmers or units which 
was deducted pursuant to the proviso in the preamble of this section;
    (20) If the pounds of skim milk remaining in all classes exceeds the 
pounds of skim milk in receipts from producers subtract such excess from 
the pounds of skim milk remaining in each class in series beginning with 
Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) Combine the amounts of skim milk and butterfat determined 
pursuant to paragraphs (a) and (b) of this section into one total for 
each class.

[56 FR 5325, Feb. 11, 1991, as amended at 58 FR 27779, May 11, 1993]



Sec. 1002.46  Rules and regulations.

    Accounting rules and regulations to effectuate the provisions of 
Secs. 1002.40 through 1002.45 shall be issued by the market 
administrator and shall include (but not be limited to) conversion 
factors to be used in the absence of specific weights and tests, 
specific definitions of products, specific shrinkage allowances and 
procedures for determining the quantities of skim milk and butterfat 
disposed of in specified products. Such rules and regulations shall be 
made, and may from time to time be amended, by the market administrator 
in accordance with the procedure set forth in this section: Provided, 
That at any time upon a determination by the Secretary that an emergency 
exists which requires the immediate adoption of rules and regulations, 
the market administrator may issue, with the approval of the Secretary, 
temporary rules and regulations without regard to the following 
procedure: Provided further, That, if any interested person makes 
written request for the issuance,

[[Page 95]]

amendment, or repeal of any rule, the market administrator shall within 
30 days either issue notice of meeting pursuant to paragraph (a) of this 
section or deny such request and except in affirming a prior denial, or 
where the denial is self-explanatory, shall state the grounds for such 
denial: Provided further, That if the market administrator finds it 
necessary to promulgate formal rules with respect to units, he shall 
follow the procedure set forth in this section.
    (a) All proposed rules and regulations and amendments thereto shall 
be the subject of a meeting called by the market administrator at which 
time all interested persons shall have opportunity to be heard. Notice 
of such meeting shall be given by the market administrator, and a copy 
of the proposed rules and regulations shall be sent at least 5 days 
prior to the date of the meeting to all handlers operating pool plants. 
A stenographic record shall be made at all such meetings and such record 
shall be public information available for inspection at the office of 
the market administrator.
    (b) A period of at least 5 days after the meeting held pursuant to 
paragraph (a) of this section shall be allowed for the filing of briefs. 
Such briefs shall be public information available for inspection at the 
office of the market administrator.
    (c) Not later than 30 days after a meeting held pursuant to 
paragraph (a) of this section, the market administrator shall issue and 
send to all handlers, operating pool plants and pool units the tentative 
rules and regulations or amendments thereto relating to the issues 
considered at such meeting, or a tentative notice that no rules or 
regulations or amendments thereto are to be issued prior to further 
consideration at another meeting. The tentative rules and regulations, 
or tentative notice, together with copies of the stenographic record and 
briefs, shall also at the same time be forwarded by the market 
administrator to the Secretary.
    (d) Not later than 30 days after issuance by the market 
administrator, the Secretary shall either approve the tentative rules 
and regulations or tentative notice as issued, or direct the market 
administrator to reconsider. In which latter event, the market 
administrator shall within 30 days either issue revised tentative rules 
and regulations or tentative notice, or call another meeting pursuant to 
paragraph (a) of this section.
    (e) The tentative rules and regulations and amendments thereto or 
tentative notice issued pursuant to paragraph (c) of this section shall 
be effective as of the first of the month following approval by the 
Secretary, but not sooner than 10 days after issuance by the market 
administrator.

                             Minimum Prices



Sec. 1002.50  Class prices.

    For pool milk received during each month from dairy farmers or 
cooperative associations of producers, each handler shall pay per 
hundredweight not less than the prices set forth in this section, 
subject to the differentials and adjustments in Secs. 1002.52 and 
1002.81. Any handler who purchases or receives milk during any month 
from a cooperative association of producers but does not operate the 
plant or unit receiving this milk from producers shall pay the 
cooperative association on or before 2 days before the last day of the 
month if paid by check, or the last day of the month if paid in cash or 
cash equivalent, at not less than the lowest class price pursuant to 
this section for the preceding month for milk received from such 
cooperative during the first 15 days of the month, and shall pay the 
cooperative association on or before the 15th day of the following month 
the balance due for milk received during the month from such cooperative 
at not less than the class prices pursuant to this section subject to 
the differentials and adjustments set forth in Secs. 1002.52 and 1002.81 
applicable at the plant at which the milk is first received from the 
cooperative association. Such payments to a cooperative association 
shall be deemed not to have been made until the payments have been 
received by the cooperative association.
    (a) Class I-A price. For Class I-A milk the Class I price in the 
201-210 mile freight zone shall be the basic formula price for the 
second preceding month

[[Page 96]]

plus Sec. 2.42. The differential value in the 1-10 mile freight zone 
shall be $3.14.
    (b) Class I-B price. For Class I-B milk the price shall be the price 
for Class I-A milk.
    (c) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (d) Class III price. Subject to the adjustment set forth below for 
the applicable month, the Class III price shall be the basic formula 
price for the month.

------------------------------------------------------------------------
              Month                 Amount         Month          Amount
------------------------------------------------------------------------
January..........................     +.03  July...............     +.03
February.........................     +.02  August.............     +.10
March............................     -.05  September..........     +.06
April............................     -.09  October............     +.06
May..............................     -.12  November...........     +.06
June.............................     -.11  December...........     +.06
------------------------------------------------------------------------

    (e) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential times 35 and rounded to 
the nearest cent, and subject to the adjustments set forth in paragraph 
(d) of this section for the applicable month.

[56 FR 5327, Feb. 11, 1991, as amended at 58 FR 63285, Dec. 1, 1993; 60 
FR 6607, Feb. 2, 1995]



Sec. 1002.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1002.81 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.

[[Page 97]]

    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent reporting period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.

[60 FR 18954, Apr. 14, 1995]



Sec. 1002.52  Transportation differentials.

    The class prices set forth in Sec. 1002.50 shall be subject to a 
transportation differential determined in accordance with paragraphs (a) 
through (e) of this section.
    (a) The market administrator shall determine a freight zone for each 
pool plant and each partial pool plant. Such freight zone shall be the 
shortest highway mileage from the plant to the nearest of the following 
points as computed by the market administrator from data contained in 
Mileage Guide No. 5, without supplements, issued on July 20, 1949, 
effective August 21, 1949, by the Household Goods Carriers' Bureau, 
Agent, Washington, DC: Mount Vernon or Yonkers in the State of New York; 
Tenafly, Glen Ridge, East Orange, Elizabeth, Hackensack, Hillside, 
Irvington, or Passaic in the State of New Jersey. The freight zone for 
plants located in New York City, Nassau, and Suffolk Counties in the 
State of New York, or in Essex, Hudson, and Union Counties in the State 
of New Jersey shall be in the 1- to 10-mile zone. The market 
administrator shall publicly announce the freight zones for pool plants.
    (b) The market administrator shall determine and publicly announce a 
freight zone for each minor civil division (township, borough, 
incorporated village, or city) within which farms included in a pool or 
partial pool unit are located by computing the shortest highway mileage 
distance from the nearest point in the minor civil division to the 
nearest point specified in paragraph (a) of this section, using the 
mileage guide specified in such paragraph supplemented by U.S. 
Geological Survey maps. In States where the smallest governmental unit 
except for incorporated cities or villages is the county, a zone for the 
county shall be determined in the same manner as for minor civil 
divisions. The zone for each farm shall be the zone of the minor civil 
division or county in which the farm is located.
    (c) The differential rates applicable at plants shall be as set 
forth in the following schedule:

------------------------------------------------------------------------
                       A                             B            C
------------------------------------------------------------------------
                                                              Classes II
              Freight zone miles                Classes I-A  and III and
                                                  and I-B       III-A
------------------------------------------------------------------------
 1-10.........................................        +72.0           +8
11-20.........................................        +69.5           +8
21-25.........................................        +67.0           +8
26-30.........................................        +67.0           +7
31-40.........................................        +64.5           +7
41-50.........................................        +62.0           +7
51-60.........................................        +59.5           +6
61-70.........................................        +57.0           +6
71-75.........................................        +32.5           +6
76-80.........................................        +32.5           +5
81-90.........................................        +30.0           +5
91-100........................................        +27.5           +5
101-110.......................................        +25.0           +4
111-120.......................................        +22.5           +4
121-125.......................................        +20.0           +4
126-130.......................................        +20.0           +3
131-140.......................................        +17.5           +3
141-150.......................................        +15.0           +3
151-160.......................................        +12.5           +2
161-170.......................................        +10.0           +2
171-175.......................................         +7.5           +2
176-180.......................................         +7.5           +l
181-190.......................................         +5.0           +1
191-200.......................................         +2.5           +1
201-210.......................................          0.0            0
211-220.......................................         -2.5            0

[[Page 98]]

 
221-225.......................................         -5.0            0
226-230.......................................         -5.0            0
231-240.......................................         -7.5            0
241-250.......................................        -10.0            0
251-260.......................................        -12.5            0
261-270.......................................        -15.0            0
271-275.......................................        -17.5            0
276-280.......................................        -17.5            0
281-290.......................................        -20.0            0
291-300.......................................        -22.5            0
301-310.......................................        -25.0            0
311-320.......................................        -27.5            0
321-325.......................................        -30.0            0
326-330.......................................        -30.0            0
331-340.......................................        -32.5            0
341-350.......................................        -35.0            0
351-360.......................................        -37.5            0
361-370.......................................        -40.0            0
371-375.......................................        -42.5            0
376-380.......................................        -42.5            0
381-390.......................................        -45.0            0
391-400.......................................        -47.5            0
401 and over..................................        -50.0            0
------------------------------------------------------------------------

    (d) The differential rate applicable to each pool unit or partial 
pool unit shall be computed each month as follows: Multiply the volume 
of pool milk received from farms in each zone by the rate for that zone 
as set forth in the schedule in paragraph (c) of this section, add the 
resulting values for all zones of the unit, divide such sum by the total 
volume of milk received by the unit and round to the nearest 0.1 cent. 
Rates shall be computed separately for Columns B and C of such schedule.
    (e) In the event that a plant in the 401 miles and over freight zone 
becomes a pool plant, a 10-mile zone shall be determined for such plant 
and for each farm in any pool unit delivering to such plant. The Column 
B differentials in paragraph (c) of this section shall be extended at 
the same rate as provided in such column for such plant or unit: 
Provided, That in no case shall such differential cause the class price 
or the uniform price for such plant or unit to be less than the Class 
III price for such plant or unit: Provided further, That farms or units 
delivering to such plant shall be deemed to be in the same zone as the 
plant.

[33 FR 8201, June 1, 1968, as amended at 37 FR 2929, Feb. 10, 1972; 46 
FR 41756, Aug. 18, 1981; Redesignated and amended at 56 FR 5327 and 
5328, Feb. 11, 1991; 58 FR 63285, Dec. 1, 1993]



Sec. 1002.53  Producer-handler price differential.

    For skim milk and butterfat received from a handler who is a 
producer-handler under this or any other order and is assigned to Class 
I-A pursuant to Sec. 1002.45(a)(8)(iii), the transferee handler shall 
pay a differential equal to the difference between the Class I-A price 
and the Class III price both appropriately adjusted for differentials 
pursuant to Sec. 1002.52.

[56 FR 5328, Feb. 11, 1991]



Sec. 1002.54  Use of equivalent price or index.

    If for any reason a price or index specified by this part for use in 
computing class prices or other purposes is not reported or published in 
the manner therein described, the market administrator shall use a price 
or index determined by the Secretary to be equivalent to or comparable 
with the price or index specified.



Sec. 1002.55  Transportation credit on bulk unit pool milk.

    For pool milk received by a handler in a pool or partial pool unit, 
a transportation credit at the rate of 15 cents per hundredweight shall 
be computed.

[56 FR 5328, Feb. 11, 1991]



Sec. 1002.56  Announcement of class prices and butterfat differential.

    The market administrator shall announce publicly on or before the 
fifth day of each month, the following:
    (a) The Class I price for the following month applicable at the 201-
210 mile zone and at the 1-10 mile zone.
    (b) The Class II price for the following month applicable at the 
201-210 mile zone and at the 1-10 mile zone.
    (c) The Class III and Class III-A prices for the preceding month 
applicable at the 201-210 mile zone and at the 1-10 mile zone;
    (d) The butterfat differential for the preceding month;
    (e) The basic formula price for the preceding month, pursuant to 
Sec. 1002.51, as reported by the United States Department of 
Agriculture.
    (f) The average price per hundredweight for manufacturing grade 
milk,

[[Page 99]]

f.o.b. plants in Wisconsin and Minnesota, using the base month series, 
for the second preceding month, as reported by the United States 
Department of Agriculture.
    (g) The average price per pound of Grade A (92-score) butter, at the 
Chicago Mercantile Exchange, for the preceding month, as reported by the 
United States Department of Agriculture.
    (h) The average price per pound, of nonfat dry milk f.o.b. Western 
Area, for the preceding month, as reported by the United States 
Department of Agriculture.

[56 FR 5328, Feb. 11, 1991, as amended at 58 FR 63285, Dec. 1, 1993; 60 
FR 6607, Feb. 2, 1995; 60 FR 18955, Apr. 14, 1995]

                     Determination of Uniform Price



Sec. 1002.60  Net pool obligation of handlers.

    Each handler's net pool obligation for milk received at each plant 
and unit shall be computed separately pursuant to paragraphs (a) through 
(d) of this section and then combined into one total to be adjusted by 
any credit applicable pursuant to paragraph (e) of this section to 
determine the handler's total net pool obligation.
    (a) Multiply the quantity of milk in each class remaining after the 
computation pursuant to Sec. 1002.45(a)(20) and the corresponding step 
of Sec. 1002.45(b) by the applicable class price adjusted by the 
applicable differential pursuant to Sec. 1002.52:
    (b) For each partial pool plant or partial pool unit multiply the 
quantity of pool milk in each class by the applicable class price 
adjusted by the applicable differential pursuant to Sec. 1002.52;
    (c) Deduct, in the case of each plant or unit nearer than the 201-
to-210-mile zone and add, in the case of each plant or unit farther than 
the 201-to-210-mile zone, the sum obtained by multiplying the quantity 
of pool milk received from dairy farmers by the differential in Column B 
of Sec. 1002.52(c) applicable at the plant and weighted average Column B 
differential computed pursuant to Sec. 1002.52(d) applicable to the 
unit.
    (d) Add the amounts computed in paragraph (d) (1) through (4) of 
this section:
    (1) Multiply the pounds of overage deducted from each class pursuant 
to Sec. 1002.45(a)(20) and the corresponding step of Sec. 1002.45(b) by 
the applicable class price adjusted by the differentials pursuant to 
Secs. 1002.52 and 1002.81;
    (2) Multiply the pounds of skim milk and butterfat in receipts of 
nonfluid milk products subtracted from Class I-A pursuant to 
Sec. 1002.45(a)(8)(i) and the corresponding step of Sec. 1002.45(b) and 
the pounds of skim milk and butterfat specified in 
Sec. 1002.44(d)(3)(vii) by the difference between the Class I-A and 
Class III prices, each adjusted by the applicable differential pursuant 
to Sec. 1002.52;
    (3) Multiply the pounds of skim milk and butterfat in receipts of 
nonfluid milk products assigned to Class I pursuant to Sec. 1002.40(c) 
by the difference between the Class I price less $1.00 (but not to be 
less than the Class III price) and the Class III price, both adjusted by 
the applicable differential pursuant to Sec. 1002.52. Alternatively, the 
handler may, with respect to such receipts of nonfluid milk products 
processed from producer milk regulated under another Federal order, 
elect to make payment to the producer-settlement fund of the other order 
at the difference between the Class I price applicable under the other 
order at the location of the plant where the nonfluid milk products were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
products is regulated under one or more Federal orders and payment may 
only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk products. This 
payment option shall not apply if the source of the nonfluid milk 
products used in reconstituted fluid milk products cannot be determined 
by the market administrator;
    (4) Multiply the quantity of skim milk and butterfat in receipts of 
concentrated fluid milk products from plants other than those defined in 
Sec. 1002.8(b) or (d) or as a producer-handler and which are assigned to 
Class I pursuant to Sec. 1002.40(c) or which are subtracted from Class 
I-A pursuant to Sec. 1002.45(a)(8)(i) and the corresponding

[[Page 100]]

step of Sec. 1002.45(b) by the Class I price, adjusted by the applicable 
differential pursuant to Sec. 1002.52.
    (5) Multiply the producer-handler price differential by the pounds 
of skim milk and butterfat subtracted from Class I-A pursuant to 
Sec. 1002.45(a)(8)(iii) and the corresponding step of Sec. 1002.45(b);
    (6) Multiply the difference between the Class III price for the 
preceding month and the Class I-A price or the Class II price, as the 
case may be, for the current month, both applicable at the location of 
the nearest plant or unit from which an equivalent quantity of Class III 
milk was received in the preceding month, by the pounds of skim milk and 
butterfat subtracted from Class I-A and Class II pursuant to 
Sec. 1002.45(a)(11) and the corresponding step of Sec. 1002.45(b).
    (e) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.
    (f) Deduct any credit applicable pursuant to Sec. 1002.55.

[33 FR 8201, June 1, 1968, as amended at 34 FR 18605, Nov. 22, 1969; 35 
FR 16790, Oct. 30, 1970; 39 FR 11981, Apr. 2, 1974; 39 FR 30925, Aug. 
27, 1974; 41 FR 8367, Feb. 26, 1976. Redesignated and amended at 56 FR 
5328, Feb. 11, 1991; 58 FR 27779, May 11, 1993]



Sec. 1002.61  Computation of the uniform price.

    The market administrator shall, on or before the 14th day of each 
month, audit for mathematical correctness and obvious errors the report 
submitted for the preceding month by each handler. If the unreserved 
cash balance in the producer settlement fund to be included in the 
computation is less than 2 cents per hundredweight of pool milk on all 
reports, the report of any handler who has not made payment of the last 
monthly pool debit account rendered pursuant to Sec. 1002.71 shall not 
be included in the computation of the uniform price. The report of such 
handler shall not be included in the computation for succeeding months 
until he has made full payment of outstanding monthly pool debits. 
Subject to the aforementioned conditions, the market administrator shall 
compute the uniform price in the following manner:
    (a) Combine into one total the net pool obligations of all handlers 
computed pursuant to Sec. 1002.60;
    (b) Subtract the total of payments required to be made pursuant to 
Sec. 1002.77;
    (c) Subtract an amount computed by multiplying the quantity of pool 
milk delivered directly from farms to pool plants and partial pool 
plants that was not put into a tank truck prior to such delivery, by a 
rate per hundredweight that is equal to the rate specified in 
Sec. 1002.55;
    (d)-(e) [Reserved]
    (f) Add the amount of unreserved cash in the producer settlement 
fund;
    (g) Subtract an amount equal to not less than 8 cents nor more than 
9 cents per hundredweight of pool milk and receipts of concentrated 
fluid milk products for which a payment obligation is computed pursuant 
to Sec. 1002.60(d)(4) to provide against the contingency of errors in 
reports and payments or of delinquencies in payments by handlers; and
    (h) Divide the result obtained in paragraph (g) of this section by 
the total pounds of pool milk delivered by dairy farmers and the total 
pounds of concentrated fluid milk products for which a payment 
obligation is computed pursuant to Sec. 1002.60(d)(4). The result shall 
be known as the uniform price.

[33 FR 8201, June 1, 1968, as amended at 37 FR 4175, Feb. 29, 1972; 42 
FR 52380, Sept. 30, 1977. Redesignated and amended at 56 FR 5329, Feb. 
11, 1991; 58 FR 27780, May 11, 1993; 59 FR 16512, Apr. 7, 1994]



Sec. 1002.62  Announcement of uniform price.

    The market administrator shall publicly announce, on or before the 
14th

[[Page 101]]

day of each month, the uniform price for the preceding month pursuant to 
Sec. 1002.61 applicable at the 201-210 mile zone and at the 1-10 mile 
zone pursuant to Sec. 1002.82.

[56 FR 5329, Feb. 11, 1991]

               Producer Settlement Fund and Its Operation



Sec. 1002.70  Producer settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer settlement fund'' into which he shall 
deposit all payments and out of which he shall make all payments 
pursuant to Secs. 1002.72 through 1002.77. All amounts subtracted under 
Sec. 1002.61(d), inclusive of interest earned thereon, shall remain 
therein as an obligated balance until it is withdrawn for the purpose of 
effectuating Sec. 1002.61(e).

[56 FR 5329, Feb. 11, 1991]



Sec. 1002.71  Handler's accounts.

    The market administrator shall establish an account for each handler 
who is required to make payments to the producer settlement fund or who 
received payments from the producer settlement fund. After computing the 
uniform price and each handler's pool debit or credit each month, and at 
such times as he deems appropriate, the market administrator shall 
render each handler a statement of his account showing the debit or 
credit balance, together with all debits or credits entered on such 
handler's account since the previous statement was rendered: Provided, 
That the handler operating a pool plant receiving milk from a partial 
pool plant or partial pool unit without producers as defined in 
Sec. 1002.6, or from a partial pool plant in the 401 miles or over 
freight zone, shall be responsible for the debit or credit arising on 
milk so received and for the payment of the administration assessment 
pursuant to Sec. 1002.85 on such milk.

[33 FR 8201, June 1, 1968. Redesignated and amended at 56 FR 5329, Feb. 
11, 1991]



Sec. 1002.72  Payments to the producer-settlement fund.

    On or before the 16th day of each month each handler shall make full 
payment to the market administrator of the debit balance, if any, of 
such handler shown on the last statement of account rendered pursuant to 
Sec. 1002.71. Payments to the market administrator shall be deemed not 
to have been made until such payments have been received by the market 
administrator. If the date by which such payments must be received by 
the market administrator falls on a Saturday or Sunday or a national 
holiday, such payments shall not be due until the next day that the 
market administrator's office is open for public business.

[42 FR 11823, Mar. 1, 1977, as amended at 55 FR 3200, Jan. 31, 1990. 
Redesignated and amended at 56 FR 5329, Feb. 11, 1991]



Sec. 1002.73  Payments out of producer-settlement fund.

    (a) On or before the 17th day of each month the market administrator 
shall make payment to each handler of the credit balance, if any, of 
such handler shown on the last statement of account rendered pursuant to 
Sec. 1002.71. If the date by which such payments are to be made falls on 
Saturday or Sunday or a national holiday, such payments need not be made 
until the next day that the market administrator's office is open for 
public business. If payments to the producer-settlement fund under 
Sec. 1002.72 were delayed because the due date fell on a Saturday or 
Sunday or a national holiday, payments under this paragraph may be 
delayed by the same number of days.
    (b) If the balance in the producer-settlement fund is insufficient 
to make full payment required under paragraph (a) of this section, the 
market administrator shall reduce uniformly the payments to each handler 
and shall complete such payments as soon as the necessary funds are 
available. No handler who, on the 20th day of the month, has not 
received such payments in full from the market administrator shall be 
deemed to be in violation of Secs. 1002.80 through 1002.82 if he reduces 
his total

[[Page 102]]

payments to producers for milk delivered by such producers during the 
preceding month by not more than the amount of the reduction in payment 
from the producer-settlement fund.

[42 FR 11823, Mar. 1, 1977, as amended at 55 FR 3200, Jan. 31, 1990; 56 
FR 5329, Feb. 11, 1991]



Sec. 1002.74  Handler's pool debit or credit.

    After computing the uniform price for each month, the market 
administrator shall compute each handler's pool debit or credit as 
follows:
    (a) Add the contents computed as follows:
    (1) Multiply the quantity of pool milk received by each handler from 
dairy farmers by the uniform price;
    (2) Multiply the quantity of pool milk received by the handler at a 
pool plant or partial pool plant directly from farms that was not put 
into a tank truck prior to delivery by a rate per hundredweight that is 
equal to the rate specified in Sec. 1002.55;
    (3) Multiply the quantity of concentrated fluid milk products for 
which a payment obligation is computed pursuant to Sec. 1002.60(d)(4) by 
the uniform price.
    (b) If the result obtained in paragraph (a) of this section is less 
than the handler's net pool obligation, the difference shall be entered 
on the handler's producer settlement fund account as such handler's pool 
debit.
    (c) If the result obtained in paragraph (a) of this section is 
greater than the handler's net pool obligation, the difference shall be 
entered on the handler's producer settlement fund account as such 
handler's pool credit.

[33 FR 8201, June 1, 1968, as amended at 42 FR 52381, Sept. 30, 1977. 
Redesignated at 56 FR 5329, Feb. 11, 1991, and amended at 58 FR 27780, 
May 11, 1993]



Sec. 1002.75  Adjustments of errors in payments.

    Whenever verification by the market administrator of reports or 
payments of any handler discloses errors made in payments to or from the 
producer settlement fund, the market administrator shall debit the 
handler's producer settlement fund account for any unpaid amount. 
Whenever verification discloses that payment is due from the market 
administrator to any handler, the market administrator shall credit the 
handler's producer settlement fund account for any such amount.

[33 FR 8201, June 1, 1968. Redesignated at 56 FR 5329, Feb. 11, 1991]



Sec. 1002.76  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Secs. 1002.72 and 
1002.85 shall be increased 1 percent on the first day after the due date 
of such obligation and on the same day of each succeeding month until 
such obligation is paid.

[42 FR 52381, Sept. 30, 1977. Redesignated and amended at 56 FR 5329, 
Feb. 11, 1991]



Sec. 1002.77  Cooperative payments for marketwide services.

    Payments shall be made to qualified cooperatives or to federations 
under the conditions, in the manner, and at the rates set forth in this 
section.
    (a) Definitions. As used in this section the following terms shall 
have the following meanings:
    (1) Cooperative means a cooperative association of producers which 
is duly incorporated under the cooperative corporation laws of a state; 
is qualified under the Capper-Volstead Act (7 U.S.C. 291 et seq.); has 
all its activities under the control of its members; and has full 
authority in the sale of its members' milk.
    (2) Federation means a federation of cooperatives which is duly 
incorporated under the laws of a State.
    (3) Federated cooperatives means a cooperative which is a member of 
a federation and on whose membership the federation is an applicant for 
or receives payments under paragraph (f)(2) of this section.
    (4) Affiliated cooperatives means a cooperative upon whose entire 
membership another cooperative, by mutual consent, is an applicant for 
or receives payments under paragraph (f)(2) of this section.
    (5) Member producer means, when used with respect to a cooperative 
or federation which is an applicant for or is receiving payments, is a 
producer as defined in Sec. 1002.6 who has met the following conditions:

[[Page 103]]

    (i) He is a member of the cooperative or one of its affiliated 
cooperatives, or in the case of a federation, he is a member of one of 
its federated cooperatives from whom the cooperative, affiliated 
cooperative, or federated cooperative is receiving at least 1 cent per 
hundredweight of milk delivered by him: Provided, That the cooperative 
of which he is a member is meeting the requirements of this part 
applicable to it;
    (ii) He has been a producer, or his farm, as defined in 
Sec. 1002.10, had been the farm of a producer for at least a prior 12-
month period; and
    (iii) He has not for a prior 12-month period been a member producer 
of another cooperative or federation: Provided, That in the case of 
membership transfers resulting from mergers of designated organizations, 
or from affiliation, federation or merger of cooperatives not previously 
meeting the definition of paragraph (a)(3) or (a)(4) of this section, 
this paragraph shall not apply.
    (6) Marketwide services means services performed by cooperatives or 
federations, as defined herein, which benefit all producers in the 
marketing of their milk under this order; such services are not limited 
to those specified in paragraphs (e)(1) through (6) of this section and 
may include services directly or indirectly related to the order.
    (b) Designated cooperatives and federations. A cooperative or 
federation may submit an application to the market administrator for 
payments under the provisions of this section or for modification of the 
basis of a previous designation. In accordance with the requirements of 
the rules and regulations issued by the market administrator such 
application shall include a written description of the applicant's 
program for the performance of marketwide services, including evidence 
that adequate facilities and personnel will be maintained by it so as to 
enable it to perform the marketwide services; and the application shall 
contain a statement by the applicant that it will perform the required 
marketwide services for which it is applying for payments: Provided, 
That in the case of an application for modification of the basis for a 
previous designation the market administrator may waive the requirement 
for submission of the written description of the programs. The 
application shall set forth all necessary data so as to enable the 
market administrator to determine whether it meets the designation 
requirements with respect to the payments for which the application is 
submitted. An application shall be approved by the market administrator 
only if he determines that:
    (1) In the case of a cooperative;
    (i) It has as member producers not less than 15 percent of all 
producers, as defined in Sec. 1002.6;
    (ii) It has contracts with each of its affiliated cooperatives under 
which the cooperatives agree to continue as affiliated cooperatives for 
at least 1 year, and such contracts cover or will be renewed for a 
yearly period for every subsequent year for which member producers of 
the affiliated cooperative are to be included within its membership for 
cooperative payment purposes;
    (iii) It receives from each of its affiliated cooperatives not less 
than 1 cent per hundredweight of milk delivered by member producers of 
such cooperatives; and
    (iv) If the application is also for an additional payment under 
paragraph (f)(3) of this section, the cooperative or its affiliated 
cooperatives operate marketing facilities, i.e., pool plants and pool 
bulk tank units, at which is received at least 25 percentum, by weight, 
of all milk delivered by its member producers; and, in addition, the 
cooperative or its affiliated cooperatives control processing facilities 
capable of handling at least 10 percentum, by weight, of all milk 
marketed by its member producers: Provided, That such processing 
facilities must be capable of handling not less than 1 million pounds of 
milk daily: Provided further, That the cooperative must be willing to 
accept nonmember milk on a temporary basis under the generally 
prevailing conditions for acceptance of milk from its own members.
    (2) In the case of a federation:
    (i) It has contracts with each of its federated cooperatives under 
which the cooperatives agree to remain in the federation for at least 1 
year, and such

[[Page 104]]

contracts cover or will be renewed for a yearly period for every 
subsequent year for which the federated cooperatives are to be included 
within the membership of the federation for cooperative payment 
purposes;
    (ii) It has as member producers not less than 15 percent of all 
producers, as defined in Sec. 1002.6;
    (iii) It receives from each of its federated cooperatives not less 
than 1 cent per hundredweight of milk delivered by member producers of 
such cooperative;
    (iv) If the application is also for an additional payment under 
paragraph (f)(4) of this section, the federation or its federated 
cooperatives operate marketing facilities, i.e., pool plant(s) and pool 
bulk tank unit(s), at which is received at least 25 percentum, by 
weight, of the milk marketed by its member producers; and, in addition, 
the federation or its federated cooperatives control processing 
facilities capable of handling at least 10 percentum, by weight, of all 
milk marketed by its member producers: Provided, That such processing 
facilities must be capable of handling not less than 1 million pounds of 
milk daily: Provided further, That the federation must be willing to 
accept nonmember milk on a temporary basis under the generally 
prevailing conditions for such acceptance of milk from its own members.
    (3) The applicant cooperative or federation demonstrates that it has 
the ability to perform the marketwide services for which application is 
made, and that such services will be performed.
    (4) The applicant cooperative or the federated cooperatives of an 
applicant federation are in no way precluded from arranging for the 
utilization of milk under their respective control so as to yield the 
highest available net return to all producers without displacing an 
equivalent quantity of other producer milk in the preferred 
classification.
    (c) Notice of designation or denial; effective date. Upon 
determination by the market administrator that a cooperative or a 
federation shall be designated to receive payment for performance of the 
marketwide services, he shall transmit such determination to the 
applicant cooperative or federation and publicly announce the issuance 
of the determination. The determination shall be effective with respect 
to milk delivered on and after the first day of the month following 
issuance of the determination. If, after consideration of an application 
for payments for marketwide services, the market administrator 
determines that the cooperative or federation is not qualified to 
receive such payments he shall promptly notify the applicant and 
specifically set forth in such notice his reasons for denial of the 
application.
    (d) Requirements for continued designation. From time to time and in 
accordance with the rules and regulations which may be issued by the 
market administrator, each designated cooperative or federation must 
demonstrate to the market administrator that it continues to meet the 
designation requirements for the payments and is fully performing the 
marketwide services for which it is being paid.
    (e) Marketwide services. Each cooperative or federation shall 
perform the marketwide services enumerated in this paragraph. Such 
services shall include:
    (1) Analyzing milk marketing problems and their solutions, 
conducting market research and maintaining current information as to all 
market developments, preparing and assembling statistical data relative 
to prices and marketing conditions, and making an economic analysis of 
all such data;
    (2) determining the need for the formulation of amendments to the 
order and proposing such amendments or requesting other appropriate 
action by the Secretary or the market administrator in the light of 
changing conditions;
    (3) participating in proceedings with respect to amendments to the 
order, including the preparation and presentation of evidence at public 
hearings, the submission of appropriate briefs and exceptions, and also 
participating, by voting or otherwise, in the referenda relative to 
amendments;
    (4) participating in the meetings called by the market 
administrator, such as meetings with respect to rules and regulations 
issued under the order, including activities such as the preparation and 
presentation of data at such

[[Page 105]]

meetings and briefs for submission thereafter;
    (5) conducting a comprehensive education program among producers--
i.e., members and nonmembers of cooperatives--and keeping such producers 
well informed for participation in the activities under the regulatory 
order and, as a part of such program, issuing publications that contain 
relevant data and information about the order and its operation, and the 
distribution of such publications to members and, on the same 
subscription basis, to nonmembers who request it, and holding meetings 
at which members and nonmembers may attend;
    (6) in the case of a cooperative or federation which receives an 
additional payment under paragraph (f)(3) or (4) of this section, 
operating marketing facilities, or having affiliated cooperatives or 
federated cooperatives that operate marketing facilities, i.e., pool 
plant(s) and pool bulk tank unit(s), at which is received at least 25 
percentum, by weight, of milk marketed by its member producers; and in 
addition, controls, or having affiliated cooperatives or federated 
cooperatives that control processing facilities capable of handling at 
least 10 percentum, by weight, of the milk marketed by its member 
producers: Provided, That such processing facilities must be capable of 
handling at least one million pounds of milk daily: Provided further, 
That the cooperative or federation must be willing to accept nonmember 
milk on a temporary basis under the generally prevailing conditions for 
such acceptance of milk of its own members; and
    (7) performing such other services as are needed to maintain 
satisfactory marketing conditions and promote market stability.
    (f) Rate, computation, time, and method of payment. (1) Subject to 
the provisions of paragraph (g) of this section, the market 
administrator, on or before the 20th day of each month, shall make 
payment out of the producer-settlement fund, or issue equivalent credit 
therefore, to each cooperative or federation which is designated for 
such payments for marketwide services. The payments to a cooperative or 
federation shall be based upon the milk reported by cooperative or 
proprietary handlers to have been received during the preceding month 
from its member producers, subject to adjustment upon verification by 
the market administrator.
    (2) Such payment or credit shall be at the rate of 3 cents per 
hundredweight of milk in accordance with paragraph (f)(1) of this 
section.
    (3) Any cooperative that operates marketing facilities or whose 
affiliated cooperatives operate marketing facilities, i.e., pool 
plant(s) and pool bulk tank unit(s), at which is received at least 25 
percentum, by weight, of the milk marketed by its member producers, and, 
in addition, controls, or has affiliated cooperatives that control, 
processing facilities capable of handling, at least 10 percentum, by 
weight, of the milk marketed by its member producers but not less than 
one million pounds of milk daily shall receive a payment in addition to 
that provided for in paragraph (f)(2) of this section of one cent per 
hundredweight of all milk marketed by member producers in accordance 
with paragraph (f)(1) of this section.
    (4) Any federation that operates marketing facilities, or whose 
federated cooperatives operate marketing facilities, i.e., pool plant(s) 
and pool bulk tank unit(s), at which is received at least 25 percentum, 
by weight, of the milk marketed by its member producers, and, in 
addition, controls, or whose federated cooperatives control, processing 
facilities capable of handling at least 10 percentum of the milk 
marketed by its member producers but not less than 1 million pounds 
daily, shall receive a payment, in addition to the payment provided for 
in paragraph (f)(2) of this section, of 1 cent per hundredweight of all 
milk marketed by member producers in accordance with paragraph (f)(1) of 
this section.
    (5) If an individually designated cooperative is affiliated with a 
federation, the cooperative payment shall be made to such cooperative 
unless its contract with the federation specified in writing that the 
federation is to receive the payments. Any such contract must authorize 
the federation to receive the payments for at least 1 year, and such 
agreement must cover or be renewed

[[Page 106]]

for a yearly period for every subsequent year for which the federation 
is to receive the payments.
    (g) Cancellation of designation. (1) The market administrator shall 
issue an order wholly or partly canceling the designation of a 
previously designated cooperative or federation for payments authorized 
pursuant to this section and such payments shall not thereafter be made 
to it if he determines that:
    (i) The cooperative or federation no longer complies with the 
requirements of this part: Provided, That if one of its affiliated or 
federated cooperatives has failed to comply with the requirements of 
this part applicable to it or has failed, promptly after demand by the 
market administrator, to arrange for the utilization of milk under its 
control so as to yield the highest available net return to all producers 
without displacing an equivalent quantity of other producer milk in the 
preferred classification, the cooperative or federation shall be 
disqualified only to the extent that its qualification for payments or 
the amount of its payment are based upon the membership, milk, or 
operations of such noncomplying affiliated or federated cooperatives.
    (ii) The cooperative or federation has failed to make reports or 
furnish records pursuant to this section or pursuant to rules and 
regulations issued by the market administrator; or
    (iii) In the case of the cooperative, it has failed, promptly after 
demand by the market administrator, to arrange for the utilization of 
milk under its control so as to yield the highest available net return 
to all producers without displacing an equivalent quantity of other 
producer milk in the preferred classification.
    (2) An order of the market administrator wholly or partly canceling 
the designation of a cooperative or federation shall not be issued until 
after the cooperative or federation has had opportunity for hearing 
thereon following not less than 15 days' notice to it specifying the 
reasons for the proposed cancellation. If the cooperative or federation 
fails to file a written request for hearing with the market 
administrator within such period of 15 days, the market administrator 
may issue an order of cancellation without further notice: But if within 
such period a request for hearing is filed, the market administrator 
shall promptly proceed to hold such hearing pursuant to rules and 
regulations issued by him under paragraph (i) of this section.
    (3) A cancellation order issued by the market administrator shall 
set forth the findings and conclusions on the basis of which it is 
issued.
    (h) Appeals--(1) From denials of application. Any cooperative or 
federation whose application for designation has been denied by the 
market administrator may, within 30 days after notice of such denial, 
file with the Secretary a written petition for review. But the failure 
to file such petition shall not bar the cooperative or federation from 
again applying to the market administrator for designation.
    (2) From cancellation orders. A cancellation order by the market 
administrator shall become final 30 days after its service on the 
cooperative or federation unless within such 30-day period the 
cooperative or federation files a written petition with the Secretary 
for review thereof. If such petition for review is filed, payments for 
which the cooperative or federation has been canceled by the order shall 
be held in reserve by the market administrator pending ruling of the 
Secretary, after which the sums so held in reserve shall either be 
returned to the producer-settlement fund or paid over to the cooperative 
or federation depending on the Secretary's ruling on the petition. If 
such petition for review is not filed, any payments which otherwise 
would be made within the 30-day period following issuance of the 
cancellation order shall be held in reserve until such order becomes 
final and shall then be returned to the producer-settlement fund.
    (3) Record on appeal. If an appeal is taken under paragraph (h) (1) 
or (2) of this section, the market administrator shall promptly certify 
to the Secretary the ruling or order appealed from and the evidence upon 
which it was issued: Provided, That if a hearing was held the complete 
record thereof, including the applications, petitions, and all exhibits 
or other documentary material submitted in evidence shall be the record 
so certified. Such certified material

[[Page 107]]

shall constitute the sole record upon which the appeal shall be decided 
by the Secretary.
    (i) Regulations. The market administrator is authorized to issue 
regulations and amendments thereto to effectuate the provisions of this 
section and to facilitate and implement the administration of its 
provisions. Such regulations shall be issued in accordance with the 
following procedure:
    (1) All proposed rules and regulations and amendments thereto shall 
be the subject of a meeting called by the market administrator, at which 
all interested persons shall have opportunity to be heard. Not less than 
5 days prior to the meeting, notice thereof and of the proposed 
regulations or amendments shall be mailed to qualified cooperatives and 
federations. A stenographic record shall be made at such meetings which 
shall be public information and be available for inspection at the 
office of the market administrator.
    (2) A period of at least 5 days after the meeting shall be allowed 
for the filing of briefs.
    (3) All regulations and amendments thereto issued by the market 
administrator pursuant to this section must be submitted in tentative 
form to the Secretary for approval, shall not be effective without such 
approval. The regulations or amendments in tentative form shall be 
forwarded also to cooperatives and federations designated under this 
section and to other persons upon request in writing. The Secretary 
shall either approve the regulations or amendments thereto submitted by 
the market administrator or direct the market administrator to 
reconsider the tentative rules or amendments. In the event the market 
administrator is directed to give reconsideration to the matter, the 
market administrator shall either issue revised tentative regulations or 
amendments or call another meeting pursuant to this section for 
additional consideration of the rules or amendments.
    (j) Reports and records. Each designated cooperative or federation 
shall, in accordance with rules and regulations issued by the market 
administrator:
    (1) After submission to the market administrator for verification, 
make a public report of its performance of marketwide services pursuant 
to this section, including data on its receipts and expenditure of 
cooperative payments funds and a description of the marketwide services 
performed. The report shall contain a certification by the market 
administrator that the report is, to the best of his knowledge, accurate 
and in accordance with the rules and regulations which he has 
established.
    (2) Submit an annual report to the market administrator which shall 
include:
    (i) A concise report of its performance of marketwide services and 
allocations of expenditures to such performance for the previous year; 
and
    (ii) An outline of its proposed program and budget for performance 
of marketwide services for the coming year.
    (3) Make such additional reports to the market administrator as may 
be requested by him for the administration of the provisions of this 
section.
    (4) Maintain and make available to the market administrator or his 
representative such records as will enable the market administrator to 
verify such reports.
    (k) Notices, demands, orders, etc. All notices, demands, orders, or 
other papers required by this section to be given to or served upon a 
cooperative or federation shall be deemed to have been given or served 
as of the time when mailed to the last known secretary of the 
cooperative or federation at his last known address.

[33 FR 14230, Sept. 20, 1968, as amended at 55 FR 3200, Jan. 31, 1990. 
Redesignated and amended at 56 FR 5329, Feb. 11, 1991; 60 FR 62019, Dec. 
4, 1995]

                Payment by Handlers Directly to Producers



Sec. 1002.80  Time and rate of payments.

    (a) On or before the last day of the month, each handler shall make 
payment to each producer for milk received from such producer during the 
first 15 days of the month at not less than the lowest class price for 
the preceding month.

[[Page 108]]

    (b) On or before the 20th day of the month, each handler shall make 
payment, pursuant to paragraphs (c), (d), (e), (f) and (g) of this 
section, to each producer for the balance due for all milk received from 
such producer during the preceding month at not less than the uniform 
price for such month, subject to the following adjustments:
    (1) Appropriate differentials set forth in Secs. 1002.81 and 
1002.82;
    (2) Proper deductions for the month that were authorized in writing 
by producers from whom the handler received milk (except as specified in 
paragraph (a)(3) of this section);
    (3) For milk received in a bulk tank unit and for which 
transportation was provided by the handler or at his expense, there may 
be deducted, as proper and as authorized in writing by the producer, or 
by a cooperative association authorized to act on behalf of such 
producer, a tank truck service (transportation) charge. This charge may 
include any farm-to-first plant transportation costs for which the 
handler was not reimbursed through the transportation credit pursuant to 
Sec. 1002.55, but such charge shall be reduced by the amount that the 
class use location value of milk at the plant of first receipt exceeds 
its class use location value where the milk was accounted for as a 
receipt in the bulk tank unit from which the milk was transferred. Any 
such deduction, plus the transportation credit, and plus the amount of 
the increase in class use location value of the milk at the plant 
compared to the unit shall not exceed the actual transportation costs 
incurred. Any such deduction also must be made by the handler not later 
than the date on which the producer is required to be paid for such 
milk. If authorization for such deduction is cancelled by the producer 
or by the cooperative by notifying the handler in writing, such 
cancellation shall be effective on the first day of the month following 
its receipt by the handler; and
    (4) For pool milk delivered directly from a farm to a pool plant or 
a partial pool plant that was not put into a tank truck prior to such 
delivery, the handler shall pay to the producer an additional amount 
computed by multiplying the quantity of such milk by a rate per 
hundredweight that is equal to the rate specified in Sec. 1002.55.
    (c) Upon receipt of a written request from a cooperative association 
which the market administrator determines is authorized by its producer-
members to collect payment for their milk, each handler, on or before 2 
days before payments are due to individual producers if paid by check, 
or the same day such payments are due to individual producers if paid in 
cash or cash equivalent, shall pay the cooperative association for milk 
received during the month from the producer-members of such association 
an amount equal to not less than the total amount otherwise due such 
producer-members as determined pursuant to paragraphs (a) and (b) of 
this section.
    (d) Each handler which is also a cooperative marketing association, 
determined by the Secretary to be qualified under the Capper-Volstead 
Act with respect to producers who are members of and under contract with 
such association, may make distribution in accordance with the contract 
between the association and such members of the net proceeds of all its 
sales in all markets in all use classifications.
    (e) Whenever verification by the market administrator of the payment 
to any producer or cooperative association of producers for milk 
delivered to any handler discloses payment of less than is required by 
this part, the handler shall make up such payment to the producer or 
cooperative association of producers not later than the time of making 
payment next following such disclosure.
    (f) If a handler claims that he cannot make the required payment 
because the producer is deceased or cannot be located, or because the 
cooperative association or its lawful successor or assignee is no longer 
in existence, such payment shall be made to the producer settlement 
fund, and in the event that the handler subsequently locates and pays 
the producer or a lawful claimant, or in the event that the handler no 
longer exists and a lawful claim is later established, the market 
administrator shall make such payment from the producer settlement fund 
to the handler or to the lawful claimant as the case may be.

[[Page 109]]

    (g) If not later than the date when such payment is required to be 
made, legal proceedings have been instituted by the handler for the 
purpose of administrative or judicial review of the market 
administrator's findings upon verification as provided above such 
payment shall be made to the producer settlement fund and shall be held 
in reserve until such time as the above-mentioned proceedings have been 
completed or until the handler submits proof to the market administrator 
that the required payment has been made to the producer or association 
of producers in which latter event the payment shall be refunded to the 
handler.

[33 FR 8201, June 1, 1968, as amended at 42 FR 11823, Mar. 1, 1977; 42 
FR 52380, Sept. 30, 1977; 46 FR 41756, Aug. 18, 1981; 55 FR 3200, Jan. 
31, 1990]



Sec. 1002.81  Butterfat differential.

    The butterfat differential for the adjustment of prices as specified 
in this part shall be plus or minus for each one-tenth of one percent of 
butterfat above or below 3.5 percent by an amount computed as follows: 
Round to the nearest one-tenth cent, 0.138 times the current month's 
butter price less 0.0028 times the preceding month's average pay price 
per hundredweight, at test, for manufacturing grade milk in Minnesota 
and Wisconsin, using the ``base month'' series, adjusted pursuant to 
Sec. 1002.51 (a) through (e), as reported by the Department. The butter 
price means the simple average for the month of the Chicago Mercantile 
Exchange, Grade A butter price as reported by the Department.

[60 FR 18955, Apr. 14, 1995]



Sec. 1002.82  Transportation differentials.

    The transportation differential shall be plus or minus the 
appropriate differential shown in column B of the schedule in 
Sec. 1002.52(c) for the zone of the plant to which the milk is delivered 
or in the case of farms included in units the zone of the township in 
which the milk is received.

[56 FR 5329, Feb. 11, 1991]

                        Expense of Administration



Sec. 1002.85  Payment by handlers.

    To share on a pro rata basis the expense of administration of this 
part, each handler shall, on or before the date specified for making 
payment to the producer-settlement fund pursuant to Sec. 1002.72, pay to 
the market administrator a sum not exceeding five cents per 
hundredweight on the total quantity of pool milk received from dairy 
farmers at plants or from farms in a unit operated by such handler, 
directly or at the instance of a cooperative association of producers 
and on the quantity for which payment is made pursuant to 
Sec. 1002.60(d)(2), the exact amount to be determined by the market 
administrator subject to review by the Secretary. This section shall not 
be deemed to duplicate any similar payment by any handler under an order 
issued by the Commissioner of Agriculture and Markets of the State of 
New York, or the Director of the Division of Dairy Industry of the New 
Jersey Department of Agriculture, with respect to the marketing area. 
Whenever verification by the market administrator discloses an error in 
the payment made by any handler, such error shall be adjusted not later 
than the date next following such disclosure on which payments are due 
pursuant to this section.

[42 FR 11823, Mar. 1, 1977, as amended at 53 FR 48516, Dec. 1, 1988; 53 
FR 49966, Dec. 12, 1988. Redesignated and amended at 56 FR 5329, Feb. 
11, 1991]



PART 1004--MILK IN THE MIDDLE ATLANTIC MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1004.1  General provisions.

                               Definitions

1004.2  Middle Atlantic marketing area.
1004.3  Route disposition.
1004.4  Plant.
1004.5-1004.6  [Reserved]
1004.7  Pool plant.
1004.8  Nonpool plant.
1004.9  Handler.
1004.10  Producer-handler.

[[Page 110]]

1004.11  Dairy farmer.
1004.12  Producer.
1004.13  Producer milk.
1004.14  Other source milk.
1004.15  Fluid milk product.
1004.16  Fluid cream product.
1004.17  Filled milk.
1004.18  Exempt milk.
1004.19  Federation.
1004.20  Cooperative association.
1004.21  [Reserved]
1004.22  Commercial food processing establishment.

                             Handler Reports

1004.30  Reports of receipts and utilization.
1004.31  [Reserved]
1004.32  Other reports.

                         Classification of Milk

1004.40  Classes of utilization.
1004.41  Shrinkage.
1004.42  Classification of transfers and diversions.
1004.43  General classification rules.
1004.44  Classification of producer milk.
1004.45  Market administrator's reports and announcements concerning 
          classification.

                       Class and Component Prices

1004.50  Class and component prices.
1004.51  Basic formula prices.
1004.52  Location differentials to handlers.
1004.53  Announcement of class prices and component prices.
1004.54  Equivalent prices or indexes.

                Differential Pool and Handler Obligations

1004.60  Handler's value of milk for computing uniform prices.
1004.61  Computation of weighted average differential price, and 
          producer nonfat milk solids price.
1004.62  Computation of uniform price.
1004.63  Announcement of weighted average differential price, nonfat 
          milk solids price and producer nonfat milk solids price.

                            Payments for Milk

1004.70  Producer-settlement fund.
1004.71  Payments to the producer-settlement fund.
1004.72  Payments from the producer-settlement fund.
1004.73  Value of producer milk.
1004.74  Payments to producers and to cooperative associations.
1004.75  Location differentials to producers and on nonpool milk.
1004.76  Payments by a handler operating a partially regulated 
          distributing plant.
1004.77  Adjustment of accounts.
1004.78  Charges on overdue accounts.
1004.79  Direct-delivery differential.

        Administrative Assessment and Marketing Service Deduction

1004.85  Assessment for order administration.
1004.86  Deductions for marketing services.

    Authority: Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source: 40 FR 18753, Apr. 30, 1975, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1004.1  General provisions.

    The terms, definitions, and provisions in Part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1004.2  Middle Atlantic marketing area.

    Middle Atlantic marketing area (hereinafter called the ``marketing 
area'') means all territory within the boundaries of the following 
places, including piers, docks and wharves and territory within such 
boundaries occupied by government (municipal, State, or Federal) 
reservations, installations, institutions or other similar 
establishments:
    (a) The District of Columbia.
    (b) The State of Delaware.
    (c) In the State of Maryland:
    (1) The counties of:

    Anne Arundel, Baltimore, Calvert, Caroline, Carroll, Cecil, Charles, 
Dorchester, Frederick, Harford, Howard, Kent, Montgomery, Prince 
Georges, Queen Annes, Somerset, St. Marys, Talbot, Washington, Wicomico, 
Worcester.

    (2) The city of Baltimore.
    (d) In the State of New Jersey:
    (1) The counties of:

    Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, 
Mercer, Salem.

    (2) In Ocean County:
    (i) The townships of:

    Eagleswood, Lacey, Long Beach, Little Egg Harbor, Ocean, Stafford, 
Union.

    (ii) The boroughs of:


[[Page 111]]


    Barnegat Light, Beach Haven, Harvey Cedars, Ship Bottom, Tuckerton.

    (e) In the State of Pennsylvania, the counties of:

    Adams, Bucks, Chester, Cumberland, Dauphin, Delaware, Franklin, 
Fulton, Juniata, Lancaster, Lebanon, Montgomery, Perry, Philadelphia, 
York.

    (f) In the State of Virginia:
    (1) The counties of:

    Arlington, Fairfax, Loudoun, Prince William.

    (2) The cities of:

    Alexandria, Falls Church, Fairfax.



Sec. 1004.3  Route disposition.

    Route disposition means any delivery of a fluid milk product from a 
plant to a retail or wholesale outlet (including any delivery through a 
distribution depot, by a vendor, from a plant store or through a vending 
machine) except any delivery to a plant.



Sec. 1004.4  Plant.

    Except as specifically provided in Sec. 1004.7(d)(2), plant means 
the land and buildings together with their surroundings, facilities and 
equipment, whether owned or operated by one or more persons, 
constituting a single operating unit or establishment for the receiving, 
processing or packaging of milk or milk products (including filled 
milk). However, a separate facility used only for the purpose of 
transferring bulk milk from one tank truck to another tank truck or only 
as a distribution depot for fluid milk products in transit for route 
distribution shall not be included under this definition.

[50 FR 16453, Apr. 26, 1985]



Secs. 1004.5-1004.6  [Reserved]



Sec. 1004.7  Pool plant.

    Except as provided in paragraph (f) of this section, pool plant 
means a plant (except a producer-handler plant or the plant of a handler 
pursuant to Sec. 1004.9(e)) specified in paragraphs (a) through (e) of 
this section.
    (a) A plant from which during the month a volume not less than 40 
percent in the months of September through February, and 30 percent in 
the months of March through August, of its receipts described in 
paragraph (a)(1) or (2) of this section is disposed of as Class I milk 
(except filled milk) and a volume not less than 15 percent of such 
receipts is disposed of as route disposition (other than as filled milk) 
in the marketing area.
    (1) Milk received at such plant directly from dairy farmers 
(excluding milk diverted as producer milk pursuant to Sec. 1004.12, by 
either the plant operator or by a cooperative association, and also 
excluding the milk of dairy farmers for other markets) and from a 
cooperative in its capacity as a handler pursuant to Sec. 1004.9(c); or
    (2) In the case of a plant with no receipts described in paragraph 
(a)(1) of this section, receipts of fluid milk products (other than 
filled milk) from other plants.
    (3) A plant which meets the ``pool plant'' requirements of this 
paragraph during any month shall retain its pool status during the 
immediately succeeding two months as long as the plant continues to meet 
the 15-percent in-area Class I disposition requirement, unless written 
application is filed by the plant operator with the market administrator 
on or before the first day of any such month requesting that the plant 
be designated a nonpool plant for such month and each subsequent month 
during which it does not otherwise qualify pursuant to this paragraph.
    (4) A plant's status as an other order plant pursuant to paragraph 
(f) of this section will become effective beginning the third 
consecutive month in which a plant is subject to the classification and 
pricing provisions of another order.
    (b) Any plant not meeting the conditions of paragraph (a) of this 
section from which during the month a quantity of fluid milk products 
(other than filled milk) not less than the applicable percentage (as 
specified in paragraph (b)(1) of this section) of such plant's receipts 
of milk from dairy farmers (including milk diverted as producer milk 
pursuant to Sec. 1004.12 by either the plant operator or by a 
cooperative association) and from a cooperative association in its 
capacity as a handler pursuant to Sec. 1004.9(c) is moved to a plant(s) 
meeting the percentage disposition requirements specified in paragraph 
(a)

[[Page 112]]

of this section with respect to its total receipts of fluid milk 
products (other than filled milk) from dairy farmers, cooperative 
associations as handlers pursuant to Sec. 1004.9(c) and from other 
plants. However, a plant shall not qualify pursuant to this paragraph in 
any month in which a greater proportion of its qualifying shipments are 
made to a plant(s) regulated under another Federal order than to plants 
regulated under this order.
    (1) The applicable percentage for the purpose of this paragraph 
shall be:
    (i) 50 percent for any month of September through February; and
    (ii) 40 percent for any month of March through August.
    (2) [Reserved]
    (c) [Reserved]
    (d) A plant operated in accordance with paragraph (d)(1), (2) or (3) 
of this section, subject to the requirement of paragraph (d)(4) of this 
section.
    (1) A reserve processing plant operated by a cooperative association 
at which milk from dairy farmers is received if the total of fluid milk 
products (except filled milk) transferred from such cooperative 
association plant(s) to, and the milk of member producers physically 
received at, pool plants pursuant to Sec. 1004.7(a) is not less than 25 
percent of the total milk of member producers during the month.
    (2) A reserve processing plant operated by a federation of 
cooperative associations if, during the month, 30 percent or more of the 
producer milk of member producers of such cooperative is caused to be 
delivered to and physically received at pool plants qualified pursuant 
to paragraph (a) of this section either from the farms of such producers 
or by transfer in the form of fluid milk products (except filled milk) 
from the plant(s) of such cooperatives. If a pipeline is maintained 
between a reserve processing plant and a nonpool plant operated by 
another person and located on the same premises, the reserve processing 
plant shall be a pool plant for the month if the operator of such plant 
proves to the satisfaction of the market administrator that such plant 
should be eligible for pool status on the basis of the plant's monthly 
receipts and disposition of milk and that the pipeline was used only to 
move by-products (not milk) between such plants during the month.
    (3) A reserve processing plant owned and operated by a cooperative 
association that also owns and operates a pool plant pursuant to 
Sec. 1004.7(a) so long as the volume of the cooperative's member milk 
pooled at the reserve processing plant does not exceed the volume of 
sales of Class I milk (except filled milk) from the cooperative's pool 
distributing plant, plus the milk of member producers received directly 
at pool plants pursuant to Sec. 1004.7(a) of other handlers during the 
month.
    (4) A cooperative or federation of cooperatives operating a pool 
reserve processing plant qualified pursuant to this paragraph shall 
notify the market administrator each month, at the time of filing 
reports pursuant to Sec. 1004.30 and in the detail prescribed by the 
market administrator, with respect to any receipts from member dairy 
farmers of the cooperative(s) delivering to such plant not meeting the 
health requirements for disposition as fluid milk in the marketing area.
    (e) A plant that qualified as a pool plant pursuant to paragraph (b) 
or (d) of this section during each of the immediately preceding months 
of September through February shall be qualified for automatic pool 
plant status for each of the following months of March through August, 
unless the plant operator files a written request with the market 
administrator prior to the beginning of any such month asking that such 
plant not be a pool plant. Such nonpool status shall be effective on the 
first day of the month following the receipt of such request and shall 
continue until the plant again qualifies as a pool plant pursuant to 
paragraph (b) or (d) of this section, subject to the following 
conditions:
    (1) The automatic pool plant status for any plant identified in 
paragraph (e) of this section shall be cancelled if another plant is 
qualified as a pool plant on the basis of deliveries to the same plants 
through which such automatic pooling status was acquired by the plant. 
Cancellation of the plant's automatic pool plant status shall be 
effective on the first day of the month in which the other plant is 
qualified as a pool plant and shall continue until the

[[Page 113]]

plant again qualifies as a pool plant pursuant to paragraph (b) or (d) 
of this section; and
    (2) The automatic pool plant status of a reserve processing plant 
operated by a federation of cooperative associations qualified pursuant 
to paragraph (d)(2) of this section shall be forfeited for any month 
during the March through August period in which the market administrator 
determines on the basis of the investigation conducted pursuant to 
paragraph (d)(2) of this section that such plant shall not be a pool 
plant for the month.
    (f) A plant specified in paragraph (f)(1) or (2) of this section 
shall, except as provided in Secs. 1004.32(e) and 1004.71(c), be exempt 
from the provisions of this part:
    (1) Any plant qualified pursuant to paragraph (a) of this section 
which would be subject to the classification and pricing provisions of 
another order issued pursuant to the Act unless the Secretary determines 
that a greater volume of Class I milk, except filled milk, is disposed 
of from such plant as route disposition in the Middle Atlantic marketing 
area than is so disposed of in a marketing area regulated pursuant to 
such other order; or
    (2) Any plant subject to the classification and pricing provisions 
of another order issued pursuant to the Act, notwithstanding its status 
under this order pursuant to paragraph (a) or (b) of this section.
    (g) The applicable shipping percentage of paragraphs (a) and (b) or 
(d) of this section may be increased or decreased by the market 
administrator if the market administrator finds that such revision is 
necessary to encourage needed shipments or to prevent uneconomic 
shipments. Before making such a finding, the market administrator shall 
investigate the need for revision either on the market administrator's 
own initiative or at the request of interested parties. If the 
investigation shows that a revision of the shipping percentages might be 
appropriate, the market administrator shall issue a notice stating that 
the revision is being considered and invite data, views and arguments. 
Any request for revision of shipping percentages shall be filed with the 
market administrator no later than the 15th day of the month prior to 
the month for which the requested revision is desired effective.

[40 FR 18753, Apr. 30, 1975, as amended at 44 FR 21621, Apr. 11, 1979; 
47 FR 5194, Feb. 4, 1982; 47 FR 51732, Nov. 17, 1982; 48 FR 39034, Aug. 
29, 1983; 49 FR 33432, Aug. 23, 1984; 50 FR 16453, Apr. 26, 1985; 60 FR 
55310, Oct. 31, 1995]



Sec. 1004.8  Nonpool plant.

    Nonpool plant means a plant other than a pool plant. The following 
categories of nonpool plants are further defined:
    (a) Other order plant means a plant that is fully subject to the 
pricing and payment provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a plant which is 
not a pool plant, a producer-handler plant, an other order plant, or the 
plant of a handler pursuant to Sec. 1004.9(e), from which fluid milk 
products in consumer-type packages or dispenser units are disposed of as 
route disposition in the marketing area during the month.
    (d) Unregulated supply plant means a plant which is not a pool 
plant, a producer-handler plant, an other order plant, or the plant of a 
handler pursuant to Sec. 1004.9(e), from which fluid milk products are 
shipped during the month to a plant qualified under Sec. 1004.7.



Sec. 1004.9  Handler.

    Handler means any person described in paragraphs (a) through (f) of 
this section. Any person in his capacity as the operator of a pool plant 
or a cooperative association in its capacity as a handler pursuant to 
paragraph (b) or (c) of this section shall be a ``pool handler''.
    (a) Any person in his capacity as the operator of:
    (1) A pool plant;
    (2) A partially regulated distributing plant;
    (3) An unregulated supply plant; or
    (4) An other order plant.
    (b) Any cooperative association or federation of cooperative 
associations with respect to the milk of any producer which it causes to 
be diverted in

[[Page 114]]

accordance with the provisions of Sec. 1004.12 for the account of such 
cooperative association or federation.
    (c) Any cooperative association with respect to the milk of its 
producer members which is delivered from the farm to the pool plant of 
another person in a tank truck owned and operated by or under contract 
to such cooperative association, unless both the cooperative association 
and the operator of the pool plant notify the market administrator in 
writing prior to the first day of the month that the plant operator will 
be responsible for payment for the milk and is purchasing the milk on 
the basis of farm weights determined by farm bulk tank calibrations and 
butterfat tests based on samples taken at the farm. Milk for which the 
cooperative association is qualified pursuant to this paragraph shall be 
deemed to have been received at the location of the pool plant to which 
such milk is delivered.
    (d) A producer-handler.
    (e) A governmental agency in its capacity as the operator of a plant 
with route disposition in the marketing area.
    (f) Any other person who by purchase or direction causes milk of 
producers to be picked up at the farm and/or moved to a plant.

[40 FR 18753, Apr. 30, 1975, as amended at 49 FR 33432, Aug. 23, 1984]



Sec. 1004.10  Producer-handler.

    Producer-handler means any person who operates a dairy farm and a 
plant with route disposition in the marketing area, and who meets the 
conditions of paragraphs (a), (b), and (c) of this section:
    (a) The sole source of supply of fluid milk products is his own farm 
production and transfers of such products from pool plants;
    (b) The quantity of fluid milk products received from pool plants 
during the month does not exceed 10,000 pounds;
    (c) Such person furnishes proof satisfactory to the market 
administrator that the maintenance and management of all dairy animals 
and other resources necessary to produce the entire amount of fluid milk 
products handled (excluding transfers from pool plants), and the 
operation of the plant are each the personal enterprise of and at the 
personal risk of such person; and
    (d) Sections 1004.40 through 1004.45, 1004.50 through 1004.54, 
1004.60 through 1004.62, 1004.70 through 1004.79, 1004.85 and 1004.86, 
and 1004.90 through 1004.95 shall not apply to a producer-handler.

[40 FR 18753, Apr. 30, 1975, as amended at 56 FR 5329, Feb. 11, 1991]



Sec. 1004.11  Dairy farmer.

    Dairy farmer means any person who produces milk which is delivered 
in bulk to a plant. A dairy farmer shall be a ``dairy farmer for other 
markets'' with respect to milk reported pursuant to Sec. 1004.7(d)(4).

[56 FR 5329, Feb. 11, 1991]



Sec. 1004.12  Producer.

    Subject to the conditions of paragraph (e) and the exceptions of 
paragraph (f) of this section, producer means any person described in 
paragraphs (a) through (d) of this section.
    (a) A dairy farmer with respect to milk which is received at a pool 
plant pursuant to Sec. 1004.7 (a), (b), or (e) directly from the farm.
    (b) A dairy farmer with respect to milk which is received at a pool 
plant pursuant to Sec. 1004.7(d): Provided, That such milk is received 
directly from the farm of one who is a member of the cooperative 
operating the plant or is received directly from the farm of one who is 
a member of a cooperative association that is a member of the federation 
operating the plant, or is received as milk diverted from a pool plant 
pursuant to Sec. 1004.7(a), (b) or (e).
    (c) A dairy farmer with respect to milk received by a cooperative 
association in its capacity as a handler pursuant to Sec. 1004.9(c).
    (d) A dairy farmer with respect to milk which is diverted to a 
nonpool plant (other than a producer-handler plant) in accordance with 
the conditions of paragraphs (d)(1) and (d)(2) of this section.
    (1) During any month of March through August.
    (2) Not more than 18 days' production during any month of September 
through February unless all of the diversions of member and nonmember

[[Page 115]]

milk, as the case may be, are pursuant to paragraph (d)(2)(i) or (ii) of 
this section, respectively, and they fall within the limits prescribed 
thereunder. If a handler diverting milk pursuant to this paragraph 
(d)(2) diverts milk of any dairy farmer in excess of the limits 
prescribed such dairy farmer shall be a producer only with respect to 
that milk physically received at a pool plant.
    (i) All of the diversions of milk of members of a cooperative 
association or a federation of cooperative associations to nonpool 
plants are for the account of such cooperative association or 
federation, and the amount of member milk so diverted does not exceed 55 
percent of the volume of milk of all members of such cooperative 
association or federation delivered to or diverted from pool plants 
during the month.
    (ii) All of the diversions of milk of dairy farmers who are not 
members of a cooperative association diverting milk for its own account 
during the month are diversions by a handler in his capacity as the 
operator of a pool plant from which the quantity of such nonmember milk 
so diverted does not exceed 45 percent of the total of such nonmember 
milk for which the pool plant operator is the handler during the month.
    (e) Milk which is diverted in accordance with the provisions of this 
section shall be deemed to have been received by the handler for whose 
account it is diverted at a pool plant at the location of the plant from 
which it is diverted, except that, for the purpose of applying location 
adjustments pursuant to Secs. 1004.52 and 1004.75 and the direct-
delivery differential pursuant to Sec. 1004.79, milk which is diverted 
shall be considered to be received at the location of the plant to which 
the milk is diverted.
    (f) This definition shall not include a:
    (1) Producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (2) Dairy farmer for other markets;
    (3) Government agency which is a handler pursuant to Sec. 1004.9(e);
    (4) Dairy farmer with respect to milk reported as milk diverted to 
an other order plant if any portion of such dairy farmer's milk so moved 
is assigned to Class I under the provisions of such other order; or
    (5) Dairy farmer with respect to milk physically received at a pool 
plant as diverted milk from another order plant if all of the milk so 
received from such dairy farmer is assigned to Class II or Class III and 
the milk is treated as producer milk under the provisions of such other 
order.
    (g) The applicable percentages in paragraphs (d)(2)(i) and 
(d)(2)(ii) of this section may be increased or decreased by the market 
administrator if the market administrator finds that such revision is 
necessary to encourage needed shipments or to prevent uneconomic 
shipments. Before making such a finding, the market administrator shall 
investigate the need for revision either on the market administrator's 
own initiative or at the request of interested parties. If the 
investigation shows that a revision of the diversion limit percentages 
might be appropriate, the market administrator shall issue a notice 
stating that the revision is being considered and invite data, views and 
arguments. Any request for revision of the diversion limit percentages 
shall be filed with the market administrator no later than the 15th day 
of the month prior to the month for which the requested revision is 
desired effective.

[40 FR 18753, Apr. 30, 1975, as amended at 44 FR 21621, Apr. 11, 1979; 
47 FR 51732, Nov. 17, 1982; 49 FR 33432, Aug. 23, 1984; 56 FR 5329, Feb. 
11, 1991; 60 FR 55310, Oct. 31, 1995]



Sec. 1004.13  Producer milk.

    Producer milk means any skim milk or butterfat contained in milk:
    (a) Received at a pool plant pursuant to Sec. 1004.7(a), (b), or (e) 
directly from the farm.
    (b) Received at a pool plant pursuant to Sec. 1004.7(d): Provided, 
That such milk is received directly from the farm of one who is a member 
of the cooperative operating the plant or is received directly from the 
farm of one who is a member of a cooperative association that is a 
member of the federation operating plant, or is received as milk 
diverted from a pool plant pursuant to Sec. 1004.7(a), (b), or (e).

[[Page 116]]

    (c) Received from producers by a cooperative association in its 
capacity as a handler pursuant to Sec. 1004.9(c); or
    (d) Diverted to a nonpool plant in accordance with the provisions of 
Sec. 1004.12.

[40 FR 18753, Apr. 30, 1975, as amended at 44 FR 21621, Apr. 11, 1979; 
56 FR 5329, Feb. 11, 1991]



Sec. 1004.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts in the form of fluid milk products and bulk products 
specified in Sec. 1004.40(b)(1) from any source other than producers, 
handlers described in Sec. 1004.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1004.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1004.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1004.40(b)(1)) for which the handler fails 
to establish a disposition.

[56 FR 5329, Feb. 11, 1991]



Sec. 1004.15  Fluid milk product.

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

[58 FR 27780, May 11, 1993]



Sec. 1004.16  Fluid cream product.

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

[58 FR 27780, May 11, 1993]



Sec. 1004.17  Filled milk.

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



Sec. 1004.18  Exempt milk.

    Exempt milk means bulk fluid milk products received at a pool plant 
or a partially regulated distributing plant from the plant of a handler 
pursuant to Sec. 1004.9(e) for processing and packaging and for which an 
equivalent quantity of packaged fluid milk products is returned to such 
handler during the month.



Sec. 1004.19  Federation.

    Federation means an organization that is formed by two or more 
cooperative associations as defined in Sec. 1004.20 and which is 
incorporated under the laws of the state.

[44 FR 21621, Apr. 11, 1979]

[[Page 117]]



Sec. 1004.20  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines, after application by the 
association:
    (a) Is qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act'';
    (b) Has full authority in the sale of milk of its members and is 
engaged in making collective sales of or marketing milk or milk products 
for its members; and
    (c) Has its entire activities under the control of its members.



Sec. 1004.21  [Reserved]



Sec. 1004.22  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1004.12, 1004.13, and 1004.41.

[58 FR 27780, May 11, 1993]

                             Handler Reports



Sec. 1004.30  Reports of receipts and utilization.

    (a) On or before the eighth day after the end of each month each 
handler with respect to each of the handler's pool plants shall report 
for the month to the market administrator in the detail and on forms 
prescribed by the market administrator as follows:
    (1) The quantities of skim milk and butterfat contained in:
    (i) Receipts of producer milk (including such handler's own 
production) and milk received from a cooperative association for which 
it is a handler pursuant to Sec. 1004.9(c), and the pounds of nonfat 
milk solids contained in such receipts;
    (ii) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants; and
    (iii) Receipts of other source milk;
    (2) The quantities of skim milk and butterfat in inventories at the 
beginning and end of the month of fluid milk products and products 
specified in Sec. 1004.40(b)(1); and
    (3) The utilization or disposition of all skim milk and butterfat 
required to be reported pursuant to this paragraph, showing separately 
in-area route disposition, except filled milk, and filled milk route 
disposition in the marketing area;
    (b) Each handler who operates a partially regulated distributing 
plant shall report as required in paragraph (a) of this section, except 
that receipts of milk from dairy farmers shall be reported in lieu of 
producer milk and that the market administrator may waive the reporting 
of nonfat milk solids; such report shall include a separate statement 
showing the quantity of reconstituted skim milk in fluid milk products 
disposed of on routes in the marketing area;
    (c) Each producer-handler and each handler pursuant to 
Sec. 1004.9(e) shall make reports to the market administrator at such 
time and in such manner as the market administrator may prescribe; and
    (d) On or before the eighth day after the end of each month, each 
cooperative association and/or a federation of cooperative associations 
shall report with respect to milk for which it is a handler pursuant to 
Sec. 1004.9 (b) or (c) as follows:
    (1) Receipts of skim milk, butterfat and nonfat milk solids from 
producers;
    (2) Utilization of skim milk, butterfat and nonfat milk solids 
diverted to nonpool plants; and
    (3) The quantities of skim milk, butterfat and nonfat milk solids 
delivered to each pool plant of another handler.

[56 FR 61348, Dec. 3, 1991]



Sec. 1004.31  [Reserved]



Sec. 1004.32  Other reports.

    (a) Each pool handler shall report to the market administrator in 
detail and

[[Page 118]]

on forms prescribed by the market administrator as follows:
    (1) On or before the 25th day after the end of the month for each 
pool plant, his producer payroll for such month which shall show for 
each producer:
    (i) His name and address;
    (ii) The total pounds of milk received from such producer;
    (iii) The average butterfat content and average nonfat milk solids 
content of such milk; and
    (iv) The net amount of the handler's payment, together with the 
price paid and the amount and nature of any deduction;
    (2) Such other information with respect to receipts and utilization 
of butterfat, skim milk and nonfat milk solids as the market 
administrator shall prescribe.
    (b) Promptly after a producer moves from one farm to another, or 
starts or resumes deliveries to a pool handler, the handler shall file 
with the market administrator a report stating the producer's name and 
post office address, the health department permit number, if applicable, 
the date on which the changes took place, and the farm and plant 
location involved.
    (c) Each handler operating a partially regulated distributing plant 
who does not elect to make payments pursuant to Sec. 1004.76(b) shall 
report the same information as required in paragraph (a) of this section 
with respect to dairy farmers from whom he receives milk
    (d) On or before the 20th day after the end of the month, each 
handler pursuant to Sec. 1004.9(f) shall report to the market 
administrator, in the detail and on forms prescribed by the market 
administrator, all transactions wherein milk was bought or dealt in, 
giving the following information:
    (1) The name and address of any cooperative association or producer 
for whom the handler by either purchase or direction caused milk of 
producers to be moved to a plant;
    (2) The total pounds of milk involved in the transaction, and the 
average butterfat and nonfat milk solids content of such milk; and
    (3) Such other information with respect to such transaction as the 
market administrator may prescribe.
    (e) Each handler operating a plant described in Sec. 1004.7(f) 
shall, with respect to total receipts and utilization or disposition of 
skim milk and butterfat at such plant, make reports to the market 
administrator at such time and in such manner as the market 
administrator may require (in lieu of other reports specified in this 
section or in Sec. 1004.30) and allow verification of such reports by 
the market administrator.

[40 FR 18753, Apr. 30, 1975, as amended at 56 FR 61349, Dec. 3, 1991]

                         Classification of Milk



Sec. 1004.40  Classes of utilization.

    Subject to the conditions set forth in Secs. 1004.41 through 
1004.44, all skim milk and butterfat required to be reported by a 
handler pursuant to Secs. 1004.30 and 1004.32 shall be classified as 
follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraph (b) and (c) of this section;
    (2) In packaged inventory of fluid milk products at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:

[[Page 119]]

    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4) (i) through (iv) of this section, 
that are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1004.15 and the fluid 
cream product definition pursuant to Sec. 1004.16; and
    (7) In shrinkage assigned pursuant to Sec. 1004.41(a) to the 
receipts specified in Sec. 1004.41(a)(2) and in shrinkage specified in 
Sec. 1004.41(b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.

[56 FR 5330, Feb. 11, 1991, as amended at 57 FR 175, Jan. 3, 1992; 58 FR 
27780, May 11, 1993]



Sec. 1004.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1004.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the

[[Page 120]]

respective quantities of skim milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraphs; 
and
    (2) In other source milk not specified in paragraphs (b) (1) through 
(6) of this section, which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant and milk received from a handler described in Sec. 1004.9(c));
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1004.9(c) and in milk 
diverted to such plant from another pool plant, except that if the 
operator of the plant to which the milk is delivered purchases such milk 
on the basis of weights determined from its measurement at the farm and 
butterfat tests determined from farm bulk tank samples, the applicable 
percentage under this paragraph shall be 2 percent:
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk tank lots of fluid milk products received by transfer from other 
order plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in receipts from dairy farmers for other markets pursuant to 
Sec. 1004.11 and receipts of bulk fluid milk products from unregulated 
supply plants, excluding the quantity for which Class II or Class III 
classification is requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk tank lots of fluid milk products transferred to other plants 
that is not in excess of the respective amounts of skim milk and 
butterfat to which percentages are applied in paragraphs (b) (1), (2), 
(4), (5), and (6) of this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1004.9 (b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.

[56 FR 5331, Feb. 11, 1991]



Sec. 1004.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream product from a pool plant to another pool plant shall be 
classified as Class I milk unless the operators of both plants request 
the same classification in another class. In either case, the 
classification of such transfers or diversions shall be subject to the 
following conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant or divertee-plant after 
the computations pursuant to Sec. 1004.44(a)(13) and the corresponding 
step of Sec. 1004.44(b). The

[[Page 121]]

amount of skim milk or butterfat classified in each class shall include 
the assigned utilization of skim milk or butterfat in transfers of 
concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1004.44(a)(8) 
or the corresponding step of Sec. 1004.44(b), the skim milk or butterfat 
so transferred or diverted shall be classified so as to allocate the 
least possible Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to Sec. 1004.44 (a) 
(12) or (13) or the corresponding steps of Sec. 1004.44(b), the skim 
milk or butterfat so transferred or diverted, up to the total of the 
skim milk and butterfat, respectively, in such receipts of other source 
milk, shall not be classified as Class I milk to a greater extent than 
would be the case if the other source milk had been received at the 
transferee-plant or the divertee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b)(1), (2), or (3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1004.40.
    (c) Transfers to producer-handlers and transfers and diversions to 
exempt distributing plants operated by governmental agencies. Skim milk 
or butterfat in the following forms that is transferred from a pool 
plant to a producer-handler under this or any other Federal order or 
transferred or diverted from a pool plant to an exempt distributing 
plant operated by a governmental agency shall be classified:
    (1) As Class I milk, if so moved in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool

[[Page 122]]

plant that is not an other order plant, a producer-handler plant, or an 
exempt distributing plant operated by a governmental agency shall be 
classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (A) and (B) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (A) The transferor-handler or divertor-handler claims such 
classification in its report of receipts and utilization filed pursuant 
to Sec. 1004.30 for the month within which such transaction occurred; 
and
    (B) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (A) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (B) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (C) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (D) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (A) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (B) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (A) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of milk for 
such nonpool plant; and
    (B) To such nonpool plant's receipts of milk from plants not fully 
regulated under any Federal milk order which the market administrator 
determines constitute regular sources of milk for such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a plant not

[[Page 123]]

fully regulated under any Federal milk order shall be classified on the 
basis of the second plant's utilization using the same assignment 
priorities at the second plant that are set forth in paragraph (d)(2) of 
this section.

[56 FR 5331, Feb. 11, 1991, as amended at 58 FR 27781, May 11, 1993]



Sec. 1004.43  General classification rules.

    (a) Each month, the market administrator shall correct for 
mathematical and other obvious errors, the reports of receipts and 
utilization submitted pursuant to Sec. 1004.30 (a), (b), and (d) by each 
handler and compute the total pounds of skim milk and butterfat, 
respectively, in each class at each of the plants of such handler, and 
the total pounds of skim milk and butterfat in each class which was 
received from producers by a cooperative association handler pursuant to 
Sec. 1004.9 (b) and (c) and was not received at a pool plant.
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
products plus all the water originally associated with such solids.
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1004.9 (b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III use at the plant.
    (e) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1004.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1004.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.

[56 FR 5333, Feb. 11, 1991, as amended at 57 FR 175, Jan. 3, 1992; 58 FR 
27781, May 11, 1993]



Sec. 1004.44  Classification of producer milk.

    After making the computations pursuant to Sec. 1004.43, the market 
administrator each month shall determine the classification of milk 
received from producers by each cooperative association handler pursuant 
to Sec. 1004.9 (b) and (c) which was not received at a pool plant, and 
the classification of milk received from producers and from cooperative 
association handlers pursuant to Sec. 1004.9(c) at each pool plant for 
each handler as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1004.41(b);
    (2) Subtract from the total pounds of skim milk in Class I, the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
disposed of to such plant by handlers fully regulated under any Federal 
milk order is classified and priced as Class I milk and is not used as 
an offset for any other payment obligation under any order; and
    (ii) Receipts of exempt milk;
    (3) Subtract from the remaining pounds of skim milk in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(8)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining, or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the remaining pounds of skim milk in Class I the

[[Page 124]]

pounds of skim milk in packaged fluid milk products in inventory at the 
beginning of the month. This paragraph shall apply only if the pool 
plant was subject to the provisions of this paragraph or comparable 
provisions of another Federal milk order in the immediately preceding 
month;
    (5) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1004.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1004.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph (a)(6) or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (7) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1004.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1004.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(6) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1004.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(5), (a)(6) and (a)(7) of this section;
    (ii) Receipts of fluid milk products from dairy farmers for other 
markets pursuant to Sec. 1004.11 and from unidentified sources;
    (iii) Receipts of fluid milk products from a producer-handler, as 
defined under this or any other Federal order;
    (iv) Receipts (other than exempt milk) of fluid milk products from a 
handler pursuant to Sec. 1004.9(e);
    (v) Receipts of reconstituted skim milk in filled milk from 
unregulated supply plants that were not subtracted pursuant to paragraph 
(a)(2) of this section;
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling to the extent that 
reconstituted skim milk is allocated to Class I at the transferor plant 
and is not assigned under this step at a plant regulated under another 
market pool order;
    (9) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (8)(v) of this section for which the handler 
requests aclassification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (8)(v) and (9)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(9)(ii) (A) through (C) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler)

[[Page 125]]

by an amount equal to such excess quantity to be subtracted, and the 
pounds of skim milk in Class I shall be decreased by a like amount. In 
such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount:
    (A) Multiply by 1.25 the pounds of skim milk remaining in Class I at 
this allocation step at all pool plants of the handler (excluding any 
duplication of Class I utilization resulting from reported Class I 
transfers between pool plants of the handler);
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
fluid milk products from pool plants of other handlers, from a 
cooperative association in its capacity as a handler pursuant to 
Sec. 1004.9(c), and in receipts of bulk fluid milk products from other 
order plants that were not subtracted pursuant to paragraph (a)(8)(vi) 
of this section; and
    (C) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants remaining at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(8)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (10) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1004.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(4), (6) and (8)(i) of this section;
    (11) Add to the remaining pounds of skim milk in Class III, the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (12) Subject to the provisions of paragraphs (a)(12) (i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, prorata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from 
unregulated supply plants and from other order plants if not classified 
or priced pursuant to the order regulating such plants, that were not 
subtracted pursuant to paragraphs (a)(2)(i), (8)(v) and (9) (i) and (ii) 
of this section and that were not offset by transfers or diversions of 
fluid milk products to the same unregulated supply plant from which 
fluid milk products to be allocated at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to paragraph (a)(12) of this section 
exceed the pounds of skim milk remaining in such classes, the pounds of 
skim milk in Class II and Class III combined shall be increased 
(increasing as necessary Class III and then Class II to the extent of 
available utilization in such classes at the nearest other pool plant of 
the handler, and then at each successively more distant pool plant of 
the handler) by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class I shall be decreased by 
a like amount. In such case, the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall 
be adjusted in the reverse direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to paragraph (a)(12) of this section exceed the pounds of skim 
milk remaining in such class, the pounds of skim milk in Class I shall 
be increased by an amount equal to such excess quantity to be 
subtracted, and the pounds of

[[Page 126]]

skim milk in Class II and Class III combined shall be decreased by a 
like amount (decreasing as necessary Class III and then Class II). In 
such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount, beginning with the nearest plant 
at which Class I utilization is available;
    (13) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in remaining 
receipts of bulk fluid milk products from other order plants (except 
receipts from other order plants not classified and priced pursuant to 
the order regulating such plants), that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraphs (a)(8)(vi) and (9)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(13) (ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II with respect to whichever of 
the following quantities represents the lower proportion of Class I 
milk:
    (A) The estimated utilization of skim milk of all handlers in each 
class, as announced for the month pursuant to Sec. 1004.45(b); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(13)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at such plants, the pounds of such excess shall 
be subtracted from the pounds of skim milk remaining in Class I after 
such proration at the pool plants at which such other source milk was 
received;
    (iii) Except as provided in paragraph (a)(13)(ii) of this section, 
should the computations pursuant to paragraph (a)(13) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and Class 
III combined shall be increased (increasing as necessary Class III and 
then Class II to the extent of available utilization in such classes at 
the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (iv) Except as provided in paragraph (a)(13)(ii) of this section, 
should the computations pursuant to paragraph (a)(13) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class I that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in Class I shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (14) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant and from a cooperative 
association in its capacity as a handler pursuant to Sec. 1004.9(c) 
according to the classification assigned pursuant to Sec. 1004.42(a); 
and

[[Page 127]]

    (15) If the pounds of skim milk remaining in all classes exceed the 
pounds of skim milk in producer milk, subtract such excess from the 
pounds of skim milk remaining in each class in series beginning with 
Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(15) of this section and the 
corresponding step of paragraph (b) of this section.

[56 FR 5333, Feb. 11, 1991, as amended at 58 FR 27781, May 11, 1993]



Sec. 1004.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) On or before the 15th day after the end of each month, report to 
each cooperative association which so requests, the class utilization of 
milk purchased from such association or delivered to the pool plant(s) 
of each handler by producers who are members of such cooperative 
association. For the purpose of this report, the milk so purchased or 
received shall be allocated to each class in the same ratio as all 
producer milk received by such handler during such month;
    (b) Whenever required for purpose of allocating receipts from other 
order plants pursuant to Sec. 1004.44(a)(13) and the corresponding step 
of Sec. 1004.44(b), the market administrator shall estimate and publicly 
announce the utilization (to the nearest whole percentage) in each class 
during the month of skim milk and butterfat, respectively, in producer 
milk of all handlers. Such estimate shall be based upon the most current 
available data and shall be final for such purpose;
    (c) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1004.43(e) and Sec. 1004.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (d) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order 
plant, the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler; and, as necessary, any changes in such classification 
arising from the verification of such report.

[40 FR 18753, Apr. 30, 1975, as amended at 56 FR 5335, Feb. 11, 1991; 58 
FR 27782, May 11, 1993]

                       Class and Component Prices



Sec. 1004.50  Class and component prices.

    Subject to the provisions of Sec. 1004.52 the class prices per 
hundredweight of milk for the month shall be as follows:
    (a) Class I price. The Class I price shall be the basic formula 
price for the second preceding month plus Sec. 3.03.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. Subject to the adjustment set forth below for 
the applicable month, the Class III price shall be the basic formula 
price for the month.

------------------------------------------------------------------------
                             Month                               Amount
------------------------------------------------------------------------
January.......................................................    +$0.05
February......................................................      +.04
March.........................................................      -.03
April.........................................................      -.07
May...........................................................      -.10
June..........................................................      -.09
July..........................................................      +.05
August........................................................      +.12
September.....................................................      +.08
October.......................................................      +.08
November......................................................      +.08
December......................................................      +.08
------------------------------------------------------------------------

    (d) Butterfat price. The butterfat price per pound shall be a figure 
computed as follows:

[[Page 128]]

    (1) Compute a butterfat differential per one percent butterfat, 
rounded to the nearest one-tenth cent, by multiplying the current 
month's butter price by 1.38, and subtract from the result an amount 
determined by multiplying 0.028 by the preceding month's average pay 
price per hundredweight, at test, for manufacturing grade milk in 
Minnesota and Wisconsin, using the ``base month'' series, adjusted 
pursuant to Sec. 1004.51 (a) through (e), as reported by the Department. 
The butter price means the simple average for the month of the Chicago 
Mercantile Exchange, Grade A butter price as reported by the Department.
    (2) Multiply the butterfat differential obtained in paragraph (d)(1) 
of this section by 3.5, and subtract the resulting amount from the Class 
III price;
    (3) Divide the value obtained from the calculations of paragraph 
(d)(2) of this section by 100; and
    (4) Add to the resulting amount the butterfat differential computed 
in paragraph (d)(1) of this section. The sum thereof shall be the price 
per pound for producer butterfat for the month.
    (e) Nonfat milk solids price. The price per pound for nonfat milk 
solids shall be computed by subtracting from the Class III price the 
butterfat price multiplied by 3.5, and dividing the result by the 
average percentage of nonfat milk solids in all producer milk for the 
month.
    (f) Skim milk price. The skim milk price per hundredweight shall be 
the Class III price for the month adjusted to remove the value of 3.5 
percent butterfat and rounded to the nearest cent. Such adjustment shall 
be computed by multiplying the butterfat differential pursuant to 
paragraph (d)(1) of this section by 3.5 and subtracting the result from 
the Class III price.
    (g) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential value per hundredweight 
of 3.5 percent milk and rounded to the nearest cent, and subject to the 
adjustments set forth in paragraph (c) of this section for the 
applicable month.

[56 FR 5335, Feb. 11, 1991, as amended at 56 FR 61349, Dec. 3, 1991; 57 
FR 49635, Nov. 3, 1992; 58 FR 63285, Dec. 1, 1993; 60 FR 6607, Feb. 2, 
1995; 60 FR 18955, Apr. 14, 1995]



Sec. 1004.51  Basic formula prices.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1004.50(d)(1) and rounded to 
the nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the non dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.

[[Page 129]]

    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.

[60 FR 18955, Apr. 14, 1995]



Sec. 1004.52  Location differentials to handlers.

    (a) For that milk received from producers and from a cooperative 
association in its capacity as a handler pursuant to Sec. 1004.9(c) at a 
plant located 55 miles or more by shortest highway distance from the 
city hall in Philadelphia, Pa., and also 75 miles or more by the 
shortest highway distance from the nearer of the zero milestone in 
Washington, DC, or the city hall in Baltimore, MD (all such distance to 
be determined by the market administrator), and which is assigned to 
Class I milk, subject to the limitations pursuant to paragraph (b) of 
this section, and for other source milk for which a location adjustment 
is applicable, the Class I price shall be reduced at the rate of 1.5 
cents per 10-mile distance or fraction thereof that such plant location 
is from the nearest of such basing points.
    (b) For purposes of calculating such adjustment, transfers between 
pool plants shall be assigned to Class I disposition at the transferee 
plant in an amount not in excess of that by which such Class I 
disposition exceeds 95 percent of the sum of receipts at such plant from 
producers, cooperative associations pursuant to Sec. 1004.9(c), and the 
pounds assigned as Class I to receipts from other order plants and 
unregulated supply plants, and from dairy farmers for other markets 
pursuant to Sec. 1004.11. Such assignment is to be made first to 
transferor plants at which no location adjustment credit is applicable 
and then in sequence beginning with the plant at which the least 
location adjustment would apply: Provided, That for the purposes of this 
paragraph, transfers from a pool plant to a second pool plant which are 
in turn transferred to a third pool plant shall be treated as though the 
transfer was

[[Page 130]]

direct from the originating plant to the plant of final receipt.

[40 FR 18753, Apr. 30, 1975, as amended at 56 FR 5336, Feb. 11, 1991]



Sec. 1004.53  Announcement of class prices and component prices.

    The market administrator shall announce publicly on or before the 
fifth day of each month, the following:
    (a) The Class I price for the following month;
    (b) The Class II price for the following month;
    (c) The Class III and Class III-A prices for the preceding month; 
and
    (d) The prices for butterfat and skim milk computed pursuant to 
Sec. 1004.50(d) and (f).

[56 FR 5336, Feb. 11, 1991, as amended at 56 FR 61349, Dec. 3, 1991; 57 
FR 175, Jan. 3, 1992; 60 FR 6607, Feb. 2, 1995]



Sec. 1004.54  Equivalent prices or indexes.

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

[56 FR 61349, Dec. 3, 1991]

                Differential Pool and Handler Obligations



Sec. 1004.60  Handler's value of milk for computing uniform prices.

    The market administrator shall compute each month for each handler 
defined in Sec. 1004.9(a) with respect to each of such handler's pool 
plants, and for each handler defined in Sec. 1004.9 (b) and (c), an 
obligation to the pool computed by adding the following values:
    (a) The pounds of milk received from a cooperative association as a 
handler pursuant to Sec. 1004.9(c) and allocated to Class I pursuant to 
Sec. 1004.44(a)(14) and the corresponding step of Sec. 1004.44(b), and 
the pounds of producer milk in Class I as determined pursuant to 
Sec. 1004.44, both multiplied by the difference between the Class I 
price (adjusted pursuant to Sec. 1004.52) and the Class III price;
    (b) The pounds of milk received from a cooperative association as a 
handler pursuant to Sec. 1004.9(c) and allocated to Class II pursuant to 
Sec. 1004.44(a)(14) and the corresponding step of Sec. 1004.44(b), and 
the pounds of producer milk in Class II as determined pursuant to 
Sec. 1004.44, both multiplied by the difference between the Class II 
price and Class III price;
    (c) The value of the product pounds, skim milk, and butterfat in 
overage assigned to each class pursuant to Sec. 1004.44(a)(15) and the 
value of the corresponding pounds of nonfat milk solids associated with 
the skim milk subtracted from Class II and Class III pursuant to 
Sec. 1004.44(a)(15), by multiplying the skim milk pounds so assigned by 
the percentage of nonfat milk solids in the handler's receipts of 
producer skim milk during the month, as follows:
    (1) The hundredweight of skim milk and butterfat subtracted from 
Class I pursuant to Sec. 1004.44(a)(15) and the corresponding step of 
Sec. 1004.44(b), multiplied by the difference between the Class I price 
adjusted for location and the Class III price, plus the hundredweight of 
skim milk subtracted from Class I pursuant to Sec. 1004.44(a)(15) 
multiplied by the skim milk price, plus the butterfat pounds of overage 
subtracted from Class I pursuant to Sec. 1004.44(b) multiplied by the 
butterfat price;
    (2) The hundredweight of skim milk and butterfat subtracted from 
Class II pursuant to Sec. 1004.44(a)(15) and the corresponding step of 
Sec. 1004.44(b) multiplied by the difference between the Class II price 
and the Class III price, plus the pounds of nonfat milk solids in skim 
milk subtracted from Class II pursuant to Sec. 1004.44(a)(15) multiplied 
by the nonfat milk solids price, plus the butterfat pounds of overage 
subtracted from Class II pursuant to Sec. 1004.44(b) multiplied by the 
butterfat price;
    (3) The pounds of nonfat milk solids in skim milk overage subtracted 
from Class III pursuant to Sec. 1004.44(a)(15) multiplied by the nonfat 
milk solids price, plus the butterfat pounds of overage subtracted from 
Class III pursuant to Sec. 1004.44(b) multiplied by the butterfat price;
    (d) For the first month that this paragraph is effective, the value 
of the

[[Page 131]]

hundredweight of skim milk and butterfat subtracted from Class I and 
Class II pursuant to Sec. 1004.44(a)(10) and the corresponding step of 
Sec. 1004.44(b), as follows:
    (1) The value of the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1004.44(a)(10) and the 
corresponding step of Sec. 1004.44(b) applicable at the location of the 
pool plant at the difference between the current month's Class I price 
and the previous month's Class III price;
    (2) The value of the hundredweight of skim milk and butterfat 
subtracted from Class II pursuant to Sec. 1004.44(a)(10) and the 
corresponding step of Sec. 1004.44(b) at the difference between the 
current month's Class II price and the Class III price for the previous 
month;
    (e) For the second and subsequent months that this paragraph is 
effective, the value of the product pounds, skim milk, and butterfat 
subtracted from Class I or Class II pursuant to Sec. 1004.44(a)(10) and 
the corresponding step of Sec. 1004.44(b), and the value of the pounds 
of nonfat milk solids associated with the skim milk subtracted from 
Class II pursuant to Sec. 1004.44(a)(10), computed by multiplying the 
skim milk pounds so subtracted by the percentage of nonfat milk solids 
in the handler's receipts of producer skim milk during the previous 
month, as follows:
    (1) The value of the product pounds, skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1004.44(a)(10) and the 
corresponding step of Sec. 1004.44(b) applicable at the location of the 
pool plant at the current month's Class I-Class III price difference and 
the current month's skim milk and butterfat prices, less the Class III 
value of the milk at the previous month's nonfat milk solids and 
butterfat prices;
    (2) The value of the hundredweight of skim milk and butterfat 
subtracted from Class II pursuant to Sec. 1004.44(a)(10) and the 
corresponding step of Sec. 1004.44(b) at the current month's Class II-
Class III price difference and the current month's nonfat milk solids 
and butterfat prices, less the Class III value of the milk at the 
previous month's nonfat milk solids and butterfat prices;
    (f) The value of the product pounds, skim milk and butterfat 
assigned to Class I pursuant to Sec. 1004.43(e) and the hundredweight of 
skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1004.44(a)(8) (i) through (iv), and the corresponding step of 
Sec. 1004.44(b), excluding receipts of bulk fluid cream products from 
another order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants, applicable at 
the location of the pool plant at the current month's Class I-Class III 
price difference;
    (g) The value of the product pounds, skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1004.44(a)(8) (v) and (vi) and 
the corresponding step of Sec. 1004.44(b) applicable at the location of 
the transferor-plant at the current month's Class I-Class III price 
difference;
    (h) The value of the product pounds, skim milk and butterfat in 
receipts of concentrated fluid milk products assigned to Class I 
pursuant to Sec. 1004.43(e) and Sec. 1004.44(a)(8)(i) and the pounds of 
skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1004.44(a)(12) and the corresponding steps of Sec. 1004.44(b), 
excluding such hundredweight in receipts of bulk fluid milk products 
from an unregulated supply plant to the extent that an equivalent 
quantity disposed of to such plant by handlers fully regulated by any 
Federal order is classified and priced as Class I milk and is not used 
as an offset for any other payment obligation under any order, 
applicable at the location of the nearest unregulated supply plants from 
which an equivalent volume was received at the current month's Class I-
Class III price difference;
    (i) The pounds of skim milk received from a cooperative association 
as a handler pursuant to Sec. 1004.9(c) and allocated to Class I 
pursuant to Sec. 1004.44(a)(14), and the pounds of producer milk in 
Class I as determined pursuant to Sec. 1004.44, both multiplied by the 
skim milk price for the month computed pursuant to Sec. 1004.50(f);
    (j) The pounds of nonfat milk solids in skim milk in receipts 
allocated to Class II and Class III pursuant to Sec. 1004.44(a)(14) and 
in producer milk

[[Page 132]]

classified as Class II and Class III pursuant to Sec. 1004.44, computed 
by multiplying the skim milk pounds so assigned by the percentage of 
nonfat milk solids in the handler's receipts of producer skim milk 
during the month for each report filed, separately, the result to be 
multiplied by the nonfat milk solids price for the month computed 
pursuant to Sec. 1004.50(e).
    (k) For producer milk in Class III-A, add or subtract as appropriate 
an amount per hundredweight that the Class III-A price is more or less, 
respectively, than the Class III price.
    (l) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1004.43(e);
    (m) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1004.76(b)(5) or (c); and
    (n) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.

[56 FR 61349, Dec. 3, 1991, as amended at 57 FR 175, Jan. 3, 1992; 58 FR 
27782, May 11, 1993]



Sec. 1004.61  Computation of weighted average differential price and producer nonfat milk solids price.

    For each month the market administrator shall compute a ``weighted 
average differential price'' and a ``producer nonfat milk solids 
price'', as follows:
    (a) The ``weighted average differential price'' shall be the result 
of the following computations:
    (1) Combine into one total:
    (i) The value computed pursuant to Sec. 1004.60 (a) through (h) for 
all handlers who filed the reports prescribed by Sec. 1004.30 for the 
month and who made the payments pursuant to Sec. 1004.71 for the 
preceding month;
    (ii) An amount equal to the total value of the location 
differentials computed pursuant to Sec. 1004.75;
    (iii) An amount equal to not less than one-half of the unobligated 
balance in the producer-settlement fund.
    (2) Divide the total value calculated under paragraph (a)(1) of this 
section by the sum of the following for all handlers:
    (i) The total hundredweight of producer milk pursuant to 
Sec. 1004.13 represented by the value established pursuant to (1)(i) of 
this paragraph; and
    (ii) The total hundredweight for which a value is computed pursuant 
to Sec. 1004.60(h).
    (3) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight. The result shall be the ``Weighted average differential 
price.''
    (b) [Reserved]
    (c) The ``Producer nonfat milk solids price'' to be paid to all 
producers for the pounds of nonfat milk solids contained in their milk 
shall be computed by the market administrator each month as follows:
    (1) Combine into one total the values computed pursuant to 
Sec. 1004.60 (i) and (j) for all handlers who made reports pursuant to 
Sec. 1004.30 and who made payments pursuant to Sec. 1004.71 for the 
preceding month;
    (2) Divide the resulting amount by the total pounds of nonfat milk 
solids in producer milk; and
    (3) Round by subtracting a positive amount not to exceed one cent. 
The result is the ``Producer nonfat milk solids price.''

[56 FR 61350, Dec. 3, 1991; as amended at 61 FR 69017, Dec. 31, 1996]

[[Page 133]]



Sec. 1004.62  Computation of uniform price.

    A uniform price for producer milk containing 3.5 percent butterfat 
shall be computed by adding the weighted average differential price 
determined pursuant to Sec. 1004.61(a) to the Class III price.

[56 FR 61351, Dec. 3, 1991]



Sec. 1004.63  Announcement of weighted average differential price, nonfat milk solids price and producer nonfat milk solids price.

    On or before the 13th day of each month, the market administrator 
shall publicly announce for the preceding month by posting in a 
conspicuous place in his office and by such other means as he deems 
appropriate, the weighted average differential price, the producer 
nonfat milk solids price computed pursuant to Sec. 1004.61, and the 
price for nonfat milk solids computed pursuant to Sec. 1004.50(e).

[56 FR 61351, Dec. 3, 1991; as amended at 61 FR 69017, Dec. 31, 1996]

                            Payments for Milk



Sec. 1004.70  Producer-settlement fund.

    The market administrator shall maintain a separate fund known as the 
``producer-settlement fund'' into which he shall deposit all payments 
into such fund pursuant to Secs. 1004.71, 1004.76 and 1004.77 and out of 
which he shall make all payments from such fund pursuant to 
Secs. 1004.72 and 1004.77: Provided, That the market administrator shall 
offset the payment due to a handler against payment due from such 
handler.



Sec. 1004.71  Payments to the producer-settlement fund.

    On or before the 15th day after the end of the month each handler 
shall pay to the market administrator the amount, if any, by which the 
total amount specified in paragraph (a) of this section exceeds the 
amounts specified in paragraph (b) of this section:
    (a) The net pool obligation computed pursuant to Sec. 1004.60 for 
such handler;
    (b) The sum of:
    (1) The value of milk received by such handler from producers and 
from cooperative association handlers pursuant to Sec. 1004.9(c) at the 
applicable price(s) pursuant to Sec. 1004.61 adjusted by applicable 
location differentials, less in the case of a cooperative association on 
milk for which it is a handler pursuant to Sec. 1004.9(c), the amount 
due from other handlers pursuant to Sec. 1004.74(d); and
    (2) The value at the weighted average differential price, computed 
pursuant to Sec. 1004.61, adjusted by the applicable location 
differential on nonpool milk pursuant to Sec. 1004.75(b), with respect 
to other source milk for which a value was computed pursuant to 
Sec. 1004.60(h).

[40 FR 18753, Apr. 30, 1975, as amended at 45 FR 23402, Apr. 7, 1980; 56 
FR 61351, Dec. 3, 1991; 57 FR 175, Jan. 3, 1992]



Sec. 1004.72  Payments from the producer-settlement fund.

    On or before the 16th day after the end of each month the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1004.71(b) exceeds the amount computed 
pursuant to Sec. 1004.71(a), subject to the following conditions:
    (a) If the balance in the producer-settlement fund is insufficient 
to make all payments pursuant to this section, the market administrator 
shall reduce uniformly such payments and shall complete such payments as 
soon as the necessary funds are available.
    (b) If the 16th day after the end of the month is a Saturday, 
Sunday, or national holiday, the market administrator may delay payments 
pursuant to this section until the next day his office is open for 
public business.

[45 FR 23402, Apr. 7, 1980]



Sec. 1004.73  Value of producer milk.

    The total value of milk received from producers during any month 
shall be the sum of the following calculations:
    (a) The value of a producer's milk shall be the sum of the 
following:
    (1) The weighted average differential price subject to the 
appropriate plant location adjustment times the total hundredweight of 
milk received from the producer;
    (2) The total nonfat milk solids contained in the producer milk 
received from the producer multiplied by the

[[Page 134]]

producer nonfat milk solids price computed pursuant to Sec. 1004.61; and
    (3) The total butterfat contained in the producer milk received from 
the producer times the butterfat price computed pursuant to 
Sec. 1004.50(d).
    (b) [Reserved]

[56 FR 61351, Dec. 3, 1991; as amended at 61 FR 69017, Dec. 31, 1996]



Sec. 1004.74  Payments to producers and to cooperative associations.

    (a) Except as provided in paragraphs (b) and (d) of this section, 
each pool handler shall make payment as specified in paragraphs (a)(1) 
and (2) of this section to each producer from whom milk is received.
    (1) On or before the last day of each month at not less than the 
Class III price for the preceding month per hundredweight for his 
deliveries of producer milk during the first 15 days of the month; and
    (2) On or before the 20th of the following month at not less than 
the total amount computed in accordance with the provisions set forth in 
Sec. 1004.73 with respect to such milk, subject to the following 
adjustments:
    (i) Proper deductions authorized in writing by such producer;
    (ii) Partial payment made pursuant to paragraph (a)(1) of this 
section;
    (iii) Less the location differential applicable pursuant to 
Sec. 1004.75; and
    (iv) If by such date such handler has not received full payment from 
the market administrator pursuant to Sec. 1004.72 for such month he may 
reduce pro rata his payments to producers by not more than the amount of 
such underpayment. Payment to producers shall be completed thereafter 
not later than the date for making payments pursuant to this paragraph 
next following after receipt of the balance due from the market 
administrator.
    (b) In the case of a cooperative association which the market 
administrator determines is authorized by its producer-members to 
collect payment for their milk and which has so requested any handler in 
writing, such handler shall on or before the second day prior to the 
date on which payments are due individual producers, pay the cooperative 
association for milk received during the month from the producer-members 
of such association as determined by the market administrator an amount 
equal to not less than the total due such producer-members as determined 
pursuant to paragraph (a) of this section;
    (c) In the case of milk received by a handler from a cooperative 
association in its capacity as the operator of a pool plant such handler 
shall on or before the second day prior to the date on which payments 
are due individual producers, pay to such cooperative association for 
milk so received during the month, an amount not less than the value of 
such milk computed at the applicable class and/or component prices for 
the location of the plant of the buying handler; and
    (d) Each handler who receives milk from a cooperative association 
handler pursuant to Sec. 1004.9(c), shall on or before the second day 
prior to the date payments are due individual producers, pay such 
cooperative association for such milk as follows:
    (1) A partial payment for milk received during the first 15 days of 
the month at the rate specified in paragraph (a)(1) of this section; and
    (2) A final payment equal to the total value of such milk computed 
pursuant to Sec. 1004.73, adjusted by the applicable differentials 
pursuant to Sec. 1004.75, less the amount of partial payment on such 
milk.
    (e) In making payments to producers pursuant to paragraph (a)(2) of 
this section, or to a cooperative association pursuant to paragraph (b) 
of this section, each pool handler shall furnish such producer or 
cooperative association with respect to each of its producer members 
from whom the handler received milk during the month, a written 
statement showing:
    (1) The month and the identity of the handler and the producer;
    (2) The total pounds, average butterfat test and average test of 
nonfat milk solids of milk delivered by the producer;
    (3) The minimum rate at which payment to such producer is required 
under paragraph (a)(2) of this section;
    (4) The rate which is used in making the payment, if such rate is 
other than the applicable minimum rate;

[[Page 135]]

    (5) The nature and amount of any deductions made in payment due such 
producer; and
    (6) The net amount of the payment to the producer.

[40 FR 18753, Apr. 30, 1975, as amended at 45 FR 23403, Apr. 7, 1980; 56 
FR 5337, Feb. 11, 1991. Redesignated and amended at 56 FR 61351, Dec. 3, 
1991; 58 FR 27782, May 11, 1993]



Sec. 1004.75  Location differentials to producers and on nonpool milk.

    (a) For milk received from producers and from cooperative 
association handlers pursuant to Sec. 1004.9(c) at a plant located 55 
miles or more from the city hall in Philadelphia, PA., and also at least 
75 miles from the nearer of the zero milestone in Washington, DC, or the 
city hall in Baltimore, MD. (all distances to be the shortest highway 
distance as determined by the market administrator), the weighted 
average differential price shall be reduced 1.5 cents for each 10 miles 
distance or fraction thereof that such plant is from the nearest of such 
basing points.
    (b) For purposes of computations pursuant to Secs. 1004.71 and 
1004.74, the weighted average differential price computed pursuant to 
Sec. 1004.61(a) shall be reduced at the rate set forth in paragraph (a) 
of this section applicable at the location of the nonpool plant from 
which the milk was received, except that the adjusted weighted average 
differential price shall not be less than zero.

[56 FR 61351, Dec. 3, 1991; as amended at 61 FR 69017, Dec. 31, 1996]



Sec. 1004.76  Payments by a handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay to the market administrator for the producer-settlement fund 
on or before the 25th day after the end of the month either of the 
amounts (at the handler's election) calculated pursuant to paragraph (a) 
or (b) of this section. If the handler fails to report pursuant to 
Secs. 1004.30(b) and 1004.32(c) the information necessary to compute the 
amount specified in paragraph (a) of this section, he shall pay the 
amount computed pursuant to paragraph (b) of this section:
    (a) An amount computed as follows:
    (1)(i) The obligation that would have been computed pursuant to 
Sec. 1004.60 at such plant shall be determined as though such plant were 
a pool plant. For purposes of such computation, receipts at such nonpool 
plant from a pool plant, a cooperative association as a handler pursuant 
to Sec. 1004.9(b), or an other order plant shall be assigned to the 
utilization at which classified at the pool plant or other order plant 
and transfers from such nonpool plant to a pool plant or an other order 
plant shall be classified as Class III milk if allocated to such class 
at the pool plant or other order plant and be valued at the weighted 
average price of the respective order if so allocated to Class I milk 
except that reconstituted skim milk in filled milk shall be valued at 
the Class III price. There shall be included in the obligation so 
computed a charge in the amount specified in Sec. 1004.60(h) and a 
credit in the amount specified in Sec. 1004.71(b)(2) with respect to 
receipts from an unregulated supply plant, except that the credit for 
receipts of reconstituted skim milk in filled milk shall be at the Class 
III price, unless an obligation with respect to such plant is computed 
as specified below in paragraph (a)(1)(ii) of this section; and
    (ii) If the operator of the partially regulated distributing plant 
so requests, and provides with his reports pursuant to Secs. 1004.30(b) 
and 1004.32(c) similar reports with respect to the operations of any 
other nonpool plant which serves as a supply plant for such partially 
regulated distributing plant by shipments to such plant during the month 
equivalent to the requirements of Sec. 1004.7(b) with agreement of the 
operator of such plant that the market administrator may examine the 
books and records of such plant for purposes of verification of such 
reports, there will be added the amount of the obligation computed at 
such nonpool supply plant in the same manner and subject to the same 
conditions as for the partially regulated distributing plant.
    (2) From this obligation there will be deducted the sum of: (i) The 
gross payments made by such handler for milk (approved by a duly 
constituted health

[[Page 136]]

authority for fluid disposition) received during the month from dairy 
farmers at such plant and like payments made by the operator of a supply 
plant(s) included in the computations pursuant to paragraph (a)(1) of 
this section, and (ii) any payments to the producer-settlement fund of 
another order under which such plant is also a partially regulated 
distributing plant.
    (b) An amount computed as follows:
    (1) Determine the respective amounts of skim milk and butterfat 
disposed of as Class I milk on routes in the marketing area;
    (2) Deduct the respective amounts of skim milk and butterfat 
received as Class I milk at the partially regulated distributing plant 
from pool plants; cooperative associations in their capacity as handlers 
pursuant to Sec. 1004.9(b), and other order plants, except that deducted 
under a similar provision of another order issued pursuant to the Act;
    (3) Deduct the quantity of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of on routes in the 
marketing area from the partially regulated distributing plant;
    (4) Combine the amounts of skim milk and butterfat remaining into 
one total and determine the weighted average butterfat content; and
    (5) From the value of such milk at the Class I price, subtract its 
value at the uniform price computed pursuant to Sec. 1004.62, and add 
for the quantity of labeled reconstituted skim milk specified in 
paragraph (b)(3) of this section its value computed at the Class I price 
less $1.00 (but not to be less than the Class III price) and the value 
of such milk at the Class III price (except that the Class I price and 
the uniform price shall be adjusted for the location of the nonpool 
plant and shall not be less than the Class III price). For any 
reconstituted milk that is not so labeled, the Class I price shall not 
be reduced by $1.00. Alternatively, for such disposition, payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1004.43(e). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.

[40 FR 18753, Apr. 30, 1975, as amended at 45 FR 23403, Apr. 7, 1980; 56 
FR 5336, Feb. 11, 1991; 56 FR 61352, Dec. 3, 1991; 58 FR 27782, May 11, 
1993]



Sec. 1004.77  Adjustment of accounts.

    Whenever verification by the market administrator of reports or 
payments of any handler discloses errors resulting in money due: (a) The 
market administrator from such handler, (b) such handler from the market 
administrator, or (c) any producer or cooperative association from such 
handler, the market administrator shall promptly

[[Page 137]]

notify such handler of any amount so due and payment thereof shall be 
made on or before the next date for making payments set forth in the 
provisions under which such error occurred.



Sec. 1004.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Sec. 1004.71, 
1004.73, 1004.76, 1004.77, 1004.79, 1004.85, or 1004.86 shall be 
increased 1 percent beginning on the day after the due date, and on the 
same day of each succeeding month until such obligation is paid, subject 
to the following conditions:
    (a) The amount payable pursuant to this section shall be computed 
monthly on each unpaid obligation, which shall include any unpaid 
charges previously computed pursuant to this section and all such 
amounts shall be paid to the administrative assessment fund maintained 
by the market administrator;
    (b) Any obligation that was determined at a date later than that 
prescribed by the order because of a handler's failure to submit a 
report to the market administrator when due, shall be considered to have 
been payable by the date it would have been due if the report had been 
filed when due; and
    (c) Payments shall be deemed not to have been made until such 
payments have been received, except:
    (1) Any payment received after the due date in an envelope that is 
postmarked not later than the second day prior to the due date shall be 
considered to have been received by the due date; and
    (2) If the date by which payments must be received falls on a 
Saturday or Sunday or on a national holiday, payments shall be 
considered to have been received by the due date if received not later 
than the next day on which the market administrator's office is open for 
public business.

[45 FR 23403, Apr. 7, 1980]



Sec. 1004.79  Direct-delivery differential.

    For producer milk received at a plant located within 55 miles of the 
city hall in Philadelphia, Pa., the handler in making payments to 
producers and cooperative association handlers pursuant to 
Sec. 1004.9(c), in addition to any amounts required by other provisions 
of this part, shall pay 6 cents per hundredweight of milk so received.

        Administrative Assessment and Marketing Service Deduction



Sec. 1004.85  Assessment for order administration.

    As his pro rata share of the expense of administration, each handler 
shall pay to the market administrator on or before the 20th day after 
the end of the month, 4 cents per hundredweight, or such lesser amount 
as the Secretary may prescribe with respect to milk handled during the 
month as follows:
    (a) Each handler (excluding a cooperative association in its 
capacity as a handler pursuant to Sec. 1004.9(c), and a cooperative 
association as the operator of a pool plant with respect to milk 
transferred in bulk to a pool plant) with respect to the handler's 
receipts of producer milk (including such handler's own-farm production, 
milk received from a cooperative association pursuant to Sec. 1004.9(c), 
and milk transferred in bulk from a pool plant owned and operated by a 
cooperative association) and receipts of concentrated fluid milk 
products from unregulated supply plants and receipts of nonfluid milk 
products assigned to Class I use pursuant to Sec. 1004.43(e) and other 
source milk allocated to Class I pursuant to Sec. 1004.44(a)(8) and 
(a)(12) and the corresponding step of Sec. 1004.44(b), except such other 
source milk that is excluded from the computations pursuant to 
Sec. 1004.60(f) and (h);
    (b) Each handler in his capacity as the operator of a partially 
regulated distributing plant with respect to his route disposition in 
the marketing area in excess of his receipts of Class I milk from pool 
plants, cooperative associations as handlers pursuant to Sec. 1004.9(b), 
and other order plants assigned to such disposition.

[40 FR 18753, Apr. 30, 1975, as amended at 56 FR 5337, Feb. 11, 1991; 56 
FR 61352, Dec. 3, 1991; 58 FR 27783, May 11, 1993]



Sec. 1004.86  Deductions for marketing services.

    (a) Except as set forth in paragraph (b) of this section, each 
handler, making payments directly to producers for

[[Page 138]]

milk (other than milk of his own production) pursuant to Sec. 1004.74(a) 
shall deduct 5 cents per hundredweight or such lesser amount as the 
Secretary may prescribe and shall pay such deductions to the market 
administrator on or before the 20th day after the end of the month. Such 
money shall be expended by the market administrator to provide market 
information and to verify or establish the weights, samples and tests of 
milk of producers who are not receiving such service from a cooperative 
association; and
    (b) In the case of producers for whom the Secretary determines a 
cooperative association is actually performing the services set forth in 
paragraph (a) of this section, each handler shall make, in lieu of the 
deduction specified in paragraph (a) of this section, such deductions 
from the payments to be made directly to such producer pursuant to 
Sec. 1004.74(a) as are authorized by such producers on or before the 
18th day after the end of each month and pay such deductions to the 
cooperative rendering such services.

[56 FR 61352, Dec. 3, 1991]



PART 1005--MILK IN THE CAROLINA MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1005.1  General provisions.

                               Definitions

1005.2  Carolina marketing area.
1005.3  Route disposition.
1005.4  Plant.
1005.5  Distributing plant.
1005.6  Supply plant.
1005.7  Pool plant.
1005.8  Nonpool plant.
1005.9  Handler.
1005.10  Producer-handler.
1005.11  [Reserved]
1005.12  Producer.
1005.13  Producer milk.
1005.14  Other source milk.
1005.15  Fluid milk product.
1005.16  Fluid cream product.
1005.17  Filled milk.
1005.18  Cooperative association.
1005.19  Commercial food processing establishment.

                             Handler Reports

1005.30  Reports of receipts and utilization.
1005.31  Payroll reports.
1005.32  Other reports.

                         Classification of Milk

1005.40  Classes of utilization.
1005.41  Shrinkage.
1005.42  Classification of transfers and diversions.
1005.43  General classification rules.
1005.44  Classification of producer milk.
1005.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1005.50  Class prices.
1005.51  Basic formula price.
1005.52  [Reserved]
1005.53  Plant location adjustments for handlers.
1005.54  Announcement of class prices.
1005.55  Equivalent price.

                              Uniform Price

1005.60  Handler's value of milk for computing uniform price.
1005.61  Computation of uniform price (including weighted average 
          price).
1005.62  Announcement of uniform price and butterfat differential.

                            Payments for Milk

1005.70  Producer-settlement fund.
1005.71  Payments to the producer-settlement fund.
1005.72  Payments from the producer-settlement fund.
1005.73  Payments to producers and to cooperative associations.
1005.74  Butterfat differential.
1005.75  Plant location adjustments for producers and on nonpool milk.
1005.76  Payments by handler operating a partially regulated 
          distributing plant.
1005.77  Adjustment of accounts.
1005.78  Charges on overdue accounts.

                       Marketwide Service Payments

1005.80  Transportation credit balancing fund.
1005.81  Payments to the transportation credit balancing fund.
1005.82  Payments from the transportation credit balancing fund.

        Administrative Assessment and Marketing Service Deduction

1005.85  Assessment for order administration.
1005.86  Deduction for marketing services.

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

[[Page 139]]


    Source: 55 FR 31352, Aug. 2, 1990, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1005.1  General provisions.

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

                               Definitions



Sec. 1005.2  Carolina marketing area.

    The Carolina marketing area, hereinafter called the marketing area, 
means all the territory within the boundaries of the following counties, 
including all piers, docks and wharves connected therewith and all craft 
moored thereat, and all territory occupied by government (municipal, 
State or Federal) reservations, installations, institutions, or other 
similar establishments if any part thereof is within any of the listed 
counties (in the event such provision conflicts with a similar provision 
of an adjacent Federal milk order, the provisions of the adjacent 
Federal order shall have precedence.):
    (a) Northwestern Zone:

    North Carolina counties of Alexander, Alleghany, Ashe, Avery, 
Buncombe, Burke, Caldwell, Cherokee, Clay, Graham, Haywood, Henderson, 
Jackson, McDowell, Macon, Madison, Mitchell, Rockingham, Stokes, Surry, 
Swain, Transylvania, Watauga, Wilkes, Yadkin, and Yancey.

    (b) Base Zone:

    North Carolina counties of Alamance, Anson, Cabarrus, Caswell, 
Catawba, Chatham, Cleveland, Davidson, Davie, Durham, Forsyth, Franklin, 
Gaston, Granville, Guilford, Halifax, Iredell, Lee, Lincoln, 
Mecklenberg, Montgomery, Moore, Nash, Northampton, Orange, Person, Polk, 
Randolph, Richmond, Rowan, Rutherford, Stanly, Union, Vance, Wake, and 
Warren.
    South Carolina counties of Abbeville, Anderson, Cherokee, Chester, 
Greenville, Greenwood, Lancaster, Laurens, McCormick, Oconee, Pickens, 
Spartanburg, Union, and York.

    (c) Southeastern Zone:

    North Carolina counties of Beaufort, Bertie, Bladen, Brunswick, 
Camden, Carteret, Chowan, Columbus, Craven, Cumberland, Currituck, Dare, 
Duplin, Edgecombe, Gates, Greene, Harnett, Hertford, Hoke, Hyde, 
Johnston, Jones, Lenoir, Martin, New Hanover, Onslow, Pamlico, 
Pasquotank, Pender, Perquimans, Pitt, Robeson, Sampson, Scotland, 
Tyrrell, Washington, Wayne, and Wilson.
    South Carolina counties of Aiken, Allendale, Bamberg, Barnwell, 
Beaufort, Berkeley, Calhoun, Charleston, Chesterfield, Clarendon, 
Colleton, Darlington, Dillon, Dorchester, Edgefield, Fairfield, 
Florence, Georgetown, Hampton, Horry, Jasper, Kershaw, Lee, Lexington, 
Marion, Marlboro, Newberry, Orangeburg, Richland, Saluda, Sumter, and 
Williamsburg.



Sec. 1005.3  Route disposition.

    Route disposition means a delivery to a retail or wholesale outlet 
(except to a plant) either directly or through any distribution facility 
(including disposition from a plant store, vendor or vending machine) of 
a fluid milk product classified as Class I milk.



Sec. 1005.4  Plant.

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



Sec. 1005.5  Distributing plant.

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



Sec. 1005.6  Supply plant.

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

[[Page 140]]



Sec. 1005.7  Pool plant.

    Except as provided in paragraph (e) of this section, pool plant 
means:
    (a) A plant that is approved by a duly constituted regulatory agency 
for the processing or packaging of Grade A milk and from which during 
the month is:
    (1) Route disposition, except filled milk, in the marketing area not 
less than 15 percent of its total route disposition, except filled milk, 
during the month; and
    (2) The total quantity of fluid milk products, except filled milk, 
disposed of in class I is not less than 60 percent in each of the months 
of August through November and January and February, and 40 percent in 
each of the other months, of the total quantity of fluid milk products, 
except filled milk, physically received at such plant or diverted 
therefrom pursuant to Sec. 1005.13, subject to the following conditions:
    (i) Two or more plants operated by the same handler may be 
considered as a unit for the purpose of meeting the total Class I 
requirement percentages specified in paragraph (a)(2) of this section if 
each plant in the unit meets the in-area route disposition requirement 
specified in paragraph (a)(1) of this section, and if such handler 
requests that the plants be so considered as a unit. If such a handler 
wishes to add or remove plants from consideration as a unit, such a 
request must be made before the first day of the month for which it is 
to be effective.
    (ii) The applicable percentages in paragraph (a)(2) of this section 
may be increased or decreased up to 10 percentage points by the Director 
of the Dairy Division if the Director finds such revision is necessary 
to assure orderly marketing and efficient handling of milk in the 
marketing area. Before making such a finding, the Director shall 
investigate the need for revision either at the Director's own 
initiative or at the request of interested persons. If the investigation 
shows that a revision might be appropriate, the Director shall issue a 
notice stating that the revision is being considered and invite written 
data, views, and arguments.
    (b) A plant, other than a plant described in paragraph (a) of this 
section, from which fluid milk products, except filled milk, are shipped 
to pool plants pursuant to paragraph (a) of this section. Such shipments 
must equal not less than 60 percent in each of the months of August 
through November and January and February, and 40 percent in each of the 
other months, of the total quantity of milk approved by a duly 
constituted regulatory agency for fluid consumption that is received 
during the month from dairy farmers (including producer milk diverted 
from the plant pursuant to Sec. 1005.13 but excluding milk diverted to 
such plant) and handlers described in Sec. 1005.9(c). The operator of 
such plant may include milk diverted from such plant to plants described 
in paragraph (a) of this section as qualifying shipments in meeting up 
to one-half of the required shipments. The applicable shipping 
percentage of this paragraph may be increased or decreased up to 10 
percentage points by the market administrator if the market 
administrator finds such revision is necessary to obtain needed 
shipments or to prevent uneconomic shipments. Before making such a 
finding, the market administrator shall investigate the need for 
revision either at the market administrator's own initiative or at the 
request of interested persons. If the investigation shows that a 
revision might be appropriate, the market administrator shall issue a 
notice stating that the revision is being considered and invite data, 
views, and arguments.
    (c) A plant located in the State of North Carolina, South Carolina 
or Virginia that is operated by a cooperative association if pool plant 
status under this paragraph is requested for such plant by the 
cooperative association and during the month 60 percent or more of the 
producer milk of members of such cooperative association, excluding such 
milk that is received at or diverted from pool plants described in 
paragraph (b) of this section but including milk delivered by such 
cooperative as a handler described in Sec. 1005.9(c), is delivered 
directly from their farms to pool plants described in paragraph (a) of 
this section or is transferred to such plants as a bulk fluid milk 
product from the plant of the cooperative association, subject to the 
following conditions:

[[Page 141]]

    (1) The plant does not qualify as a pool plant under paragraph (a) 
or (b) of this section or under the provisions of another Federal order 
applicable to a distributing plant or a supply plant; and
    (2) The plant is approved by a duly constituted regulatory agency to 
handle milk for fluid consumption.
    (d) A plant located within the marketing area (other than a 
producer-handler plant or a governmental agency plant) that meets the 
qualifications described in paragraph (a) of this section regardless of 
its quantity of route disposition in any other Federal order marketing 
area.
    (e) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) A governmental agency plant;
    (3) A plant with route disposition in this marketing area that is 
located within the marketing area of another Federal order and that is 
fully regulated under such order;
    (4) A plant qualified pursuant to paragraph (a) of this section 
which is not located within any Federal order marketing area but which 
also meets the pooling requirements of another Federal order and from 
which there is a greater quantity of route disposition, except filled 
milk, during the month in such other Federal order marketing area than 
in this marketing area; and
    (5) A plant qualified pursuant to paragraph (b) of this section if 
the plant has automatic pooling status under another Federal order or if 
the plant meets the pooling requirements of another Federal order during 
the month and makes greater qualifying shipments to plants regulated 
under such other order than to plants regulated under this order.

[55 FR 31352, Aug. 2, 1990, as amended at 56 FR 31858, July 12, 1991; 61 
FR 1148, Jan. 17, 1996]



Sec. 1005.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is not a producer-handler plant, a governmental agency plant or an 
other order plant and from which there is route disposition in consumer-
type packages or dispenser units in the marketing area during the month.
    (d) Unregulated supply plant means a nonpool plant that is not a 
producer-handler plant, a governmental agency plant or an other order 
plant and from which fluid milk products are shipped to a pool plant.
    (e) Governmental agency plant means a plant operated by a 
governmental agency from which fluid milk products are distributed in 
the marketing area. Such plant shall be exempt from all provisions of 
this part.



Sec. 1005.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of one or more pool 
plants;
    (b) Any cooperative association with respect to milk of such 
producers diverted to nonpool plants for the account of such association 
pursuant to Sec. 1005.13, excluding the milk of producers diverted by 
the association as a handler pursuant to paragraph (a) of this section;
    (c) Any cooperative association with respect to milk excluding the 
milk of producers diverted to pool plants by the association as a 
handler pursuant to paragraph (a) of this section, that it receives for 
its account from the farm of a producer for delivery to a pool plant or 
another handler, in a tank truck owned and operated by, or under the 
control of, such cooperative association, unless both the cooperative 
association and the operator of the pool plant notify the market 
administrator prior to the time that such milk is delivered to the pool 
plant that the plant operator will be the handler of such milk and will 
purchase such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk

[[Page 142]]

tank samples. Milk for which the cooperative association is the handler 
pursuant to this paragraph shall be deemed to have been received by the 
cooperative association at the location of the pool plant to which such 
milk is delivered;
    (d) Any person who operates a partially regulated distributing 
plant;
    (e) A producer-handler;
    (f) Any person who operates an other order plant described in 
Sec. 1005.7 (d)(3) or (d)(4); and
    (g) Any person who operates an unregulated supply plant.



Sec. 1005.10  Producer-handler.

    Producer-handler means any person:
    (a) Who operates a dairy farm and a processing plant from which 
there is route disposition in the marketing area;
    (b) Who receives no fluid milk products from sources other than his 
own farm production, pool plants and other order plants;
    (c) Whose receipts of fluid milk products from pool plants and other 
order plants do not exceed the lesser of 5 percent of Class I 
disposition or 5,000 pounds during the month;
    (d) Who disposes of no other source milk as Class I milk except by 
increasing the nonfat milk solids content of the fluid milk products 
received from his own farm production or pool plants; and
    (e) Who provides proof satisfactory to the market administrator that 
the care and management of the dairy farm and other resources necessary 
for his own farm production of milk and the management and operation of 
the processing plant are the personal enterprise and risk of such 
person.



Sec. 1005.11  [Reserved]



Sec. 1005.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk approved by a duly constituted 
regulatory agency for fluid consumption, which milk is:
    (1) Received at a pool plant directly from such person;
    (2) Received by a handler described in Sec. 1005.9(c); or
    (3) Diverted from a pool plant in accordance with Sec. 1005.13.
    (b) Producer shall not include:
    (1) A producer-handler as described in any order (including this 
part) issued pursuant to the Act;
    (2) A governmental agency operating a plant exempt pursuant to 
Sec. 1005.8(e);
    (3) Any person with respect to milk produced by such person which is 
diverted to a pool plant from an other order plant if the other order 
designates such person as a producer under that order and such milk is 
allocated to Class II or Class III utilization pursuant to 
Sec. 1005.44(a)(8)(iii) and the corresponding step of Sec. 1005.44(b); 
and
    (4) Any person with respect to milk produced by such person which is 
reported as diverted to an other order plant if any portion of such 
person's milk so moved is assigned to Class I under the provisions of 
such other order.



Sec. 1005.13  Producer milk.

    Producer milk means the skim milk and butterfat contained in milk of 
a producer that is:
    (a) Received at a pool plant directly from such producer by the 
operator of the plant, excluding such milk that is diverted from another 
pool plant;
    (b) Received by a handler described in Sec. 1005.9(c);
    (c) Diverted from a pool plant for the account of the handler 
operating such plant to another pool plant;
    (d) Diverted from a pool plant to a nonpool plant (other than a 
producer-handler plant) for the account of the handler described in 
Sec. 1005.9 (a) or (b) subject to the following conditions:
    (1) A producer's milk shall be eligible for diversion to a nonpool 
plant during any month in which such producer's milk is physically 
received at a pool plant as follows:
    (i) In any month of July through February, six days' production;
    (ii) In any month of March through June, two days' production.
    (2) During each of the months of July through November and January 
and February, the total quantity of milk diverted by a cooperative 
association shall not exceed one-fourth of the producer milk that such 
cooperative

[[Page 143]]

caused that month to be delivered to or diverted from such pool plants;
    (3) A handler described in Sec. 1005.9(a) that is not a cooperative 
association may divert for its account any milk that is not under the 
control of a cooperative association that diverts milk during the month 
pursuant to paragraph (d)(2) of this section. The total quantity of milk 
so diverted shall not exceed one-fourth of the milk that is physically 
received at or diverted from pool plants as producer milk of such 
handler in each month of July through November and January and February;
    (4) Any milk diverted in excess of the limits prescribed in 
paragraphs (d)(2) and (d)(3) of this section shall not be producer milk. 
The diverting handler shall designate the dairy farmer deliveries that 
shall not be producer milk. If the handler fails to make such 
designation, no milk diverted by such handler pursuant to this paragraph 
shall be producer milk;
    (5) To the extent that it would result in nonpool status for the 
pool plant from which diverted, milk diverted for the account of a 
cooperative association from the pool plant of another handler shall not 
be producer milk;
    (6) The cooperative association shall designate the dairy farmer 
deliveries that are not producer milk pursuant to paragraph (d)(5) of 
this section. If the diverting handler fails to make such designation, 
no milk diverted by such handler shall be producer milk; and
    (e) Milk diverted pursuant to paragraph (c) or (d) of this section 
shall be priced at the location of the plant to which diverted.



Sec. 1005.14  Other source milk.

    Other source milk means all skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk products specified in 
Sec. 1005.40(b)(1) from any source other than producers, handlers 
described in Sec. 1005.9(c), or pool plants;
    (b) Receipts in packaged form from other plants of products 
specified in Sec. 1005.40(b)(1);
    (c) Products (other than fluid milk products, products specified in 
Sec. 1005.40(b)(1), and products produced at the plant during the same 
month) from any source which are reprocessed, converted into, or 
combined with another product in the plant during the month; and
    (d) Receipts of any milk product (other than a fluid milk product or 
a product specified in Sec. 1005.40(b)(1)) for which the handler fails 
to establish a disposition.



Sec. 1005.15  Fluid milk product.

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

[58 FR 27783, May 11, 1993]



Sec. 1005.16  Fluid cream product.

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

[58 FR 27783, May 11, 1993]

[[Page 144]]



Sec. 1005.17  Filled milk.

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



Sec. 1005.18  Cooperative association.

    Cooperative association means any cooperative marketing association 
of producers which the Secretary determines after application by the 
association:
    (a) To be qualified under the provisions of the Act of Congress of 
February 18, 1922, as amended, known as the ``Capper-Volstead Act''; and
    (b) To have and be exercising full authority in the sale of milk of 
its members.



Sec. 1005.19  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1005.13, 1005.41 and 1005.53.

[58 FR 27783, May 11, 1993]

                             Handler Reports



Sec. 1005.30  Reports of receipts and utilization.

    On or before the seventh day after the end of each month, each 
handler shall report for such month to the market administrator, in the 
detail and on the forms prescribed by the market administrator, as 
follows:
    (a) Each handler, with respect to each of its pool plants, shall 
report the quantities of skim milk and butterfat contained in or 
represented by:
    (1) Receipts of producer milk, including producer milk diverted from 
the pool plant to other plants;
    (2) Receipts of milk from handlers described in Sec. 1005.9(c);
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk;
    (5) Receipts of bulk milk from a plant regulated under another 
Federal order, except Federal Orders 1007, 1011, and 1046, for which a 
transportation credit is requested pursuant to Sec. 1005.82, including 
the date that such milk was received;
    (6) Receipts of producer milk described in Sec. 1005.82(c)(2), 
including the identity of the individual producers whose milk is 
eligible for the transportation credit pursuant to that paragraph and 
the date that such milk was received;
    (7) For handlers submitting transportation credit requests, 
transfers of bulk milk to nonpool plants, including the dates that such 
milk was transferred;
    (8) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1005.40(b)(1); and
    (9) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (c) Each handler described in Sec. 1005.9(b) and (c) shall report:
    (1) The quantities of all skim milk and butterfat contained in 
receipts of milk from producers;
    (2) The utilization or disposition of all such receipts; and
    (3) With respect to milk for which a cooperative association is 
requesting a transportation credit pursuant to

[[Page 145]]

Sec. 1005.82, all of the information required in paragraphs 
(a)(5),(a)(6), and (a)(7) of this section.

[55 FR 31352, Aug. 2, 1990, as amended at 61 FR 41490, Aug. 9, 1996; 62 
FR 39739, July 23, 1997]



Sec. 1005.31  Payroll reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec. 1005.9 (a), (b), and (c) shall report to the 
market administrator its producer payroll for such month, in the detail 
prescribed by the market administrator, showing for each producer:
    (1) Such producer's name and address;
    (2) The total pounds of milk received from such producer;
    (3) The average butterfat content of such milk; and
    (4) The price per hundredweight, the gross amount due, the amount 
and nature of any deductions, and the net amount paid.
    (b) Each handler operating a partially regulated distributing plant 
who elects to make payment pursuant to Sec. 1005.76(b) shall report for 
each dairy farmer who would have been a producer if the plant had been 
fully regulated in the same manner as prescribed for reports required by 
paragraph (a) of this section.



Sec. 1005.32  Other reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec. 1005.9 (a), (b), and (c) shall report to the 
market administrator any adjustments to transportation credit requests 
as reported pursuant to Sec. 1005.30(a) (5), (6), and (7).
    (b) In addition to the reports required pursuant to paragraph (a) of 
this section and Secs. 1005.30 and 1005.31, each handler shall report 
such other information as the market administrator deems necessary to 
verify or establish each handler's obligation under the order.

[55 FR 31352, Aug. 2, 1990, as amended at 61 FR 69017, Dec. 31, 1996; 62 
FR 39740, July 23, 1997]

                         Classification of Milk



Sec. 1005.40  Classes of utilization.

    Except as provided in Sec. 1005.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1005.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;

[[Page 146]]

    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form, except nonfat dry milk;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1005.15 and the fluid 
cream product definition pursuant to Sec. 1005.16; and
    (7) In shrinkage assigned pursuant to Sec. 1005.41(a) to the 
receipts specified in Sec. 1005.41(a)(2) and in shrinkage specified in 
Sec. 1005.41(b) and (c).
    (d) Class III-A milk. Class III-A milk shall be all skim milk and 
butterfat used to produce nonfat dry milk.

[58 FR 27783, May 11, 1993, as amended at 58 FR 63285, Dec. 1, 1993]



Sec. 1005.41  Shrinkage.

    For the purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1005.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b) (1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product.
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:

[[Page 147]]

    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant);
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1005.9(c), and in milk 
diverted to such plant from another pool plant, except that in either 
case, if the operator of the plant to which the milk is delivered 
purchases such milk on the basis of weights determined from its 
measurement at the farm and butterfat tests determined from farm bulk 
tank samples, the applicable percentage under this subparagraph shall be 
2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchases such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage under this 
subparagraph shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the operators of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II or Class III classification is 
requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amounts of skim milk and butterfat to which 
percentages are applied in paragraphs (b)(1), (b)(2), (b)(4), (b)(5), 
and (b)(6) of this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1005.9 (b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.



Sec. 1005.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or a bulk 
fluid cream product from a pool plant to another pool plant shall be 
classified as Class I milk unless the operators of both plants request 
the same classification in another class. In either case, the 
classification of such transfers or diversions shall be subject to the 
following conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant after the computations 
pursuant to Sec. 1005.44(a)(12) and the corresponding step of 
Sec. 1005.44(b). The amount of skim milk or butterfat classified in each 
class shall include the assigned utilization of skim milk or butterfat 
in transfers of concentrated fluid milk products;
    (2) If the transferor-plant or divertor-plant received during the 
month other source milk to be allocated pursuant to Sec. 1005.44(a)(7) 
or the corresponding step of Sec. 1005.44(b), the skim milk or butterfat 
so transferred or diverted shall be classified so as to allocate the 
least possible Class I utilization to such other source milk; and
    (3) If the transferor-handler or divertor-handler received during 
the month other source milk to be allocated pursuant to 
Sec. 1005.44(a)(11) or (a)(12) or the corresponding steps of 
Sec. 1005.44(b), the skim milk or butterfat so transferred or diverted, 
up to the total of the skim milk and butterfat, respectively, in such 
receipts of other source milk, shall not be classified as Class I milk

[[Page 148]]

to a greater extent than would be the case if the other source milk had 
been received at the transferee-plant or divertee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to another order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b)(1), (b)(2), or (b)(3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to the class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order classification under this paragraph shall be in 
accordance with the provisions of Sec. 1005.40.
    (c) Transfers to producer-handlers and transfers and diversions to 
governmental agency plants. Skim milk or butterfat in the following 
forms that is transferred from a pool plant to a producer-handler under 
this or any other Federal order or transferred or diverted from a pool 
plant to a governmental agency plant shall be classified:
    (1) As Class I milk, if so moved in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant, a producer-
handler plant, or a governmental agency plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i)(A) and 
(d)(2)(i)(B) of this section are met, transfers or diversions in bulk 
form shall be classified on the basis of the assignment of the nonpool 
plant's utilization to its receipts as set forth in paragraph (d)(2)(ii) 
through (d)(2)(viii) of this section:
    (A) The transferor-handler or divertor-handler claims such 
classification in such handler's report of receipts and utilization 
filed pursuant to Sec. 1005.30 for the month within which such 
transaction occurred; and

[[Page 149]]

    (B) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (A) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (B) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (C) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (D) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (A) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (B) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (A) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (B) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this subparagraph, any fluid milk products and bulk fluid cream 
products transferred from such nonpool plant to a plant not fully 
regulated under any Federal milk order shall be classified on the basis 
of the second plant's utilization using the same assignment priorities 
at the second plant that are set forth in this subparagraph.
    (e) Transfers by a handler described in Sec. 1005.9(c) to pool 
plants. Skim milk and butterfat transferred in the form of bulk milk by 
a handler described in Sec. 1005.9(c) to another handler's pool plant 
shall be classified pursuant to Sec. 1005.44 pro rata with producer milk 
received at the transferee-handler's plant.

[55 FR 31352, Aug. 2, 1990, as amended at 58 FR 27784, May 11, 1993]



Sec. 1005.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1005.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports

[[Page 150]]

filed pursuant to Sec. 1005.30 and shall compute separately for each 
pool plant, and for each cooperative association with respect to milk 
for which it is the handler pursuant to Sec. 1005.9 (b) or (c) that was 
not received at a pool plant, the pounds of skim milk and butterfat, 
respectively, in each class in accordance with Secs. 1005.40, 1005.41, 
and 1005.42. The combined pounds of skim milk and butterfat so 
determined in each class for a handler described in Sec. 1005.9 (b) or 
(c) shall be such handler's classification of producer milk;
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk in such product that are to be 
considered under this part as used or disposed of by the handler shall 
be an amount equivalent to the nonfat milk solids contained in such 
product plus all of the water originally associated with such solids; 
and
    (c) The classification of producer milk of a handler pursuant to 
Sec. 1005.9 (b) or (c) shall be determined separately from the 
operations of any pool plant operated by such handler.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1005.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1005.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.
    (e) Class III-A milk shall be allocated in combination with Class 
III milk and the quantity of producer milk eligible to be priced in 
Class III-A shall be determined by prorating receipts from pool sources 
to Class III-A use on the basis of the quantity of total receipts of 
bulk fluid milk products allocated to Class III milk at the plant.

[55 FR 31352, Aug. 2, 1990, as amended at 58 FR 27784, May 11, 1993; 58 
FR 63286, Dec. 1, 1993]



Sec. 1005.44  Classification of producer milk.

    For each month the market administrator shall determine for each 
handler described in Sec. 1005.9(a) for each pool plant of the handler 
separately the classification of producer milk and milk received from a 
handler described in Sec. 1005.9(c), by allocating the handler's 
receipts of skim milk and butterfat to the utilization of such receipts 
by such handler as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1005.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
disposed of to such plant by handlers fully regulated under any Federal 
milk order is classified and priced as Class I milk and is not used as 
an offset for any other payment obligation under any order;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim

[[Page 151]]

milk in products specified in Sec. 1005.40(b)(1) that were received in 
packaged form from other plants, but not in excess of the pounds of skim 
milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1005.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this subparagraph or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to any product specified in Sec. 1005.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1005.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II.
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1005.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5) and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order and from a 
governmental agency plant;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (a)(7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (a)(7)(v), and (a)(8)(i) of this section which are 
in excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii)(A) through (a)(8)(ii)(C) of this section. Should the pounds 
of skim milk to be subtracted from Class II and Class III combined 
exceed the pounds of skim milk remaining in such classes, the pounds of 
skim milk in Class II and Class III combined shall be increased 
(increasing as necessary Class III and then Class II to the extent of 
available utilization in such classes at the nearest other pool plant of 
the handler, and then at each successively more distant pool plant of 
the handler) by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class I shall be decreased by 
a like amount. In such case, the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall 
be adjusted in the reverse direction by a like amount:
    (A) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding

[[Page 152]]

any duplication of Class I utilization resulting from reported Class I 
transfers between pool plants of the handler);
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
milk from a handler described in Sec. 1005.9(c), fluid milk products 
from pool plants of other handlers, and bulk fluid milk products from 
other order plants that were not subtracted pursuant to paragraph 
(a)(7)(vi) of this section; and
    (C) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1005.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11) (i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (a)(7)(v), and (a)(8)(i) and (a)(8)(ii) of this section and 
that were not offset by transfers or diversions of fluid milk products 
to the same unregulated supply plant from which fluid milk products to 
be allocated at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to this subparagraph exceed the pounds 
of skim milk remaining in such classes, the pounds of skim milk in Class 
II and Class III combined shall be increased (increasing as necessary 
Class III and then Class II to the extent of available utilization in 
such classes at the nearest other pool plant of the handler, and then at 
each successively more distant pool plant of the handler) by an amount 
equal to such excess quantity to be subtracted, and the pounds of skim 
milk in Class I shall be decreased by a like amount. In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to this subparagraph exceed the pounds of skim milk remaining 
in such class, the pounds of skim milk in Class I shall be increased by 
an amount equal to such excess quantity to be subtracted, and the pounds 
of skim milk in Class II and Class III combined shall be decreased by a 
like amount (decreasing as necessary Class III and then Class II). In 
such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount, beginning with the nearest plant 
at which Class I utilization is available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted

[[Page 153]]

to such plant and that were not subtracted pursuant to paragraphs 
(a)(7)(vi) and (a)(8)(iii) of this section:
    (i) Subject to the provisions of paragraphs (a)(12)(ii), 
(a)(12)(iii), and (a)(12)(iv) of this section, such subtraction shall be 
pro rata to the pounds of skim milk in Class I and in Class II and Class 
III combined, with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
with respect to whichever of the following quantities represents the 
lower proportion of Class I milk:
    (A) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1005.45(a); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (a)(12)(ii) 
of this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and Class 
III combined shall be increased (increasing as necessary Class III and 
then Class II to the extent of available utilization in such classes at 
the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (a)(12)(ii) 
of this section result in a quantity of skim milk to be subtracted from 
Class I that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in Class I shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1005.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk and milk received from a 
handler described in Sec. 1005.9(c), subtract such excess from the 
pounds of skim milk remaining in each class in series beginning with 
Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk and milk received from a handler 
described in Sec. 1005.9(c) in each class shall be the combined pounds 
of skim milk and butterfat remaining in each class after the 
computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.

[55 FR 31352, Aug. 2, 1990, as amended at 58 FR 27784, May 11, 1993]

[[Page 154]]



Sec. 1005.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1005.44(a)(12) and the corresponding 
step of Sec. 1005.44(b), estimate and publicly announce the utilization 
(to the nearest whole percentage) in each class during the month of skim 
milk and butterfat, respectively, in producer milk of all handlers. Such 
estimate shall be based upon the most current available data and shall 
be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1005.43(d) and Sec. 1005.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) On or before the 12th day after the end of each month, report to 
each cooperative association which so requests, the percentage of 
producer milk delivered by members of such association that was used in 
each class by each handler receiving such milk. For the purpose of this 
report the milk so received shall be prorated to each class in 
accordance with the total utilization of producer milk by such handler.

[55 FR 31352, Aug. 2, 1990, as amended at 58 FR 27784, May 11, 1993]

                              Class Prices



Sec. 1005.50  Class prices.

    Subject to the provisions of Sec. 1005.53, the class prices for the 
month per hundredweight of milk shall be as follows:
    (a) Class I price. The Class I price shall be the basic formula 
price for the second preceding month plus $3.08.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.
    (d) Class III-A price. The Class III-A price for the month shall be 
the average Central States nonfat dry milk price for the month, as 
reported by the Department, less 12.5 cents, times an amount computed by 
subtracting from 9 an amount calculated by dividing .4 by such nonfat 
dry milk price, plus the butterfat differential times 35 and rounded to 
the nearest cent.

[55 FR 31352, Aug. 2, 1990, as amended at 58 FR 63286, Dec. 1, 1993; 60 
FR 6608, Feb. 2, 1995]



Sec. 1005.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1005.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;

[[Page 155]]

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

[60 FR 18956, Apr. 14, 1995]



Sec. 1005.52  [Reserved]



Sec. 1005.53  Plant location adjustments for handlers.

    (a) For milk received at a plant from producers or a handler 
described in Sec. 1005.9(c) which is classified as Class I milk subject 
to the limitations pursuant to paragraph (b) of this section, the Class 
I price specified in Sec. 1005.50(a) shall be adjusted by the amount 
stated in paragraphs (a)(1) through (a)(6) of this section for the 
location of such plant:
    (1) For a plant located within one of the zones set forth in 
Sec. 1005.2, the adjustment shall be as follows:

------------------------------------------------------------------------
                                            Adjustment per hundredweight
------------------------------------------------------------------------
Northwestern..............................  Minus 15 cents.
Base......................................  No adjustment.
Southeastern..............................  Plus 15 cents.
------------------------------------------------------------------------

    (2) For a plant located within the Tennessee Valley Federal order 
marketing area (part 1011), except Kentucky and West Virginia counties, 
the adjustment shall be a minus 31 cents;
    (3) For a plant located within the State of Florida, the adjustment 
shall be a plus 50 cents;

[[Page 156]]

    (4) For a plant located outside the areas specified in paragraphs 
(a)(1), (a)(2), and (a)(3) of this section and south of a line extending 
through the southern boundary of the State of Tennessee and east of the 
Mississippi River, the adjustment shall be the adjustment applicable at 
Anderson, North Augusta, or Hardeeville, South Carolina, whichever city 
is nearest;
    (5) For a plant located outside the area specified in paragraph 
(a)(2) of this section and in the State of Virginia, the adjustment 
shall be the adjustment applicable at Reidsville, Roanoke Rapids, or 
Elizabeth City, North Carolina, whichever city is nearest;
    (6) For a plant located within the Middle Atlantic Federal Order 
Marketing Area (Part 1004), the adjustment shall be computed by 
subtracting the base zone Class I price specified in Sec. 1005.50(a) 
from the Class I price applicable at such plant under the Middle 
Atlantic Federal Order; and
    (7) For a plant located outside the areas specified in paragraphs 
(a)(1) through (a)(6) of this section, the adjustment shall be a minus 
2.5 cents for each 10 miles or fraction thereof (by the shortest hard-
surfaced highway distance as determined by the market administrator) 
that such plant is from the nearer of the city halls in Greenville, 
South Carolina, or Charlotte or Greensboro, North Carolina.
    (b) For fluid milk products transferred in bulk from a pool plant to 
a pool distributing plant at which a higher Class I price applies and 
which are classified as Class I milk, the Class I price shall be the 
Class I price applicable at the location of the transferor-plant subject 
to a location adjustment credit for the transferor-plant which shall be 
determined by the market administrator for skim milk and butterfat, 
respectively, as follows:
    (1) Subtract from the pounds of skim milk remaining in Class I at 
the transferee-plant after the computations pursuant to 
Sec. 1005.44(a)(12) and the pounds of skim milk in receipts of 
concentrated fluid milk products from other pool plants that are 
assigned to Class I use, an amount equal to:
    (i) The pounds of skim milk in receipts of milk at the transferee-
plant from producers and handlers described in Sec. 1005.9(c); and
    (ii) The pounds of skim milk in receipts of packaged fluid milk 
products from other pool plants.
    (2) Assign any remaining pounds of skim milk in Class I at the 
transferee-plant to the skim milk in receipts of bulk fluid milk 
products from other pool plants, first to the transferor-plant at which 
the highest Class I price applies and then to other plants in sequence 
beginning with the plant at which the next highest Class I price 
applies;
    (3) Compute the total amount of location adjustment credits to be 
assigned to transferor-plants by multiplying the hundredweight of skim 
milk assigned pursuant to paragraph (b)(2) of this section to each 
transferor-plant at which the Class I price is lower than the Class I 
price at the transferee-plant by the difference in the Class I prices 
applicable at the transferor-plant and transferee-plant, and add the 
resulting amounts;
    (4) Assign the total amount of location adjustment credits computed 
pursuant to paragraph (b)(3) of this section to those transferor-plants 
that transferred fluid milk products containing skim milk classified as 
Class I milk pursuant to Sec. 1005.42(a) and at which the applicable 
Class I price is less than the Class I price at the transferee-plant, in 
sequence beginning with the plant at which the highest Class I price 
applies. Subject to the availability of such credits, the credit 
assigned to each plant shall be equal to the hundredweight of such Class 
I skim milk multiplied by the applicable location adjustment rate for 
such plant. If the aggregate of this computation for all plants having 
the same location adjustment rate exceeds the credits that are available 
to those plants, such credits shall be prorated to the volume of skim 
milk in Class I transfers from such plants; and
    (5) Location adjustment credit for butterfat shall be determined in 
accordance with the procedure outlined for skim milk in paragraphs 
(b)(1) through (b)(4) of this section.
    (c) The Class I price applicable to other source milk shall be 
adjusted at the rates set forth in paragraph (a) of

[[Page 157]]

this section, except that the adjusted Class I price shall not be less 
than the Class III price.

[55 FR 31352, Aug. 2, 1990, as amended at 58 FR 27785, May 11, 1993; 61 
FR 1148, Jan. 17, 1996]



Sec. 1005.54  Announcement of class prices.

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

[60 FR 6608, Feb. 2, 1995]



Sec. 1005.55  Equivalent price.

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

                              Uniform Price



Sec. 1005.60  Handler's value of milk for computing uniform price.

    For the purpose of computing the uniform price, the market 
administrator shall determine for each month the value of milk for each 
handler described in Sec. 1005.9(a) with respect to each of its pool 
plants and for each handler described in Sec. 1005.9 (b) and (c) with 
respect to milk that was not received at a pool plant as follows:
    (a) Multiply the pounds of producer milk and milk received from a 
handler described in Sec. 1005.9(c) that were classified in each class 
pursuant to Secs. 1005.43(a) and 1005.44(c) by the applicable class 
prices, and add the resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1005.44(a)(14) and the 
corresponding step of Sec. 1005.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1005.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1005.44(a)(9) and the corresponding step of Sec. 1005.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1005.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1005.44(a)(7) (i) through (iv) and the corresponding step of 
Sec. 1005.44(b), excluding receipts of bulk fluid cream products from an 
other order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1005.44 (a)(7)(v) and 
(a)(7)(vi) and the corresponding step of Sec. 1005.44(b); and
    (f) Add the amount obtained from multiplying the Class I price 
applicable at the location of the nearest unregulated supply plants from 
which an equivalent volume was received by the pounds of skim milk and 
butterfat in receipts of concentrated fluid milk products assigned to 
Class I pursuant to Sec. 1005.43(d) and Sec. 1005.44(a)(7)(i) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1005.44(a)(11) and the corresponding steps of Sec. 1005.44(b), 
excluding such skim milk and butterfat in receipts of bulk fluid milk 
products from an unregulated supply plant to the extent that an 
equivalent amount of skim milk or butterfat disposed of to such plant by 
handlers fully regulated under any Federal milk order is classified and 
priced as Class I milk and is not used as an offset for any other 
payment obligation under any order;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk

[[Page 158]]

products, an amount computed by multiplying $1.00 (but not more than the 
difference between the Class I price applicable at the location of the 
pool plant and the Class III price) by the hundredweight of skim milk 
and butterfat contained in receipts of nonfluid milk products that are 
allocated to Class I use pursuant to Sec. 1005.43(d);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1005.76(a)(5) or (c); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.

[55 FR 31352, Aug. 2, 1990, as amended at 58 FR 27785, May 11, 1993]



Sec. 1005.61  Computation of uniform price (including weighted average price).

    (a) The market administrator shall compute the weighted average 
price for each month and the uniform price for each month per 
hundredweight for milk of 3.5 percent butterfat content as follows:
    (1) Combine into one total the values computed pursuant to 
Sec. 1005.60 for all handlers who filed the reports prescribed in 
Sec. 1005.30 for the month and who made the payments pursuant to 
Sec. 1005.71 for the preceding month;
    (2) Add one-half the unobligated balance in the producer-settlement 
fund;
    (3) Add an amount equal to the total value of the minus adjustments 
and subtract an amount equal to the total value of the plus adjustments 
computed pursuant to Sec. 1005.75;
    (4) Divide the resulting amount by the sum of the following for all 
handlers included in these computations;
    (i) The total hundredweight of producer milk; and
    (ii) The total hundredweight for which a value is computed pursuant 
to Sec. 1005.60(f); and
    (5) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight. The resulting figure, rounded to the nearest cent, shall 
be the weighted average price for each month and the uniform price.
    (b) [Reserved]

[55 FR 31352, Aug. 2, 1990, as amended at 61 FR 1148, Jan. 17, 1996; 61 
FR 41490, Aug. 9, 1996; as amended at 61 FR 69017, Dec. 31, 1996; 62 FR 
39740, July 23, 1997]



Sec. 1005.62  Announcement of uniform price and butterfat differential.

    The market administrator shall announce publicly on or before:
    (a) The fifth day after the end of each month the butterfat 
differential for such month; and
    (b) The 11th day after the end after the end of each month the 
uniform price pursuant to Sec. 1005.61 for such month.

[55 FR 31352, Aug. 2, 1990, as amended at 61 FR 69018, Dec. 31, 1996]

                            Payments for Milk



Sec. 1005.70  Producer-settlement fund.

    The market administrator shall establish and maintain a separate 
fund known as the ``producer-settlement fund'' into which he shall 
deposit all payments made by handlers pursuant to Secs. 1005.71, 
1005.76, and 1005.77, and out of which he shall make all payments 
pursuant to Secs. 1005.72 and 1005.77: Provided, That any payments due 
any handler shall be offset by any payments due from such handler.



Sec. 1005.71  Payments to the producer-settlement fund.

    (a) On or before the 12th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the amount specified in paragraph (a)(1) of this section exceeds 
the amount specified in paragraph (a)(2) of this section:

[[Page 159]]

    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1005.60.
    (2) The sum of:
    (i) The value at the uniform price, as adjusted pursuant to 
Sec. 1005.75, of such handler's receipts of producer milk and milk 
received from handlers pursuant to Sec. 1005.9(c); and
    (ii) The value at the weighted average price applicable at the 
location of the plant from which received of other source milk for which 
a value is computed pursuant to Sec. 1005.60(f).
    (b) On or before the 25th day after the end of the month each person 
who operated an other order plant that was regulated during such month 
under an order providing for individual-handler pooling shall pay to the 
market administrator an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is such route disposition 
from such plant in marketing areas regulated by two or more marketwide 
pool orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by multiplying the quantity of such skim milk by the difference 
between the Class I price under this part that is applicable at the 
location of the other order plant (but not to be less than the Class III 
price) and the Class III price.

[55 FR 31352, Aug. 2, 1990, as amended at 61 FR 69018, Dec. 31, 1996]



Sec. 1005.72  Payments from the producer-settlement fund.

    On or before the 13th day after the end of each month, the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1005.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1005.71(a)(1). If, at such time, the balance 
in the producer-settlement fund is insufficient to make all payments 
pursuant to this section, the market administrator shall reduce 
uniformly such payments and shall complete such payments as soon as the 
appropriate funds are available.



Sec. 1005.73  Payments to producers and to cooperative associations.

    (a) Each handler shall pay each producer for producer milk for which 
payment is not made to a cooperative association pursuant to paragraph 
(b) of this section, as follows:
    (1) On or before the last day of each month, for milk received 
during the first 15 days of the month from such producer who has not 
discontinued delivery of milk to such handler before the 25th day of the 
month at not less than the Class III price for the preceding month or 90 
percent of the weighted average price for the preceding month, whichever 
is higher, less proper deductions authorized in writing by the producer; 
and
    (2) On or before the 15th day of the following month, an amount 
equal to not less than the uniform price, as adjusted pursuant to 
Secs. 1005.74 and 1005.75, multiplied by the hundredweight of milk 
received from such producer during the month, subject to the following 
adjustments:
    (i) Less payments made to such producer pursuant to paragraph (a)(1) 
of this section;
    (ii) Less deductions for marketing services made pursuant to 
Sec. 1005.86;
    (iii) Plus or minus adjustments for errors made in previous payments 
made to such producers; and
    (iv) Less proper deductions authorized in writing by such producer: 
Provided, That if by such date such handler has not received full 
payment from the market administrator pursuant to Sec. 1005.72 for such 
month, he may reduce pro rata his payments to producers by not more than 
the amount of such underpayment. Payments to producers shall be 
completed thereafter not later than the date for making payments 
pursuant to the paragraph next following after the receipt of the 
balance due from the market administrator;
    (b) Each handler shall make payment to the cooperative association 
for producer milk which it caused to be delivered to such handler, if 
such cooperative association is authorized to collect

[[Page 160]]

such payments for its members and exercises such authority, an amount 
equal to the sum of the individual payments otherwise payable for such 
producer milk as follows:
    (1) On or before two days prior to the last day of each month for 
producer milk received during the first 15 days of the month; and
    (2) On or before the 13th day after the end of each month for milk 
received during such month.
    (c) Each handler pursuant to Sec. 1005.9(a) who receives milk from a 
cooperative association as a handler pursuant to Sec. 1005.9(c), 
including the milk of producers who are not members of such association, 
and who the market administrator determines have authorized such 
cooperative association to collect payment for their milk, shall pay 
such cooperative for such milk as follows:
    (1) On or before two days prior to the last day of the month for 
milk received during the first 15 days of the month, not less than the 
Class III price for the preceding month or 90 percent of the weighted 
average price for the preceding month, whichever is higher; and
    (2) On or before the 13th day of the following month for milk 
received during the month, not less than the uniform price as adjusted 
pursuant to Secs. 1005.74 and 1005.75, and less any payments made 
pursuant to paragraph (c)(1) of this section.
    (d) In making payments for producer milk pursuant to this section, 
each handler shall furnish each producer or cooperative association from 
whom he has received milk a supporting statement in such form that it 
may be retained by the recipient which shall show:
    (1) The month and identity of the producer;
    (2) The daily and total pounds and the average butterfat content of 
producer milk;
    (3) [Reserved]
    (4) The minimum rate at which payment to the producer is required 
pursuant to this order;
    (5) The rate(s) used in making the payment if such rate is other 
than the applicable minimum rate;
    (6) The amount, or the rate per hundredweight, and nature of each 
deduction claimed by the handler; and
    (7) The net amount of payment to such producer or cooperative 
association.

[55 FR 31352, Aug. 2, 1990, as amended at 61 FR 69018, Dec. 31, 1996]



Sec. 1005.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which shall be 
0.138 times the current month's butter price less 0.0028 times the 
preceding month's average pay price per hundredweight, at test, for 
manufacturing grade milk in Minnesota and Wisconsin, using the ``base 
month'' series, adjusted pursuant to Sec. 1005.51 (a) through (e), as 
reported by the Department. The butter price means the simple average 
for the month of the Chicago Mercantile Exchange, Grade A butter price 
as reported by the Department.

[60 FR 18956, Apr. 14, 1995, as amended at 61 FR 69018, Dec. 31, 1996]



Sec. 1005.75  Plant location adjustments for producers and on nonpool milk.

    (a) In making the payments required pursuant to Sec. 1005.73, the 
uniform price pursuant to Sec. 1005.61 for the month shall be adjusted 
by the amounts set forth in Sec. 1005.53 according to the location of 
the plant where the milk being priced was received.
    (b) For purposes of computing the value of other source milk 
pursuant to Sec. 1005.71, the weighted average price shall be adjusted 
by the amount set forth in Sec. 1005.53 that is applicable at the 
location of the nonpool plant from which the milk was received, except 
that the adjusted weighted average price shall not be less than the 
Class III price.

[55 FR 31352, Aug. 2, 1990, as amended at 61 FR 69018, Dec. 31, 1996]

[[Page 161]]



Sec. 1005.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Secs. 1005.30(b) and 1005.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants, handlers pursuant to 
Sec. 1005.9(b), and other order plants, except that subtracted under a 
similar provision of another Federal milk order; and
    (ii) From another nonpool plant that is not another order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool plant by handlers fully regulated under any Federal milk 
order is classified and priced as Class I milk and is not used as an 
offset for any other payment obligation under any order;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Multiply the remaining pounds by the difference between the 
Class I price and the weighted average price, both prices to be 
applicable at the location of the partially regulated distributing plant 
(except that the Class I price and weighted average price shall not be 
less than the Class III price); and
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to 
Sec. 1005.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant, a handler 
described in Sec. 1005.9(b), or another order plant shall be allocated 
at the partially regulated distributing plant to the same class in which 
such products were classified at the fully regulated plant or as 
classified pursuant to Sec. 1005.42 with respect to receipts from a 
handler described in Sec. 1005.9(b);
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or 
another order plant shall be classified at the partially regulated 
distributing plant in

[[Page 162]]

the class to which allocated at the fully regulated plant. Such 
transfers shall be allocated to the extent possible to those receipts at 
the partially regulated distributing plant from pool plants and other 
order plants that are classified in the corresponding class pursuant to 
paragraph (b)(1)(i) of this section. Any such transfers remaining after 
the above allocation which are classified in Class I and for which a 
value is computed for the handler operating the partially regulated 
distributing plant pursuant to Sec. 1005.60 shall be priced at the 
uniform price (or at the weighted average price if such is provided) of 
the respective order regulating the handling of milk at the transferee-
plant, with such uniform price adjusted to the location of the nonpool 
plant (but not to be less than the lowest class price of the respective 
order), except that transfers of reconstituted skim milk in filled milk 
shall be priced at the lowest class price of the respective order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1005.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1005.60(f) less the value of such other source milk 
specified in Sec. 1005.71(a)(2)(ii), a value of milk determined pursuant 
to Sec. 1005.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distributing plant 
during the month equivalent to the requirements of Sec. 1005.7(b) 
subject to the following conditions:
    (A) The operator of the partially regulated distributing plant 
submits with its reports filed pursuant to Secs. 1005.30(b) and 
1005.31(b) similar reports for each such nonpool supply plant;
    (B) The operator of such nonpool supply plant maintains books and 
records showing the utilization of all skim milk and butterfat received 
at such plant which are made available if requested by the market 
administrator for verification purposes; and
    (C) The value of milk determined pursuant to Sec. 1005.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of such partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1005.74, for milk received at 
the plant during the month that would have been producer milk if the 
plant had been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1005.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1005.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the

[[Page 163]]

nonfluid ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.

[55 FR 31352, Aug. 2, 1990, as amended at 58 FR 27785, May 11, 1993]



Sec. 1005.77  Adjustment of accounts.

    (a) Whenever verification by the market administrator of payments by 
any handler discloses errors made in payments to the producer-settlement 
fund pursuant to Sec. 1005.71 or to the transportation credit balancing 
fund pursuant to Sec. 1005.81, the market administrator shall promptly 
bill such handler for any unpaid amount and such handler shall, within 
15 days, make payment to the market administrator of the amount so 
billed. Whenever verification discloses that payment is due from the 
market administrator to any handler pursuant to Sec. 1005.72 or 
Sec. 1005.82, the market administrator shall make payment to such 
handler within 15 days or, in the case of the transportation credit 
balancing fund, as soon as funds become available. If a handler is due 
additional payment for a month in which payments to handlers were 
prorated pursuant to Sec. 1005.82(a), the additional payment pursuant to 
this section shall be multiplied by the final proration percentage 
computed in Sec. 1005.82(a)(2).
    (b) Whenever verification by the market administrator of the payment 
by a handler to any producer or cooperative association for milk 
received by such handler discloses payment of less than is required by 
Sec. 1005.73, the handler shall pay such balance due such producer or 
cooperative association not later than the time of making payment to 
producers or cooperative associations next following such disclosure.

[62 FR 39740, July 23, 1997]



Sec. 1005.78  Charges on overdue accounts.

    Any unpaid obligations of a handler pursuant to Secs. 1005.71, 
1005.73, 1005.76, 1005.77, 1005.81, 1005.85 or 1005.86 shall be 
increased one and one-fourth percent per month beginning on the first 
day after the due date, and on each date of subsequent months following 
the day on which such type of obligation is normally due, subject to the 
following conditions:
    (a) The amounts payable pursuant to this section shall be computed 
monthly on each unpaid obligation, which shall include any unpaid 
interest charges previously computed pursuant to this section;
    (b) For the purposes of this section, any obligation that was 
determined at a date later than that prescribed by the order because of 
a handler's failure to submit a report to the market administrator when 
due shall be considered to have been payable by the date it would have 
been due if the report had been filed when due; and
    (c) All monies collected pursuant to this section shall be paid to 
the administrative assessment fund maintained by the market 
administrator.

[55 FR 31352, Aug. 2, 1990, as amended at 62 FR 39740, July 23, 1997]

                       Marketwide Service Payments



Sec. 1005.80  Transportation credit balancing fund.

    The market administrator shall maintain a separate fund known as the 
Transportation Credit Balancing Fund into which shall be deposited the 
payments made by handlers pursuant to Sec. 1005.81 and out of which 
shall be made the payments due handlers pursuant to Sec. 1005.82. 
Payments due a handler shall be offset against payments due from the 
handler.

[61 FR 41490, Aug. 9, 1996]



Sec. 1005.81  Payments to the transportation credit balancing fund.

    (a) On or before the 12th day after the end of the month, each 
handler operating a pool plant and each handler specified in Sec. 1005.9 
(b) and (c) shall pay to the market administrator a transportation 
credit balancing fund assessment determined by multiplying the pounds of 
Class I producer milk assigned pursuant to Sec. 1005.44 by $0.065 per 
hundredweight or such lesser amount as the market administrator deems 
necessary to maintain a balance in the fund equal to the total 
transportation credits disbursed during the prior June-January period. 
In the event that during any month of the June-January period the fund 
balance is insufficient

[[Page 164]]

to cover the amount of credits that are due, the assessment should be 
based upon the amount of credits that would have been disbursed had the 
fund balance been sufficient.
    (b) The market administrator shall announce publicly on or before 
the 5th day of the month the assessment pursuant to paragraph (a) of 
this section for the following month.

[61 FR 41490, Aug. 9, 1996, as amended at 62 FR 39740, July 23, 1997]



Sec. 1005.82  Payments from the transportation credit balancing fund.

    (a) Payments from the transportation credit balancing fund to 
handlers and cooperative associations requesting transportation credits 
shall be made as follows:
    (1) On or before the 13th day after the end of each of the months of 
July through December and any other month in which transportation 
credits are in effect pursuant to paragraph (b) of this section, the 
market administrator shall pay to each handler that received, and 
reported pursuant to Sec. 1005.30(a)(5), bulk milk transferred from 
another order plant as described in paragraph (c)(1) of this section or 
that received, and reported pursuant to Sec. 1005.30(a)(6), milk 
directly from producers' farms as specified in paragraph (c)(2) of this 
section, a preliminary amount determined pursuant to paragraph (d) of 
this section to the extent that funds are available in the 
transportation credit balancing fund. If an insufficient balance exists 
to pay all of the credits computed pursuant to this section, the market 
administrator shall distribute the balance available in the 
transportation credit balancing fund by reducing payments prorata using 
the percentage derived by dividing the balance in the fund by the total 
credits that are due for the month. The amount of credits resulting from 
this initial proration shall be subject to audit adjustment pursuant to 
paragraph (a)(2) of this section;
    (2) The market administrator shall accept adjusted requests for 
transportation credits on or before the 20th day of the month following 
the month for which such credits were requested pursuant to 
Sec. 1005.32(a). After such date, a preliminary audit will be conducted 
by the market administrator, who will recalculate any necessary 
proration of transportation credit payments for the preceding month 
pursuant to paragraph (a) of this section. Handlers will be promptly 
notified of an overpayment of credits based upon this final computation 
and remedial payments to or from the transportation credit balancing 
fund will be made on or before the next payment date for the following 
month;
    (3) Transportation credits paid pursuant to paragraph (a) (1) and 
(2) of this section shall be subject to final verification by the market 
administrator pursuant to Sec. 1005.77. Adjusted payments to or from the 
transportation credit balancing fund will remain subject to the final 
proration established pursuant to paragraph (a)(2) of this section; and
    (4) In the event that a qualified cooperative association is the 
responsible party for whose account such milk is received and written 
documentation of this fact is provided to the market administrator 
pursuant to Sec. 1005.30(c)(3) prior to the date payment is due, the 
transportation credits for such milk computed pursuant to this section 
shall be made to such cooperative association rather than to the 
operator of the pool plant at which the milk was received.
    (b) The market administrator may extend the period during which 
transportation credits are in effect (i.e., the transportation credit 
period) to the months of January and June if a written request to do so 
is received 15 days prior to the beginning of the month for which the 
request is made and, after conducting an independent investigation, 
finds that such extension is necessary to assure the market of an 
adequate supply of milk for fluid use. Before making such a finding, the 
market administrator shall notify the Director of the Dairy Division and 
all handlers in the market that an extension is being considered and 
invite written data, views, and arguments. Any decision to extend the 
transportation credit period must be issued in writing prior to the 
first day of the month for which the extension is to be effective.
    (c) Transportation credits shall apply to the following milk:

[[Page 165]]

    (1) Bulk milk received from a plant regulated under another Federal 
order, except Federal Orders 1007, 1011, and 1046, and allocated to 
Class I milk pursuant to Sec. 1005.44(a)(12); and
    (2) Bulk milk received directly from the farms of dairy farmers at 
pool distributing plants subject to the following conditions:
    (i) The quantity of such milk that shall be eligible for the 
transportation credit shall be determined by multiplying the total 
pounds of milk received from producers meeting the conditions of this 
paragraph by the lower of:
    (A) The marketwide estimated Class I utilization of all handlers for 
the month pursuant to Sec. 1005.45(a); or
    (B) The Class I utilization of all producer milk of the pool plant 
operator receiving the milk after the computations described in 
Sec. 1005.44;
    (ii) The dairy farmer was not a ``producer'' under this order during 
more than 2 of the immediately preceding months of January through June 
and not more than 50 percent of the production of the dairy farmer 
during those 2 months, in aggregate, was received as producer milk under 
this order during those 2 months. However, if January and/or June are 
months in which transportation credits are disbursed pursuant to 
paragraph (a) of this section, these months shall not be included in the 
2-month limit provided in this paragraph; and
    (iii) The farm on which the milk was produced is not located within 
the specified marketing area of this order or the marketing areas of 
Federal Orders 1007, 1011, or 1046, or within the Kentucky counties of 
Allen, Barren, Metcalfe, Monroe, Simpson, and Warren.
    (d) Transportation credits shall be computed as follows:
    (1) The market administrator shall subtract from the pounds of milk 
described in paragraphs (c) (1) and (2) of this section the pounds of 
bulk milk transferred from the pool plant receiving the supplemental 
milk if milk was transferred to a nonpool plant on the same calendar day 
that the supplemental milk was received. For this purpose, the 
transferred milk shall be subtracted from the most distant load of 
supplemental milk received, and then in sequence with the next most 
distant load until all of the transfers have been offset;
    (2) With respect to the pounds of milk described in paragraph (c)(1) 
of this section that remain after the computations described in 
paragraph (d)(1) of this section, the market administrator shall:
    (i) Determine the shortest hard-surface highway distance between the 
shipping plant and the receiving plant;
    (ii) Multiply the number of miles so determined by 0.35 cent;
    (iii) Subtract the other order's Class I price applicable at the 
shipping plant's location from the Class I price applicable at the 
receiving plant as specified in Sec. 1005.53;
    (iv) Subtract any positive difference computed in paragraph 
(d)(2)(iii) of this section from the amount computed in paragraph 
(d)(2)(ii) of this section; and
    (v) Multiply the remainder computed in paragraph (d)(2)(iv) of this 
section by the hundredweight of milk described in paragraph (d)(2) 
introductory text of this section.
    (3) For the remaining milk described in paragraph (c)(2) of this 
section after computations described in paragraph (d)(1) of this 
section, the market administrator shall:
    (i) Determine an origination point for each load of milk by locating 
the nearest city to the last producer's farm from which milk was picked 
up for delivery to the receiving pool plant. Alternatively, the milk 
hauler that is transporting the milk of producers described in paragraph 
(c)(2) of this section may establish an origination point following the 
last farm pickup by stopping at the nearest independently-operated truck 
stop with a certified truck scale and obtaining a weight certificate 
indicating the weight of the truck and its contents, the date and time 
of weighing, and the location of the truck stop;
    (ii) Determine the shortest hard-surface highway distance between 
the receiving pool plant and the truck stop or city, as the case may be;
    (iii) Subtract 85 miles from the mileage so determined;
    (iv) Multiply the remaining miles so computed by 0.35 cent;

[[Page 166]]

    (v) If the origination point determined pursuant to paragraph 
(d)(3)(i) of this section is in a Federal order marketing area, subtract 
the Class I price applicable at the origination point pursuant to the 
provisions of such other order (as if the origination point were a plant 
location) from the Class I price applicable at the distributing plant 
receiving the milk. If the origination point is not in any Federal order 
marketing area, determine the Class I price at the origination point 
based upon the provisions of this order and subtract this price from the 
Class I price applicable at the distributing plant receiving the milk;
    (vi) Subtract any positive difference computed in paragraph 
(d)(3)(v) of this section from the amount computed in paragraph 
(d)(3)(iv) of this section; and
    (vii) Multiply the remainder computed in paragraph (d)(3)(vi) by the 
hundredweight of milk described in paragraph (d)(3) introductory text of 
this section.

[62 FR 39740, July 23, 1997]

        Administrative Assessment and Marketing Service Deduction



Sec. 1005.85  Assessment for order administration.

    As his pro rata share of the expense of administration of the order, 
each handler shall pay to the market administrator on or before the 15th 
day after the end of the month 4 cents per hundredweight, or such lesser 
amount as the Secretary may prescribe with respect to:
    (a) Receipts of producer milk (including such handler's own 
production) other than such receipts by a handler described in 
Sec. 1005.9(c) that were delivered to pool plants of other handlers;
    (b) Receipts from a handler described in Sec. 1005.9(c);
    (c) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1005.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1005.44(a)(7) and (a)(11) and the corresponding steps 
of Sec. 1005.44(b), except such other source milk that is excluded from 
the computations pursuant to Sec. 1005.60(d) and (f); and
    (d) Route disposition in the marketing area from a partially 
regulated distributing plant that exceeds the skim milk and butterfat 
specified in Sec. 1005.76(a)(2).

[55 FR 31352, Aug. 2, 1990, as amended at 58 FR 27785, May 11, 1993]



Sec. 1005.86  Deduction for marketing services.

    (a) Except as provided in paragraph (b) of this section, each 
handler, in making payments to producers for milk (other than milk of 
such handler's own production) pursuant to Sec. 1005.73, shall deduct 5 
cents per hundredweight, or such amount not exceeding 5 cents per 
hundredweight, as may be prescribed by the Secretary, and shall pay such 
deductions to the market administrator on or before the 15th day after 
the end of the month. Such money shall be used by the market 
administrator to provide market information and to check the accuracy of 
the testing and weighing of their milk for producers who are not 
receiving such service from a cooperative association.
    (b) In the case of producers who are members of a cooperative 
association which the Secretary has determined is actually performing 
the services set forth in paragraph (a) of this section, each handler 
shall (in lieu of the deduction specified in paragraph (a) of this 
section), make such deductions from the payments to be made to such 
producers as may be authorized by the membership agreement or marketing 
contract between such cooperative association and such producers, and on 
or before the 13th day after the end of each month, pay such deductions 
to the cooperative association of which such producers are members, 
furnishing a statement showing the amount of any such deductions and the 
amount of milk for which such deduction was computed for each producer.



PART 1006--MILK IN UPPER FLORIDA MARKETING AREA--Table of Contents




                           General Provisions

Sec.
1006.1  General provisions.

[[Page 167]]

                               Definitions

1006.2  Upper Florida marketing area.
1006.3  Route disposition.
1006.4  [Reserved]
1006.5  Distributing plant.
1006.6  Supply plant.
1006.7  Pool plant.
1006.8  Nonpool plant.
1006.9  Handler.
1006.10  Producer-handler.
1006.11  [Reserved]
1006.12  Producer.
1006.13  Producer milk.
1006.14  Other source milk.
1006.15  Fluid milk product.
1006.16  Fluid cream product.
1006.17  Filled milk.
1006.18  Cooperative association.
1006.19  [Reserved]
1006.21  Commercial food processing establishment.

                             Handler Reports

1006.30  Reports of receipts and utilization.
1006.31  Payroll reports.
1006.32  Other reports.

                         Classification of Milk

1006.40  Classes of utilization.
1006.41  Shrinkage.
1006.42  Classification of transfers and diversions.
1006.43  General classification rules.
1006.44  Classification of producer milk.
1006.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1006.50  Class prices.
1006.51  Basic formula price.
1006.52  Plant location adjustments for handlers.
1006.53  Announcement of class prices.
1006.54  Equivalent price.

                              Uniform Price

1006.60  Handler's value of milk for computing the uniform price.
1006.61  Computation of uniform price.
1006.62  Announcement of uniform price and butterfat differential.

                            Payments for Milk

1006.70  Producer-settlement fund.
1006.71  Payments to the producer-settlement fund.
1006.72  Payments from the producer-settlement fund.
1006.73  Payments to producers and to cooperative associations.
1006.74  Butterfat differential.
1006.75  Plant location adjustments for producers and on nonpool milk.
1006.76  Payments by handler operating a partially regulated 
          distributing plant.
1006.77  Adjustment of accounts.
1006.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1006.85  Assessment for order administration.
1006.86  Deduction for marketing services.

    Authority: Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source: 37 FR 17725, Aug. 30, 1972, unless otherwise noted.

                           General Provisions



Sec. 1006.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1006.2  Upper Florida marketing area.

    The Upper Florida marketing area, hereinafter called the ``marketing 
area'', means all the territory geographically within the boundaries of 
the following counties, all in the State of Florida, including all 
waterfront facilities connected therewith and all territory wholly or 
partly therein occupied by government (municipal, State, or Federal) 
reservations, installations, institutions, or other similar 
establishments.

    Alachua, Baker, Bay, Bradford, Brevard, Calhoun, Citrus, Clay, 
Columbia, Dixie, Duval, Flagler, Franklin, Gadsden, Gilchrist, Gulf, 
Hamilton, Holmes, Jackson, Jefferson, Lafayette, Lake, Leon, Levy, 
Liberty, Madison, Marion, Nassau, Orange, Osceola, Putnam, St. Johns, 
Seminole, Sumter, Suwannee, Taylor, Union, Volusia, Wakulla, Washington.



Sec. 1006.3  Route disposition.

    Route disposition means a delivery (except to a plant) either direct 
or through any distribution facility (including disposition from a plant 
store, vendor, or vending machine) of a fluid milk product classified as 
Class I milk.



Sec. 1006.4  [Reserved]



Sec. 1006.5  Distributing plant.

    Distributing plant means a plant:

[[Page 168]]

    (a) That is approved by a duly constituted health authority for the 
processing or packaging of Grade A milk and from which there is route 
disposition of any fluid milk product during the month in the marketing 
area; or
    (b) That processes or packages filled milk and from which there is 
route disposition of filled milk during the month in the marketing area.



Sec. 1006.6  Supply plant.

    Supply plant means a plant from which a fluid milk product 
acceptable to a duly constituted health authority or filled milk is 
shipped during the month to a pool plant.



Sec. 1006.7  Pool plant.

    Except as provided in paragraph (d) of this section, pool plant 
means:
    (a) A distributing plant that has route distribution, except filled 
milk, during the month of not less than 50 percent of the total Grade A 
fluid milk products, except filled milk, that are physically received at 
such plant or diverted as producer milk to a nonpool plant pursuant to 
Sec. 1006.13, and that has route disposition, except filled milk, in the 
marketing area during the month of not less than 10 percent of such 
receipts.
    (b) A supply plant from which not less than 50 percent of the total 
quantity of Grade A fluid milk products that are physically received 
from dairy farmers at such plant or diverted as producer milk to a 
nonpool plant pursuant to Sec. 1006.13 during the month is shipped as 
fluid milk products, except filled milk, to pool plants meeting the 
requirements of Sec. 1006.7(a).
    (c) A plant, other than a distributing plant, that is located in the 
marketing area and is operated by a cooperative association if pool 
plant status under this paragraph is requested for such plant by the 
cooperative association and 50 percent or more of the producer milk of 
members of the cooperative association is received at pool distributing 
plants either directly from farms or by transfer from plants of the 
cooperative association for which pool plant status under this paragraph 
has been requested, subject to the following conditions:
    (1) The plant is approved by a duly constituted health authority for 
the disposition of Grade A milk in the marketing area; and
    (2) The plant does not qualify as a pool plant under paragraph (b) 
of this section or under the provisions of another Federal order 
applicable to a supply plant.
    (d) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) An exempt distributing plant;
    (3) A distributing plant qualified pursuant to paragraph (a) of this 
section which meets the requirements of a fully regulated plant pursuant 
to the provisions of another order issued pursuant to the Act and from 
which a greater quantity of fluid milk products, except filled milk, is 
disposed of during the month from such plant as route disposition in the 
marketing area regulated by the other order than as route disposition in 
this marketing area: Provided, That such a distributing plant which was 
a pool plant under this order in the immediately preceding month shall 
continue to be subject to all of the provisions of this part until the 
third consecutive month in which a greater proportion of its route 
disposition is made in such other marketing area, unless the other order 
requires regulation of the plant without regard to its qualifying as a 
pool plant under this order; and
    (4) Any building, premises, or facilities, the primary function of 
which is to hold or store bottled milk or milk products (including 
filled milk) in finished form, nor shall it include any part of a plant 
in which the operations are entirely separated (by wall or other 
partition) from the handling of producer milk.

[54 FR 6383, Feb. 10, 1989]

    Effective Date Note: At 62 FR 36651, July 9, 1997, in Sec. 1006.7, 
the words ``50 percent or more of the'' in the introductory text of 
paragraph (c) and paragraph (c)(2) were suspended indefinitely, 
effective Sept. 1, 1997.



Sec. 1006.8  Nonpool plant.

    Nonpool plant means a plant (except a pool plant) which receives 
milk from dairy farmers or is a milk or filled milk manufacturing, 
processing or bottling plant. The following categories of

[[Page 169]]

nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Exempt distributing plant means a distributing plant operated by 
a governmental agency.
    (d) Partially regulated distributing plant means a nonpool plant 
that is a distributing plant and is not an other order plant, a 
producer-handler plant or an exempt distributing plant.
    (e) Unregulated supply plant means a nonpool plant that is a supply 
plant and is not an other order plant, a producer-handler or an exempt 
distributing plant.



Sec. 1006.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of one or more pool 
plants;
    (b) Any cooperative association with respect to producer milk which 
it causes to be diverted from a pool plant to a nonpool plant for the 
account of such cooperative association;
    (c) A cooperative association with respect to milk of its producer-
members which is delivered from the farm to the pool plant of another 
handler in a tank truck owned and operated by or under contract to such 
cooperative association. The milk for which a cooperative association is 
the handler pursuant to this paragraph shall be deemed to have been 
received at the location of the pool plant to which it was delivered;
    (d) Any person in his capacity as the operator of a partially 
regulated distributing plant;
    (e) A producer-handler; or
    (f) Any person in his capacity as the operator of an other order 
plant that is either a distributing plant or a supply plant.



Sec. 1006.10  Producer-handler.

    Producer-handler means any person who meets all the following 
conditions:
    (a) Operates a dairy farm(s) from which the milk produced thereon is 
supplied to a plant operated by him in accordance with the requirements 
set forth in paragraph (b) of this section, and provides proof 
satisfactory to the market administrator that:
    (1) The full maintenance of milk-producing cows on such farm(s) is 
at his sole risk and under his complete and exclusive management and 
control; and
    (2) Each such farm is owned or operated by him, at his sole risk, 
and under his complete and exclusive management and control;
    (b) Operates a plant in which milk approved by a duly constituted 
health authority for fluid consumption is processed or packaged and from 
which there is route disposition during the month in the marketing area 
pursuant to the following requirements:
    (1) No fluid milk products are received at such plant or by him at 
any other location, except:
    (i) From dairy farm(s) as specified in paragraph (a) of this 
section; and
    (ii) Fluid milk products (other than whole milk) from pool plants in 
an amount that is not in excess of the lesser of 5,000 pounds or 5 
percent of his Class I sales during the month;
    (2) Such plant is operated under his complete and exclusive 
management and control and at his sole risk, and is not used during the 
month to process, package, receive or otherwise handle fluid milk 
products for any other person; and
    (c) Disposes of no other source milk (except that represented by 
nonfat solids used in the fortification of fluid milk products) as Class 
I milk.



Sec. 1006.11  [Reserved]



Sec. 1006.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk in compliance with the inspection 
requirements of a duly constituted health authority, which milk is 
received at a pool plant or diverted pursuant to Sec. 1006.13 from a 
pool plant to a nonpool plant.
    (b) The term ``producer'' shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act;
    (2) The operator of an exempt distributing plant; or

[[Page 170]]

    (3) Any person with respect to milk produced by him that is reported 
as diverted to an other order plant if any portion of such person's milk 
so moved is assigned to Class I milk under the provisions of such other 
order.

[41 FR 43155, Sept. 30, 1976]



Sec. 1006.13  Producer milk.

    Producer milk means the skim milk and butterfat contained in milk:
    (a) Received at a pool plant directly from a producer or a handler 
described in Sec. 1006.9(c): Provided, That if the milk received at a 
pool plant from a handler described in Sec. 1006.9(c) is purchased on a 
basis other than farm weights, the amount by which the total farm 
weights of such milk exceed the weights on which the pool plant's 
purchases are based shall be producer milk received by the handler 
described in Sec. 1006.9(c) at the location of the pool plant; or
    (b) Diverted from a pool plant to a nonpool plant that is not a 
producer-handler plant, subject to the following conditions:
    (1) Such milk shall be deemed to have been received by the diverting 
handler at the plant to which diverted;
    (2) Not less than 10 days' production of the producer whose milk is 
diverted is physically received at a pool plant: Provided, That any 
delivery during the current month from such producer to another order 
plant regulated by the order that regulated such pool plant in the prior 
month shall be counted towards meeting the 10-day production 
requirement;
    (3) To the extent that it would result in nonpool plant status for 
the pool plant from which diverted, milk diverted for the account of a 
cooperative association from the pool plant of another handler shall not 
be producer milk;
    (4) A cooperative association may divert for its account the milk of 
a producer. The total quantity of such milk so diverted by a cooperative 
that exceeds the following specified applicable percentage of producer 
milk that the cooperative association caused to be delivered to and 
physically received at pool plants during the month shall not be 
producer milk:
    (i) 40 percent in March-June,
    (ii) 25 percent in December-February, and
    (iii) 20 percent in July-November;
    (5) The operator of a pool plant other than a cooperative 
association may divert for its account any milk of producers that is not 
under the control of a cooperative association that is diverting milk 
during the month pursuant to paragraph (b)(4) of this section. The total 
quantity so diverted by the operator of the pool plant that exceeds the 
following specified applicable percentage of milk physically received at 
such plant during the month that is eligible to be diverted by the plant 
operator shall not be producer milk:
    (i) 40 percent in March-June,
    (ii) 25 percent in December-February, and
    (iii) 20 percent in July-November;
    (6) The diverting handler shall designate the dairy farmers whose 
milk is not producer milk pursuant to paragraphs (b) (4) and (5) of this 
section. If the handler fails to make such designation, milk diverted on 
the last day of the month, then the second-to-last day of the month, and 
so on, shall be excluded until all diversions in excess of the 
prescribed limit are accounted for.

[37 FR 17725, Aug. 30, 1972, as amended at 54 FR 6363, Feb. 10, 1989]

    Effective Date Note:  At 57 FR 61780, Dec. 29, 1992, Sec. 1006.13 
was amended by suspending paragraph (b)(2) indefinitely, effective Dec. 
1, 1992.



Sec. 1006.14  Other source milk.

    Other source milk means the skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk fluid cream products 
from any source except:
    (1) Producer milk;
    (2) Such products from pool plants; and
    (3) Such products in inventory at the beginning of the month;
    (b) Receipts of packaged fluid cream products and eggnog from other 
plants;
    (c) Products, other than fluid milk products and fluid cream 
products, from any source (including those produced at the plant) which 
are reprocessed, converted into, or combined with another product in the 
plant during the month; and

[[Page 171]]

    (d) Any disappearance of nonfluid products in a form in which they 
may be converted into a Class I product and which are not otherwise 
accounted for.

[41 FR 43156, Sept. 30, 1976, as amended at 46 FR 51234, Oct. 19, 1981]



Sec. 1006.15  Fluid milk product.

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

[58 FR 27786, May 11, 1993]



Sec. 1006.16  Fluid cream product.

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

[58 FR 27786, May 11, 1993]



Sec. 1006.17  Filled milk.

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



Sec. 1006.18  Cooperative association.

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



Sec. 1006.19  [Reserved]



Sec. 1006.21  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1006.13, 1006.41 and 1006.52.

[58 FR 27786, May 11, 1993]

                             Handler Reports



Sec. 1006.30  Reports of receipts and utilization.

    On or before the 7th day after the end of each month, each handler 
(except a handler described in Sec. 1006.9(e) or (f)) shall report to 
the market administrator for such month with respect to each plant at 
which milk is received or at which filled milk is processed or packaged, 
reporting in detail and on forms prescribed by the market administrator;

[[Page 172]]

    (a) The quantities of skim milk and butterfat contained in or 
represented by:
    (1) Producer milk (or, in the case of handlers described in 
Sec. 1006.9(d), Grade A milk received from dairy farmers);
    (2) Fluid milk products and bulk fluid cream products received from 
pool plants of other handlers;
    (3) Other source milk;
    (4) Milk diverted to nonpool plants pursuant to Sec. 1006.13; and
    (5) Inventories of fluid milk products and fluid cream products at 
the beginning and end of the month;
    (b) The utilization of all skim milk and butterfat required to be 
reported pursuant to this section, including a separate statement 
showing:
    (1) The respective amounts of skim milk and butterfat disposed of as 
route disposition in the marketing area, showing separately the in-area 
disposition of filled milk; and
    (2) For a handler described in Sec. 1006.9(d), the amount of 
reconstituted skim milk in fluid milk products disposed of in the 
marketing area as route disposition; and
    (c) Such other information with respect to the receipts and 
utilization of skim milk and butterfat as the market administrator may 
prescribe.

[37 FR 17725, Aug. 30, 1972, as amended at 41 FR 43156, Sept. 30, 1976]



Sec. 1006.31  Payroll reports.

    (a) Each handler described in Sec. 1006.9(a), (b), and (c) shall 
report to the market administrator in detail and on forms prescribed by 
the market administrator on or before the 20th day after the end of the 
month his producer payroll for such month which shall show for each 
producer;
    (1) His identity;
    (2) The quantity of milk received from such producer and the number 
of days, if less than the entire month, on which milk was received from 
such producer;
    (3) The average butterfat content of such milk; and
    (4) The net amount of such handler's payment, together with the 
price paid and the amount and nature of any deductions.
    (b) Each handler operating a partially regulated distributing plant 
who does not elect to make payments pursuant to Sec. 1006.76(b) shall 
report to the market administrator on or before the 20th day after the 
end of the month the same information required of handlers pursuant to 
paragraph (a) of this section. In such report, payments to dairy farmers 
delivering Grade A milk shall be reported in lieu of payments to 
producers.



Sec. 1006.32  Other reports.

    (a) Each producer-handler shall make reports to the market 
administrator at such time and in such manner as the market 
administrator may prescribe.
    (b) Each handler who operates an other order plant shall report 
total receipts and utilization or disposition of skim milk and butterfat 
at the plant at such time and in such manner as the market administrator 
may require and allow verification of such reports by the market 
administrator.
    (c) Each handler described in Sec. 1006.9(c) shall report to the 
market administrator, in detail and on forms prescribed by the market 
administrator on or before the 7th day after the end of the month the 
quantities of skim milk and butterfat in producer milk delivered to each 
pool plant in such month.

                         Classification of Milk



Sec. 1006.40  Classes of utilization.

    Except as provided in Sec. 1006.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1006.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product,

[[Page 173]]

except as otherwise provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded or grated and are not included in paragraph 
(b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1006.15 and the fluid 
cream product definition pursuant to Sec. 1006.16; and
    (7) In shrinkage assigned pursuant to Sec. 1006.41(a) to the 
receipts specified in

[[Page 174]]

Sec. 1006.41(a)(2) and in shrinkage specified in Sec. 1006.41(b) and 
(c).

[58 FR 27786, May 11, 1993]



Sec. 1006.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1006.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraphs; 
and
    (2) In other source milk not specified in paragraphs (b) (1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product.
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant and milk received from a handler described in Sec. 1006.9(c));
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1006.9(c), except that 
if the operator of the plant to which the milk is delivered purchases 
such milk on the basis of weights determined from its measurement at the 
farm, the applicable percentage under this paragraph shall be two 
percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is diverted purchases such milk on the basis of weights determined 
from its measurement on the farm, the applicable percentage under this 
paragraph shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II classification is 
requested by the operator of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II classification is requested by 
the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective quantities of skim milk and butterfat to which 
percentages are applied in paragraphs (b) (1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1006.9 (b) and (c), but not in excess of 
0.5 percent of the skim milk and butterfat, respectively, in such milk. 
If the operator of the plant to which the milk is delivered purchases 
such milk on the basis of weights determined from its measurement at the 
farm, the applicable percentage under this paragraph for the cooperative 
association shall be zero.

[54 FR 6384, Feb. 10, 1989]



Sec. 1006.42  Classification of transfers and diversions.

    (a) Transfers to pool plants. Skim milk or butterfat transferred in 
the form of a fluid milk product or a bulk fluid cream product from a 
pool plant to another pool plant shall be classified as Class I milk 
unless the operators of both plants request the same classification in 
another class. In either case, the classification of such transfers 
shall be subject to the following conditions:
    (1) The skim milk and butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant after the computations 
pursuant to Sec. 1006.44(a)(12) and the corresponding

[[Page 175]]

step of Sec. 1006.44(b). The amount of skim milk or butterfat classified 
in each class shall include the assigned utilization of skim milk or 
butterfat in transfers of concentrated fluid milk products;
    (2) If the transferor-plant received during the month other source 
milk to be allocated pursuant to Sec. 1006.44(a)(7) or the corresponding 
step of Sec. 1006.44(b), the skim milk or butterfat so transferred shall 
be classified so as to allocate the least possible Class I utilization 
to such other source milk; and
    (3) If the transferor-handler received during the month other source 
milk to be allocated pursuant to Sec. 1006.44(a)(11) or (a)(12) or the 
corresponding steps of Sec. 1006.44(b), the skim milk or butterfat so 
transferred, up to the total of the skim milk and butterfat, 
respectively, in such receipts of other source milk, shall not be 
classified as Class I milk to a greater extent than would be the case if 
the other source milk had been received at the transferee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b)(1), (b)(2), or (b)(3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1006.40.
    (c) Transfers to producer-handlers and to exempt distributing 
plants. Skim milk or butterfat in the following forms that is 
transferred from a pool plant to a producer-handler under this or any 
other Federal order or to an exempt distributing plant shall be 
classified:
    (1) As Class I milk, if so moved in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant, an exempt 
distributing plant, or a producer-handler plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and

[[Page 176]]

    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i)(A) and (B) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2)(ii) 
through (viii) of this section:
    (A) The transferor-handler or divertor-handler claims such 
classification in its report of receipts and utilization filed pursuant 
to Sec. 1006.30 for the month within which such transaction occurred; 
and
    (B) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are made available for verification purposes if requested by the 
market administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (A) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (B) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (C) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (D) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (A) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (B) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (A) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (B) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a plant not fully regulated under 
any Federal milk order shall be classified on the basis of the second 
plant's utilization using the same assignment priorities at the second 
plant that are set forth in paragraph (d)(2) of this section.

[58 FR 27787, May 11, 1993]

[[Page 177]]



Sec. 1006.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1006.44, the following rules shall apply:
    (a) Each month, the market administrator shall correct for 
mathematical and other obvious errors, the reports submitted by each 
handler pursuant to Sec. 1006.30 and compute the total pounds of skim 
milk and butterfat, respectively, in each class at each pool plant.
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk used or disposed of in such product 
shall be considered to be a quantity equivalent to the nonfat milk 
solids contained in such product plus all the water originally 
associated with such solids.
    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1006.9(b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1006.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1006.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.

[37 FR 17725, Aug. 30, 1972, as amended at 58 FR 27788, May 11, 1993]



Sec. 1006.44  Classification of producer milk.

    For each month the market administrator shall determine the 
classification of producer milk of each handler described in 
Sec. 1006.9(a) for each of the handler's pool plants separately and of 
each handler described in Sec. 1006.9(b) and (c) by allocating the 
handler's receipts of skim milk and butterfat to such handler's 
utilization as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1006.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
disposed of to such plant by handlers fully regulated under any Federal 
milk order is classified and priced as Class I milk and is not used as 
an offset for any other payment obligation under any order;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I the remainder of such receipts.
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1006.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1006.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph (a)(5) or 
comparable provisions

[[Page 178]]

of another Federal milk order in the immediately preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to, any product specified in Sec. 1006.40(b), 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1006.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II;
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1006.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5), and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order and from an exempt 
distributing plant;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant.
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (a)(7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (a)(7)(v), and (a)(8)(i) of this section which are 
in excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii) (A) through (C) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount:
    (A) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
fluid milk products from pool plants of other handlers, and bulk fluid 
milk products from other order plants that were not subtracted pursuant 
to paragraph (a)(7)(vi) of this section; and
    (C) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk

[[Page 179]]

products from unregulated supply plants that remain at this pool plant 
is of all such receipts remaining at this allocation step at all pool 
plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk 
unconcentrated fluid milk products transferred or diverted to such plant 
and that were not subtracted pursuant to paragraph (a)(7)(vi) of this 
section, if Class II or Class III classification is requested by the 
operator of the other order plant and the handler, but not in excess of 
the pounds of skim milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1006.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5) and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11)(i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (a)(7)(v), and (a)(8)(i) and (ii) of this section and that 
were not offset by transfers or diversions of fluid milk products to the 
same unregulated supply plant from which fluid milk products to be 
allocated at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to paragraph (a)(11) of this section 
exceed the pounds of skim milk remaining in such classes, the pounds of 
skim milk in Class II and Class III combined shall be increased 
(increasing as necessary Class III and then Class II to the extent of 
available utilization in such classes at the nearest other pool plant of 
the handler, and then at each successively more distant pool plant of 
the handler) by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class I shall be decreased by 
a like amount. In such case, the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall 
be adjusted in the reverse direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to paragraph (a)(11) of this section exceed the pounds of skim 
milk remaining in such class, the pounds of skim milk in Class I shall 
be increased by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class II and Class III 
combined shall be decreased by a like amount (decreasing as necessary 
Class III and then Class II). In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount, 
beginning with the nearest plant at which Class I utilization is 
available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(vi) and (a)(8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12)(ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then

[[Page 180]]

from Class II, with respect to whichever of the following quantities 
represents the lower proportion of Class I milk:
    (A) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1006.45(a); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler):
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool plants at which such other source milk 
was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and Class 
III combined shall be increased (increasing as necessary Class III and 
then Class II to the extent of available utilization in such classes at 
the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class I that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in Class I shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1006.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk, subtract such excess 
from the pounds of skim milk remaining in each class in series beginning 
with Class III. Any amount so subtracted shall be known as overage;
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.

[58 FR 27788, May 11, 1993]



Sec. 1006.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for purposes of allocating receipts from other 
order plants pursuant to Sec. 1006.44(a)(12) and the corresponding step 
of Sec. 1006.44(b), the market administrator shall estimate and publicly 
announce the utilization (to the nearest whole percentage) in each class 
during the month of skim milk and butterfat, respectively,

[[Page 181]]

in producer milk of all handlers. Such estimate shall be based upon the 
most current available data and shall be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1006.43(d) and Sec. 1006.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products of bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report by the 
receiving handler, and, as necessary, any changes in such allocation 
arising from the verification of such report.
    (d) On or before the 12th day after the end of each month, report to 
each cooperative association, upon request by such association, the 
percentage of the milk caused to be delivered by the cooperative 
association for its members which was utilized in each class at each 
pool plant receiving such milk. For the purpose of this report, the milk 
so received shall be allocated to each class at each pool plant in the 
same ratio as all producer milk received at such plant during the month.

[37 FR 17725, Aug. 30, 1972, as amended at 41 FR 43156, Sept. 30, 1976; 
58 FR 27790, May 11, 1993]

                              Class Prices



Sec. 1006.50  Class prices.

    Subject to the provisions of Sec. 1006.52, the class prices per 
hundredweight for the month shall be as follows:
    (a) Class I price. From the effective date hereof through April 30, 
1988, and thereafter until amended, the Class I price shall be the basic 
formula price for the second preceding month plus $3.58.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.

[37 FR 17725, Aug. 30, 1972, as amended at 42 FR 46914, Sept. 19, 1977; 
47 FR 42964, Sept. 30, 1982; 51 FR 12831, Apr. 16, 1986; 58 FR 27790, 
May 11, 1993; 60 FR 6608, Feb. 2, 1995]



Sec. 1006.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1006.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:

[[Page 182]]

    (1) Grade AA butter price. Grade AA butter price means the simply 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.

[60 FR 18956, Apr. 14, 1995]



Sec. 1006.52  Plant location adjustments for handlers.

    (a) The Class I price for producer milk and other source milk at a 
plant located outside the State of Florida and more than 70 miles from 
the nearer of the City Halls of Jacksonville or Tallahassee, Florida, or 
within the State of Florida shall be adjusted at the rates set forth in 
the following schedule:

------------------------------------------------------------------------
             Location of plant                      Rate per cwt.
------------------------------------------------------------------------
Outside the State of Florida:
    In excess of 70 but not more than 85    Subtract 15 cents.
     miles.
    For each additional 10 miles or         Subtract 2.0 cents.
     fraction thereof.
Inside the State of Florida:
    South of a line forming the southern    Add 30 cents.
     boundary of the counties of Alachua,
     Dixie, Gilchrist, Putnam and St.
     Johns, but outside the defined
     marketing area of Part 1013.
    In the defined marketing area of Part   Add 60 cents.
     1013.
    The remaining area within the State of  No adjustment.
     Florida.
------------------------------------------------------------------------

    (b) For the purpose of calculating location adjustments, receipts of 
fluid milk products from pool plants shall be assigned any remainder of 
Class I milk at the transferee plant that is in excess of the sum of 
producer milk receipts at such plant and that assigned as Class I to 
receipts from other order plants and unregulated supply plants. Such 
assignment shall be made in sequence according to the location 
adjustment applicable at each plant, beginning with the plant nearest 
the City Hall in Jacksonville, Orlando or Tallahassee, Fla.
    (c) The Class I price resulting from such adjustments specified in 
this section shall not result in a price less than the Class II price 
for the month and the Class I price applicable to

[[Page 183]]

other source milk shall be adjusted at the rates specified in paragraph 
(a) of this section, except that the adjusted Class I price shall not be 
less than the Class II price for the month.

[37 FR 17725, Aug. 30, 1972, as amended at 49 FR 37567, Sept. 25, 1984; 
52 FR 5071, Feb. 19, 1987; 54 FR 6384, Feb. 10, 1989; 55 FR 17589, Apr. 
26, 1990]



Sec. 1006.53  Announcement of class prices.

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

[60 FR 6608, Feb. 2, 1995]



Sec. 1006.54  Equivalent price.

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

                              Uniform Price



Sec. 1006.60  Handler's value of milk for computing the uniform price.

    For the purpose of computing the uniform price the market 
administrator shall determine for each month the value of milk of each 
handler with respect to each of the handler's pool plants and of each 
handler described in Sec. 1006.9 (b) and (c) as follows:
    (a) Multiply the pounds of producer milk in each class as determined 
pursuant to Sec. 1006.44(a) by the applicable class prices and add the 
resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1006.44(a)(14) and the 
corresponding step of Sec. 1006.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1006.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1006.44(a)(9) and the corresponding step of Sec. 1006.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1006.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1006.44(a)(7)(i) through (iv) and the corresponding step of 
Sec. 1006.44(b), excluding receipts of bulk fluid cream products from an 
other order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1006.44(a)(7)(v) and (vi) and 
the corresponding step of Sec. 1006.44(b);
    (f) Add the amount obtained from multiplying the Class I price 
applicable at the location of the nearest unregulated supply plants from 
which an equivalent volume was received by the pounds of skim milk and 
butterfat in receipts of concentrated fluid milk products assigned to 
Class I pursuant to Sec. 1006.43(d) and Sec. 1006.44(a)(7)(i) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1006.44(a)(11) and the corresponding steps of Sec. 1006.44(b), 
excluding such skim milk and butterfat in receipts of bulk fluid milk 
products from an unregulated supply plant to the extent that an 
equivalent amount of skim milk or butterfat disposed of to such plant by 
handlers fully regulated under any Federal milk order is classified and 
priced as Class I milk and is not used as an offset for any other 
payment obligation under any order;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the

[[Page 184]]

difference between the Class I price applicable at the location of the 
pool plant and the Class III price) by the hundredweight of skim milk 
and butterfat contained in receipts of nonfluid milk products that are 
allocated to Class I use pursuant to Sec. 1006.43(d);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1006.76(b)(5) or (c); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.

[58 FR 27790, May 11, 1993]



Sec. 1006.61  Computation of uniform price.

    For each month, the market administrator shall compute a uniform 
price for milk of 3.5 percent butterfat content as follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1006.60 for all handlers who filed the reports pursuant to 
Sec. 1006.30 for the month, except those in default of payments required 
pursuant to Sec. 1006.71 for the preceding month;
    (b) [Reserved]
    (c) Add an amount equal to the total value of the minus location 
adjustments computed pursuant to Sec. 1006.75(a);
    (d) Subtract an amount equal to the total value of the plus location 
adjustments computed pursuant to Sec. 1006.75(a);
    (e) Add an amount equal to one-half the unobligated balance in the 
producer-settlement fund;
    (f) Divide the resulting amount by the sum of the following for all 
handlers included in these computations;
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1006.60(f); and
    (g) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight.

[37 FR 17725, Aug. 30, 1972, as amended at 42 FR 46914, Sept. 19, 1977]



Sec. 1006.62  Announcement of uniform price and butterfat differential.

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

[42 FR 46914, Sept. 19, 1977]

                            Payments for Milk



Sec. 1006.70  Producer-settlement fund.

    The market administrator shall maintain a separate fund known as the 
``producer-settlement fund'' into which he shall deposit all payments 
into such fund pursuant to Secs. 1006.71 and 1006.76 and out of which he 
shall make all payments from such fund pursuant to Sec. 1006.72: 
Provided, That the market administrator shall offset the payment due to 
a handler against payments due from such handler.



Sec. 1006.71  Payments to the producer-settlement fund.

    (a) On or before the 12th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the total amounts specified in paragraph (a)(1) of this section 
exceed the amounts specified in paragraph (a)(2) of this section:
    (1) The net pool obligation pursuant to Sec. 1006.60 for such 
handler; and
    (2) The sum of:
    (i) The value of such handler's producer milk at the uniform price, 
as adjusted pursuant to Sec. 1006.75; and
    (ii) The value at the uniform price applicable at the location of 
the plant(s) from which received (not to be less than the value at the 
Class II

[[Page 185]]

price) of other source milk for which a value is computed pursuant to 
Sec. 1006.60(f).
    (b) Each handler who operates an other order plant that is regulated 
under an order providing for individual-handler pooling shall pay to the 
market administrator for the producer-settlement fund, on or before the 
25th day after the end of the month, an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
disposed of as route disposition in the marketing area which was 
allocated to Class I at such other order plant. If reconstituted skim 
milk in filled milk is disposed of from such plant as route disposition 
in marketing areas regulated by two or more market pool orders, the 
reconstituted skim milk assigned to Class I shall be prorated according 
to such disposition in each marketing area; and
    (2) Compute the value of the quantity of reconstituted skim milk 
assigned in paragraph (b)(1) of this section to Class I disposition in 
this marketing area at the Class I price under this part applicable at 
the location of the other order plant (not to be less than the Class II 
price), and subtract its value at the Class II price.

[37 FR 17725, Aug. 30, 1972, as amended at 42 FR 46914, Sept. 19, 1977]



Sec. 1006.72  Payments from the producer-settlement fund.

    On or before the 13th day after the end of each month, the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1006.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1006.7(a)(1). If, at such time, the balance in 
the producer-settlement fund is insufficient to make all payments 
pursuant to this section, the market administrator shall reduce 
uniformly such payments and shall complete such payments as soon as the 
funds are available.



Sec. 1006.73  Payments to producers and to cooperative associations.

    (a) Except as provided in paragraph (b) of this section, each 
handler shall make payment for producer milk as follows:
    (1) On or before the 20th day of the month to each producer who had 
not discontinued shipping milk to such handler before the 15th day of 
the month, not less than 85 percent of the uniform price for the 
preceding month per hundredweight of milk received during the first 15 
days of the month, less proper deductions authorized in writing by such 
producer;
    (2) On or before the 5th day of the following month to each producer 
who had not discontinued shipping milk to such handler before the last 
day of the month, not less than 85 percent of the uniform price for the 
preceding month per hundredweight of milk received from the 16th through 
the last day of the month, less proper deductions authorized in writing 
by such producer; and
    (3) On or before the 15th day of each month to each producer for 
milk received during the preceding month, not less than the uniform 
price per hundredweight, adjusted pursuant to Secs. 1006.74, 1006.75, 
and 1006.86, subject to the following:
    (i) Minus payments made pursuant to paragraphs (a)(1) and (2) of 
this section;
    (ii) Less proper deductions authorized in writing by such producer; 
and
    (iii) If by such date such handler has not received full payment 
from the market administrator pursuant to Sec. 1006.72 for such month, 
he may reduce pro rata his payments to producers by not more than the 
amount of such underpayment. Payment to producers shall be completed 
thereafter not later than the date for making payments pursuant to this 
paragraph next following after receipt of the balance due from the 
market administrator.
    (b) In the case of a cooperative association which the market 
administrator determines is authorized by its members to collect payment 
for their milk and which has so requested any handler in writing, 
together with a written promise of such association to reimburse the 
handler the amount of any actual loss incurred by him because of any 
improper claim on the part of the association, such handler on or before 
the second day prior to the

[[Page 186]]

date on which payments are due individual producers, shall pay the 
cooperative association for milk received during the month from the 
producer-members of such association as determined by the market 
administrator an amount not less than the total due such producer-
members pursuant to paragraph (a) of this section, subject to the 
following:
    (1) Payment pursuant to this paragraph shall be made for milk 
received from any producer beginning on the first day of the month 
following receipt from the cooperative association of its certification 
that such producer is a member, and continuing through the last day of 
the month next preceding receipt of notice from the cooperative 
association of a termination of membership or until the original request 
is rescinded in writing by the cooperative association; and
    (2) Copies of the written request of the cooperative association to 
receive payments on behalf of its members, together with its promise to 
reimburse and its certified list of members shall be submitted 
simultaneously both to the handler and to the market administrator and 
shall be subject to verification by the market administrator at his 
discretion, through audit of the records of the cooperative association. 
Exceptions, if any, to the accuracy of such certification claimed by any 
producer or by a handler shall be made by written notice to the market 
administrator and shall be subject to his determination.



Sec. 1006.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which shall be 
0.138 times the current month's butter price less 0.0028 times the 
preceding month's average pay price per hundredweight, at test, for 
manufacturing grade milk in Minnesota and Wisconsin, using the ``base 
month'' series, adjusted pursuant to Sec. 1006.51 (a) through (e), as 
reported by the Department. The butter price means the simple average 
for the month of the Chicago Mercantile Exchange, Grade A butter price 
as reported by the Department.

[60 FR 18957, Apr. 14, 1995]



Sec. 1006.75  Plant location adjustments for producers and on nonpool milk.

    (a) The uniform price for producer milk received at a pool plant 
shall be reduced or increased according to the location of the pool 
plant at the rates set forth in Sec. 1006.52; and
    (b) For purposes of computations pursuant to Secs. 1006.71 and 
1006.72, the uniform price shall be adjusted at the rates set forth in 
Sec. 1006.52 applicable at the location of the nonpool plant from which 
the milk was received, except that the resulting adjusted price shall 
not be less than the Class II price for the month.

[37 FR 17725, Aug. 30, 1972, as amended at 54 FR 6384, Feb. 10, 1989]



Sec. 1006.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay to the market administrator for the producer-settlement fund 
on or before the 25th day after the end of the month either of the 
amounts (at the handler's election) calculated pursuant to paragraph (a) 
or (b) of this section. If the handler fails to report pursuant to 
Secs. 1006.30 and 1006.31(b) the information necessary to compute the 
amount specified in paragraph (a) of this section, he shall pay the 
amount computed pursuant to paragraph (b) of this section:
    (a) An amount computed as follows:
    (1) The obligation that would have been computed pursuant to 
Sec. 1006.60 at such plant shall be determined as though such plant were 
a pool plant, subject to the following modifications:
    (i) Receipts at such nonpool plant from a pool plant or an other 
order plant shall be assigned to the utilization at which classified at 
the pool plant or other order plant;
    (ii) Transfers from such nonpool plant to a pool plant or an other 
order plant shall be classified in the class to which allocated at the 
pool plant or other order plant. Class I milk transferred from such 
nonpool plant to pool

[[Page 187]]

plants and other order plants shall be valued at the uniform price of 
the respective order, except that reconstituted skim milk (including 
that in filled milk), and milk or skim milk from producer-handlers and 
exempt plants defined in any order shall be valued at the Class II 
price. No obligation shall apply to Class I milk transferred to a pool 
plant or an other order plant if such Class I utilization is assigned to 
receipts at the partially regulated distributing plant from pool plants 
and other order plants at which such milk was classified and priced as 
Class I milk;
    (iii) Such handler's obligation shall include any charges computed 
pursuant to Sec. 1006.60(f) and any credits computed pursuant to 
Sec. 1006.71(a)(2)(ii) with respect to receipts of Class I milk from an 
unregulated supply plant, except that the credit for receipts of 
reconstituted skim milk (including that in filled milk), and milk or 
skim milk from producer-handlers and exempt plants defined in any order 
shall be at the Class II price, unless an obligation with respect to 
such plant is computed as specified in paragraph (a)(1)(iv) of this 
section;
    (iv) If the operator of the partially regulated distributing plant 
so requests, and provides with his report pursuant to Sec. 1006.30 a 
similar report for each nonpool plant which serves as a supply plant for 
such partially regulated distributing plant by shipments to such plant 
during the month equivalent to the requirements of Sec. 1006.7(b) with 
agreement of the operator of such plant that the market administrator 
may examine the books and records of such plant for purposes of 
verification of such reports, there will be added the amount of the 
obligation computed at such nonpool supply plant in the same manner and 
subject to the same conditions as for the partially regulated 
distributing plant;
    (2) From this obligation, deduct the sum of:
    (i) The gross payments made by such handler, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1006.74, for Grade A milk received during the month from dairy 
farmers at such plant and like payments made by the operator of a supply 
plant(s) included in the computations pursuant to paragraph (a)(1) of 
this section; and
    (ii) Payments to the producer-settlement fund of another order under 
which such plant is also a partially regulated distributing plant.
    (b) An amount computed as follows:
    (1) Determine the respective amounts of skim milk and butterfat 
disposed of as route disposition in the marketing area;
    (2) Deduct the respective amounts of skim milk and butterfat 
received at the partially regulated distributing plant as follows:
    (i) Any Class I milk from pool plants and other order plants, except 
that deducted under a similar provision of another order issued pursuant 
to the Act; and
    (ii) Receipts from a nonpool plant that is not an other order plant 
to the extent that an equivalent amount of skim milk or butterfat 
disposed of to such nonpool plant by handlers fully regulated under any 
order issued pursuant to the Act is classified and priced as Class I 
milk and is not used as an offset on any other payment obligation 
pursuant to any other order;
    (3) Deduct from any remainder the pounds of reconstituted milk made 
from nonfluid milk products, and milk or skim milk contained in receipts 
from producer-handlers and exempt plants defined in any order, which are 
then disposed of as route disposition in the marketing area from the 
partially regulated distributing plant;
    (4) Combine the amounts of skim milk and butterfat remaining into 
one total; and
    (5) From the value of such milk at the Class I price applicable at 
the location of the nonpool plant, subtract its value at the uniform 
price applicable at such location, and add the amount obtained from 
multiplying the pounds of labeled reconstituted milk included in 
paragraph (b)(3) of this section by the difference between the Class I 
price applicable at the location of the partially regulated distributing 
plant less $1.00 (but not to be less than the Class III price) and the 
Class III price. For any reconstituted milk that is not so labeled, the 
Class I price shall not be reduced by $1.00. Alternatively, for

[[Page 188]]

such disposition, payments may be made to the producer-settlement fund 
of the order regulating the producer milk used to produce the nonfluid 
milk ingredients at the difference between the Class I price applicable 
under the other order at the location of the plant where the nonfluid 
milk ingredients were processed (but not to be less than the Class III 
price) and the Class III price. This payment option shall apply only if 
a majority of the total milk received at the plant that processed the 
nonfluid milk ingredients is regulated under one or more Federal orders 
and payment may only be made to the producer-settlement fund of the 
order pricing a plurality of the milk used to produce the nonfluid milk 
ingredients. This payment option shall not apply if the source of the 
nonfluid ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1006.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.

[37 FR 17725, Aug. 30, 1972, as amended at 42 FR 46914, Sept. 19, 1977; 
58 FR 27791, May 11, 1993]



Sec. 1006.77  Adjustment of accounts.

    When verification by the market administrator of reports or payments 
of a handler discloses errors resulting in monies due the market 
administrator from such handler, such handler from the market 
administrator, or a producer or cooperative association from such 
handler, the market administrator shall promptly notify such handler of 
any amount so due and payment thereof shall be made not later than the 
date for making payment next following such disclosure.



Sec. 1006.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Sec. 1006.71, 
1006.73, 1006.76, 1006.77, 1006.85 or 1006.86 shall be increased 1 
percent for each month or portion thereof that such obligation is 
overdue, subject to the following conditions:
    (a) The amounts payable pursuant to this section shall be computed 
monthly on each unpaid obligation, which shall include any unpaid 
charges previously computed pursuant to this section;
    (b) For the purposes of this section, any obligation that was 
determined at a date later than prescribed by the order because of a 
handler's failure to submit a report to the market administrator when 
due shall be considered to have been payable by the date it would have 
been due if the report had been filed when due; and
    (c) All monies collected pursuant to this section shall be paid to 
the administrative assessment fund maintained by the market 
administrator.

[54 FR 6384, Feb. 10, 1989]

        Administrative Assessment and Marketing Service Deduction



Sec. 1006.85  Assessment for order administration.

    As his pro rata share of the expense of administration of this part, 
each handler shall pay to the market administrator on or before the 15th 
day after the end of the month 4 cents per hundredweight or such lesser 
amount as the Secretary may prescribe with respect to:
    (a) Producer milk (including such handler's own production);
    (b) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk

[[Page 189]]

products assigned to Class I use pursuant to Sec. 1006.43(d) and other 
source milk allocated to Class I pursuant to Sec. 1006.44(a)(7) and 
(a)(11) and the corresponding steps of Sec. 1006.44(b), except such 
other source milk that is excluded from the computations pursuant to 
Sec. 1006.60(d) and (f); and
    (c) Class I milk disposed of in the marketing area from a partially 
regulated distributing plant that exceeds the hundredweight of Class I 
milk:
    (1) Received during the month at such plant from pool plants and 
other order plants that is not used as an offset under a similar 
provision of another order issued pursuant to the Act; and
    (2) Specified in Sec. 1006.76(b)(2)(ii).

[37 FR 17725, Aug. 30, 1972, as amended at 41 FR 43157, Sept. 30, 1976; 
58 FR 27791, May 11, 1993]



Sec. 1006.86  Deduction for marketing services.

    (a) Except as provided in paragraph (b) of this section, each 
handler in making payments for producer milk received during the month 
shall deduct 4 cents per hundredweight or such lesser amount as the 
Secretary may prescribe (except on such handler's own farm production) 
and shall pay such deductions to the market administrator not later than 
the 15th day after the end of the month. Such money shall be used by the 
market administrator to verify or establish weights, samples and tests 
of producer milk and to provide producers with market information. Such 
services shall be performed in whole or in part by the market 
administrator or by an agent engaged by and responsible to him.
    (b) In the case of producers for whom a cooperative association is 
performing, as determined by the Secretary, the services set for in 
paragraph (a) of this section, each handler shall make, in lieu of the 
deductions specified in paragraph (a) of this section, such deductions 
as are authorized by such producers and, on or before the 15th day after 
the end of each month, pay over such deductions to the association 
rendering such services.



PART 1007--MILK IN THE SOUTHEAST MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1007.1  General provisions.

                               Definitions

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

                             Handler Reports

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

                         Classification of Milk

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

                              Class Prices

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

                             Uniform Prices

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

                            Payments for Milk

1007.70  Producer-settlement fund.

[[Page 190]]

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

                       Marketwide Service Payments

1007.80  Transportation credit balancing fund.
1007.81  Payments to the transportation credit balancing fund.
1007.82  Payments from the transportation credit balancing fund.

        Administrative Assessment and Marketing Service Deduction

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

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

    Source: 60 FR 29437, June 2, 1995, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1007.1  General provisions.

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

                               Definitions



Sec. 1007.2  Southeast marketing area.

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

                                 Zone 1

                            Arkansas Counties

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

                           Tennessee Counties

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

                                 Zone 2

                            Arkansas Counties

    Newton, Searcy, and Stone.

                           Tennessee Counties

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

                                 Zone 3

                            Arkansas Counties

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

                           Tennessee Counties

    Lauderdale, Tipton, and Haywood.

                                 Zone 4

                            Arkansas Counties

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

                           Tennessee Counties

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

                                 Zone 5

                            Alabama Counties

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

                            Arkansas Counties

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

                            Georgia Counties

    Gilmer, Towns, and Union.

[[Page 191]]

                          Mississippi Counties

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

                                 Zone 6

                            Alabama Counties

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

                            Arkansas Counties

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

                            Georgia Counties

    Bartow, Cherokee, Dawson, Floyd, Gordon, Habersham, Lumpkin, 
Pickens, Rabun, and White.

                          Mississippi Counties

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

                                 Zone 7

                            Alabama Counties

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

                            Arkansas Counties

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

                            Georgia Counties

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

                          Mississippi Counties

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

                                 Zone 8

                            Alabama Counties

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

                            Georgia Counties

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

                           Louisiana Parishes

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

                          Mississippi Counties

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

                                 Zone 9

                            Alabama Counties

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

                            Georgia Counties

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

                           Louisiana Parishes

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

                          Mississippi Counties

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

                                 Zone 10

                            Alabama Counties

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

                            Georgia Counties

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

[[Page 192]]

                           Louisiana Parishes

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

                          Mississippi Counties

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

                                 Zone 11

                            Alabama Counties

    Baldwin and Mobile.

                            Florida Counties

    Escambia, Okaloosa, Santa Rosa, and Walton.

                           Louisiana Parishes

    Allen, Beauregard, East Feliciana, Evangeline, Pointe Coupee, St. 
Helena, St. Landry, St. Tammany, Tangipahoa (north of State Highway 16), 
Washington, and West Feliciana.

                          Mississippi Counties

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

                                 Zone 12

                           Louisiana Parishes

    Acadia, Ascension, Assumption, Calcasieu, Cameron, East Baton Rouge, 
Iberia, Iberville, Jefferson, Jefferson Davis, Lafayette, Lafourche, 
Livingston, Orleans, Plaquemines, St. Bernard, St. Charles, St. James, 
St. John the Baptist, St. Martin, St. Mary, Tangipahoa (north of State 
Highway 16), Terrebonne, Vermilion, and West Baton Rouge.

[60 FR 29437, June 2, 1995, as amended by 61 FR 20125, May 6, 1996]



Sec. 1007.3  Route disposition.

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



Sec. 1007.4  Plant.

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



Sec. 1007.5  Distributing plant.

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



Sec. 1007.6  Supply plant.

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



Sec. 1007.7  Pool plant.

    Pool plant means a plant specified in paragraphs (a), (b), (c) or 
(d) of this section, or a unit of plants as specified in paragraph (e) 
of this section, but excluding a plant specified in paragraph (g) of 
this section. The pooling standards described in paragraphs (a) through 
(c) of this section are subject to modification pursuant to paragraph 
(f) of this section:
    (a) A distributing plant from which during the month:
    (1) Total route disposition, except filled milk, is equal to 50 
percent or more of the total quantity of Grade A fluid milk products, 
except filled milk, physically received at such plant or diverted 
therefrom pursuant to Sec. 1007.13; and

[[Page 193]]

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

[[Page 194]]

consecutive months, including the current month;
    (4) A plant qualified pursuant to paragraph (a) of this section 
which is located in another order's marketing area and which is required 
to be regulated under such other order because of its location within 
the other order's marketing area; and
    (5) A plant qualified pursuant to paragraph (b) of this section 
which also meets the pooling requirements of another Federal order and 
from which greater qualifying shipments are made to plants regulated 
under such other order than are made to plants regulated under this 
part, or such plant has automatic pooling status under such other order.



Sec. 1007.8  Nonpool plant.

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



Sec. 1007.9  Handler.

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



Sec. 1007.10  Producer-handler.

    Producer-handler means a person who:
    (a) Operates a dairy farm and a distributing plant from which there 
is monthly route disposition in excess of 100,000 pounds per month;
    (b) Receives no Class I milk from sources other than his/her own 
farm production and pool plants;
    (c) Disposes of no other source milk as Class I milk; and
    (d) Provides proof satisfactory to the market administrator that the 
care

[[Page 195]]

and management of the dairy animals and other resources necessary to 
produce all Class I milk handled (excluding receipts from pool plants) 
and the operation of the processing and packaging business are his/her 
personal enterprise and personal risk.



Sec. 1007.11  [Reserved]



Sec. 1007.12  Producer.

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



Sec. 1007.13  Producer milk.

    Producer milk means the skim milk and butterfat contained in milk of 
a producer that is:
    (a) Received at a pool plant directly from such producer by the 
operator of the plant;
    (b) Received by a handler described in Sec. 1007.9(c);
    (c) Diverted from a pool plant to the pool plant of another handler. 
Milk so diverted shall be deemed to have been received at the location 
of the plant to which diverted; or
    (d) Diverted by the operator of a pool plant or cooperative 
association to a nonpool plant that is not a producer-handler plant, 
subject to the following conditions:
    (1) In any month of December through June, not less than four days' 
production of the producer whose milk is diverted is physically received 
at a pool plant during the month;
    (2) In any month of July through November, not less than ten days' 
production of the producer whose milk is diverted is physically received 
at a pool plant during the month;
    (3) The total quantity of milk so diverted during the month by a 
cooperative association shall not exceed 33 percent during the months of 
July through November, or 50 percent during the months of December 
through June, of the producer milk that the cooperative association 
caused to be delivered to, and physically received at, pool plants 
during the month;
    (4) The operator of a pool plant that is not a cooperative 
association may divert any milk that is not under the control of a 
cooperative association that diverts milk during the month pursuant to 
paragraph (d) of this section. The total quantity of milk so diverted 
during the month shall not exceed 33 percent during the months of July 
through November, or 50 percent during the months of December through 
June, of the producer milk physically received at such plant (or such 
unit of plants in the case of plants that pool as a unit pursuant to 
Sec. 1007.7(d)) during the month;
    (5) Any milk diverted in excess of the limits prescribed in 
paragraphs (d)(3) and (4) of this section shall not be producer milk. 
The diverting handler shall designate the dairy farmer deliveries that 
will not be producer milk pursuant to paragraphs (d)(3) and (4) of this 
section. If the handler fails to make such designation, no milk diverted 
by such handler shall be producer milk;
    (6) To the extent that it would result in nonpool status for the 
plant from which diverted, milk diverted for the

[[Page 196]]

account of a cooperative association from the pool plant of another 
handler shall not be producer milk;
    (7) The cooperative association shall designate the dairy farm 
deliveries that are not producer milk pursuant to paragraph (d)(6) of 
this section. If the cooperative association fails to make such 
designation, no milk diverted by it to a nonpool plant shall be producer 
milk;
    (8) Diverted milk shall be priced at the location of the plant to 
which diverted; and
    (9) The market administrator may increase or decrease the applicable 
percentages in paragraphs (d) (3) and (4) of this section by up to 10 
percentage points, and may increase or decrease the 10-day and 4-day 
delivery requirements in paragraphs (d) (1) and (2) of this section by 
50 percent if, following a written request for such a revision, the 
market administrator finds that such revision is necessary to assure 
orderly marketing and efficient handling of milk in the marketing area. 
Before making such a finding, the market administrator shall investigate 
the need for the revision by conducting an investigation and conferring 
with the Director of the Dairy Division. If the investigation shows that 
a revision might be appropriate, the market administrator shall issue a 
notice stating that the revision is being considered and inviting 
written data, views, and arguments. Any decision to revise an applicable 
percentage must be issued in writing seven days before the effective 
date.



Sec. 1007.14  Other source milk.

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



Sec. 1007.15  Fluid milk product.

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



Sec. 1007.16  Fluid cream product.

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



Sec. 1007.17  Filled milk.

    Filled milk means any combination of nonmilk fat (or oil) with skim 
milk (whether fresh, cultured, reconstituted, or modified by the 
addition of nonfat milk solids), with or without milkfat,

[[Page 197]]

so that the product (including stabilizers, emulsifiers, or flavoring) 
resembles milk or any other fluid milk product, and contains less than 6 
percent nonmilk fat (or oil).



Sec. 1007.18  Cooperative association.

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



Sec. 1007.19  Commercial food processing establishment.

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

                             Handler Reports



Sec. 1007.30  Reports of receipts and utilization.

    On or before the 5th day after the end of the month (if postmarked), 
or not later than the 7th day if the report is delivered in person to 
the office of the market administrator, each handler shall report for 
such month to the market administrator, in the detail and on forms 
prescribed by the market administrator, as follows:
    (a) Each handler, with respect to each of its pool plants, shall 
report the quantities of skim milk and butterfat contained in or 
represented by:
    (1) Receipts of producer milk, including producer milk diverted by 
the handler from the pool plant to other plants;
    (2) Receipts of milk from handlers described in Sec. 1007.9(c);
    (3) Receipts of fluid milk products and bulk fluid cream products 
from other pool plants;
    (4) Receipts of other source milk;
    (5) Receipts of bulk milk from a plant regulated under another 
Federal order, except Federal Orders 1005, 1011, and 1046, for which a 
transportation credit is requested pursuant to Sec. 1007.82, including 
the date that such milk was received;
    (6) Receipts of producer milk described in Sec. 1007.82(c)(2), 
including the identity of the individual producers whose milk is 
eligible for the transportation credit pursuant to that paragraph and 
the date that such milk was received;
    (7) For handlers submitting transportation credit requests, 
transfers of bulk milk to nonpool plants, including the dates that such 
milk was transferred;
    (8) Inventories at the beginning and end of the month of fluid milk 
products and products specified in Sec. 1007.40(b)(1); and
    (9) The utilization or disposition of all milk, filled milk, and 
milk products required to be reported pursuant to this paragraph.
    (b) Each handler operating a partially regulated distributing plant 
shall report with respect to such plant in the same manner as prescribed 
for reports required by paragraph (a) of this section. Receipts of milk 
that would have been producer milk if the plant had been fully regulated 
shall be reported in lieu of producer milk. Such report shall show also 
the quantity of any reconstituted skim milk in route disposition in the 
marketing area.
    (c) Each handler described in Sec. 1007.9(b) and (c) shall report:
    (1) The quantities of skim milk and butterfat contained in receipts 
of milk from producers;
    (2) The utilization or disposition of all such receipts; and
    (3) With respect to milk for which a cooperative association is 
requesting a transportation credit pursuant to Sec. 1007.82, all of the 
information required

[[Page 198]]

in paragraphs (a)(5), (a)(6), and (a)(7) of this section.
    (d) Each handler not specified in paragraphs (a) through (c) of this 
section shall report with respect to its receipts and utilization of 
milk, filled milk, and milk products in such manner as the market 
administrator may prescribe.

60 FR 29437, June 2, 1995, as amended at 61 FR 41491, Aug. 9, 1996; 62 
FR 39741, July 23, 1997]



Sec. 1007.31  Payroll reports.

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



Sec. 1007.32  Other reports.

    (a) On or before the 20th day after the end of each month, each 
handler described in Sec. 1007.9 (a), (b), and (c) shall report to the 
market administrator any adjustments to transportation credit requests 
as reported pursuant to Sec. 1007.30(a) (5), (6), and (7).
    (b) In addition to the reports required pursuant to paragraph (a) of 
this section and Secs. 1007.30 and 1007.31, each handler shall report 
such information as the market administrator deems necessary to verify 
or establish each handler's obligation under the order.

[60 FR 29437, June 2, 1995, as amended at 61 FR 69018, Dec. 31, 1996; 62 
FR 39742, July 23, 1997]

                         Classification of Milk



Sec. 1007.40  Classes of utilization.

    Except as provided in Sec. 1007.42, all skim milk and butterfat 
required to be reported pursuant to Sec. 1007.30 shall be classified as 
follows:
    (a) Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk shall be all skim milk and butterfat:
    (1) Disposed in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processing establishment if 
the market administrator is permitted to audit the records of the 
commercial food processing establishment for the purpose of 
verification. Otherwise, such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and any similar soft, high-
moisture cheese resembling cottage cheese in form or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;

[[Page 199]]

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



Sec. 1007.41  Shrinkage.

    For the purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1007.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraph; 
and
    (2) In other source milk not specified in paragraphs (b) (1) through 
(6) of this section which was received in the form of a bulk fluid milk 
product or a bulk fluid cream product;
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to

[[Page 200]]

the receipts specified in paragraph (a)(1) of this section that is not 
in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant);
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1007.9(c), except that 
if the operator of the plant to which the milk is delivered purchased 
such milk on the basis of weights determined from its measurement at the 
farm and butterfat tests determined from farm bulk tank samples, the 
applicable percentage shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is delivered purchased such milk on the basis of weights determined 
from its measurement at the farm and butterfat tests determined from 
farm bulk tank samples, the applicable percentage shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the handler; and
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from unregulated supply 
plants, excluding the quantity for which Class II or Class III 
classification is requested by the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective amount of skim milk and butterfat to which 
percentages are applied in paragraphs (b) (1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1007.9 (b) or (c), but not in excess of 0.5 
percent of the skim milk and butterfat, respectively, in such milk. If 
the operator of the plant to which the milk is delivered purchases such 
milk on the basis of weights determined from its measurement at the farm 
and butterfat tests determined from farm bulk tank samples, the 
applicable percentage under this paragraph for the cooperative 
association shall be zero.



Sec. 1007.42  Classification of transfers and diversions.

    (a) Transfers and diversions to pool plants. Skim milk or butterfat 
transferred or diverted in the form of a fluid milk product or 
transferred in the form of a bulk fluid cream product from a pool plant 
to another pool plant shall be classified as Class I milk unless the 
operators of both plants request the same classification in another 
class. In either case, the classification shall be subject to the 
following conditions:
    (1) The skim milk or butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant after the computations 
pursuant to Sec. 1007.44(a)(12) and the corresponding step of 
Sec. 1007.44(b). The amount of skim milk or butterfat classified in each 
class shall include the assigned utilization of skim milk or butterfat 
in transfers of concentrated fluid milk products.
    (2) If the transferor-plant received during the month other source 
milk to be allocated pursuant to Sec. 1007.44(a)(7) or the corresponding 
step of Sec. 1007.44(b), the skim milk or butterfat so transferred shall 
be classified so as to allocate the least possible Class I utilization 
to such other source milk; and
    (3) If the transferor-plant received during the month other source 
milk to be allocated pursuant to Sec. 1007.44(a) (11) or (12) or the 
corresponding steps of Sec. 1007.44(b), the skim milk or butterfat so 
transferred, up to the total of the skim milk and butterfat, 
respectively, in such receipts of other source milk, shall not be 
classified as Class I milk to a greater extent than would be the case if 
the other source milk had been received at the transferee-plant.

[[Page 201]]

    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
transferred in the form of a bulk fluid cream product from a pool plant 
to an other order plant shall be classified in the following manner. 
Such classification shall apply only to the skim milk or butterfat that 
is in excess of any receipts at the pool plant from the other plant of 
skim milk and butterfat, respectively, in fluid milk products and bulk 
fluid cream products, respectively, that are in the same category as 
described in paragraph (b) (1), (2), or (3) of this section.
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be Class I subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to the class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification shall be in accordance with the 
provisions of Sec. 1007.40.
    (c) Transfers and diversions to producer-handlers and to exempt 
plants. Skim milk or butterfat that is transferred or diverted from a 
pool plant to a producer-handler under another Federal order or to an 
exempt plant shall be classified:
    (1) As Class I milk if transferred or diverted to a producer-
handler;
    (2) As Class I milk if transferred to an exempt plant in the form of 
a packaged fluid milk product;
    (3) In accordance with the utilization assigned to it by the market 
administrator if transferred or diverted in the form of a bulk fluid 
milk product or a bulk fluid cream product to an exempt plant. For this 
purpose, the transferee's utilization of skim milk and butterfat in each 
class, in series beginning with Class III, shall be assigned to the 
extent possible to its receipts of skim milk and butterfat, 
respectively, in bulk fluid cream products, pro rata to each source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant, a producer-
handler plant, or an exempt plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or transferred in the form of a bulk fluid cream 
product, unless the following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i) (A) and (B) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2) (ii) 
through (viii) of this section:
    (A) The transferor-handler or divertor-handler claims such 
classification in such handler's report of receipts and utilization 
filed pursuant Sec. 1007.30 for the month within which such transaction 
occurred; and
    (B) The nonpool plant operator maintains books and records showing 
the

[[Page 202]]

utilization of all skim milk and butterfat received at such plant which 
are made available for verification purposes if requested by the market 
administrator;
    (ii) Route disposition in the marketing area of each Federal order 
from the nonpool plant and transfers of packaged fluid milk products 
from such nonpool plant to plants fully regulated thereunder shall be 
assigned to the extent possible in the following sequence:
    (A) Pro rata to receipts of packaged fluid milk products at such 
nonpool plants from pool plants;
    (B) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plants from other order plants;
    (C) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (D) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant regulated under any Federal milk order, to the extent that such 
transfers to the regulated plant exceed receipts of fluid milk products 
from such plant and are allocated to Class I at the transferee-plant, 
shall be classified to the extent possible in the following sequence:
    (A) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (B) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (A) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (B) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a plant not fully regulated under 
any Federal milk order shall be classified on the basis of the second 
plant's utilization using the same assignment priorities at the second 
plant that are set forth in this paragraph.
    (e) Transfers by a handler described in Sec. 1007.9(c) to pool 
plants. Skim milk and butterfat transferred in the form of bulk milk by 
a handler described in Sec. 1007.9(c) to another handler's pool plant 
shall be classified pursuant to Sec. 1007.44 pro rata with producer milk 
received at the transferee-handler's plant.



Sec. 1007.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1007.44, the following rules shall apply:
    (a) Each month the market administrator shall correct for 
mathematical and other obvious errors all reports filed pursuant to 
Sec. 1007.30 and shall compute separately for each pool plant, and for 
each cooperative association with respect to milk for which it is the 
handler pursuant to Sec. 1007.9 (b) or (c)

[[Page 203]]

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



Sec. 1007.44  Classification of producer milk.

    For each month the market administrator shall determine for each 
handler described in Sec. 1007.9(a) for each pool plant of the handler 
separately the classification of producer milk and milk received from a 
handler described in Sec. 1007.9(c), by allocating the handler's 
receipts of skim milk and butterfat to the utilization of such receipts 
by such handler as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1007.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
disposed of to such plant by handlers fully regulated under any Federal 
milk order is classified and priced as Class I milk and is not used as 
an offset for any other payment obligation under any order;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I milk, the remainder of such receipts;
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1007.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1007.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the

[[Page 204]]

beginning of the month, but not in excess of the pounds of skim milk 
remaining in Class II. This paragraph shall apply only if the pool plant 
was subject to the provisions of this paragraph or comparable provisions 
of another Federal milk order in the immediately preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to, any product specified in Sec. 1007.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1007.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II;
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except other source milk received in the form of an unconcentrated 
fluid milk product) and, if paragraph (a)(5) of this section applies, 
packaged inventory at the beginning of the month of products specified 
in Sec. 1007.40(b)(1) that were not subtracted pursuant to paragraphs 
(a)(4), (a)(5), and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under any Federal milk order and from an exempt distributing 
plant;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is fully regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant;
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (7)(v), and (8)(i) of this section which are in 
excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii) (A) through (C) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased a like amount. 
In such case, the pounds of skim milk remaining in each class at this 
allocation step at the handler's other pool plants shall be adjusted in 
the reverse direction by a like amount;
    (A) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
milk from a handler described in Sec. 1007.9(c), fluid milk products 
from pool plants of other handlers, and bulk fluid milk products from 
other order plants that were not

[[Page 205]]

subtracted pursuant to paragraph (a)(7)(vi) of this section; and
    (C) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk fluid milk 
products transferred or diverted to such plant and that were not 
subtracted pursuant to paragraph (a)(7)(vi) of this section, if Class II 
or Class III classification is requested by the operator of the other 
order plant and the handler, but not in excess of the pounds of skim 
milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1007.40(b)(1) in inventory 
at the beginning of the month that were not subtracted pursuant to 
paragraphs (a)(2)(ii), (a)(5), and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11) (i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (a)(7)(v), (a)(8)(i), and (a)(8)(ii) of this section and that 
were not offset by transfers or diversions of fluid milk products to the 
same unregulated supply plant from which fluid milk products to be 
allocated at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to paragraph (a)(11) of this section 
exceed the pounds of skim milk remaining in such classes, the pounds of 
skim milk in Class II and Class III combined shall be increased 
(increasing as necessary Class III and then Class II to the extent of 
available utilization in such classes at the nearest other pool plant of 
the handler, and then at each successively more distant pool plant of 
the handler) by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class I shall be decreased a 
like amount. In such case, the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall 
be adjusted in the reverse direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to paragraph (a)(11) of this section exceed the pounds of skim 
milk remaining in such class, the pounds of skim milk in Class I shall 
be increased by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class II and Class III 
combined shall be decreased by a like amount (decreasing as necessary 
Class III then Class II). In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount, 
beginning with the nearest plant at which Class I utilization is 
available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant that were not 
subtracted pursuant to paragraphs (a)(7)(vi) and (8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12) (ii), (iii) and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated

[[Page 206]]

to Class II and Class III combined being subtracted first from Class III 
and then from Class II, with respect to whichever of the following 
quantities represents the lower proportion of Class I milk:
    (A) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1007.45(a); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler);
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds remaining in Class I after such 
proration at the pool plants at which such other source milk was 
received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class II and Class III combined that exceeds the pounds of skim milk 
remaining in such classes, the pounds of skim milk in Class II and Class 
III combined shall be increased (increasing as necessary Class III and 
then Class II to the extent of available utilization in such classes at 
the nearest other pool plant of the handler, and then at each 
successively more distant pool plant of the handler) by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class I shall be decreased by a like amount. In such case, the pounds of 
skim milk remaining in each class at this allocation step at the 
handler's other pool plants shall be adjusted in the reverse direction 
by a like amount; and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12) (i) or (ii) of 
this section result in a quantity of skim milk to be subtracted from 
Class I that exceeds the pounds of skim milk remaining in such class, 
the pounds of skim milk in Class I shall be increased by an amount equal 
to such excess quantity to be subtracted, and the pounds of skim milk in 
Class II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1007.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk and milk received from a 
handler described in Sec. 1007.9(c), subtract such excess from the 
pounds of skim milk remaining in each class in series beginning with 
Class III. Any amount so subtracted shall be known as ``overage'';
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk and milk received from a handler 
described in Sec. 1007.9(c) in each class shall be the combined pounds 
of skim milk and butterfat remaining in each class after the 
computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.



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

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for the purpose of allocating receipts from 
other order plants pursuant to Sec. 1007.44(a)(12) and the corresponding 
step of Sec. 1007.44(b), estimate and publicly announce the

[[Page 207]]

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

                              Class Prices



Sec. 1007.50  Class prices.

    Subject to the provisions of Sec. 1007.52, the class prices for the 
month per hundredweight of milk containing 3.5% butterfat shall be as 
follows:
    (a) The Class I price shall be the basic formula price for the 
second preceding month plus $3.08.
    (b) The Class II price shall be the basic formula price for the 
second preceding month plus $.30.
    (c) The Class III price shall be the basic formula price for the 
month.
    (d) The Class III-A price for the month shall be the average Central 
States nonfat dry milk price for the month, as reported by the 
Department, less 12.5 cents, times an amount computed by subtracting 
from 9 an amount calculated by dividing 0.4 by such nonfat dry milk 
price, plus the butterfat differential times 35 and rounded to the 
nearest cent.

[60 FR 29437, June 2, 1995, as amended by 61 FR 20125, May 6, 1996]



Sec. 1007.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1007.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.

[[Page 208]]

    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of milk used to manufacture butter-nonfat dry milk and the gross value 
per hundredweight of milk used to manufacture Cheddar cheese for the 
current month exceed or are less than the respective gross values for 
the preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.



Sec. 1007.52  Plant location adjustments for handlers.

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

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

    (2) For a plant located in that portion of the Tennessee Valley 
marketing area that is within the State of Georgia, the adjustment shall 
be minus 25 cents.
    (3) For a plant located in the Missouri counties of Dunklin or 
Pemiscot, the adjustment shall be minus 53 cents.
    (4) For a plant located in the Texas counties of Bowie or Cass, the 
adjustment shall be zero.
    (5) For a plant located within another Federal order marketing area, 
other than in those counties specified in paragraphs (a) (2), (3), and 
(4) of this

[[Page 209]]

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



Sec. 1007.53  Announcement of class prices.

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

[[Page 210]]

and the Class III and Class III-A prices for the preceding month.



Sec. 1007.54  Equivalent price.

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

                             Uniform Prices



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

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

[[Page 211]]

settlement fund of another order under Sec. 1007.76 (a)(5) or (c); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk unconcentrated fluid milk products 
received at the plant during the prior month.



Sec. 1007.61  Computation of uniform price (including weighted average price).

    (a) The market administrator shall compute the weighted average 
price for each month and the uniform price for each month per 
hundredweight of milk of 3.5 percent butterfat content as follows:
    (1) Combine into one total the values computed pursuant to 
Sec. 1007.60 for all handlers who filed the reports prescribed in 
Sec. 1007.30 for the month and who made payments pursuant to 
Sec. 1007.71 for the preceding month;
    (2) Add not less than one-half the unobligated balance in the 
producer-settlement fund;
    (3) Add an amount equal to the total value of the minus adjustments 
and subtract an amount equal to the total value of the plus adjustments 
computed pursuant to Sec. 1007.75;
    (4) Divide the resulting amount by the sum of the following for all 
handlers included in these computations;
    (i) The total hundredweight of producer milk; and
    (ii) The total hundredweight for which a value is computed pursuant 
to Sec. 1007.60(f); and
    (5) Subtract not less than 4 cents nor more than 5 cents per 
hundredweight. The resulting figure, rounded to the nearest cent, shall 
be the weighted average price for each month and the uniform price.
    (b) [Reserved]

[60 FR 29437, June 2, 1995, as amended at 61 FR 41492, Aug. 9, 1996; 61 
FR 69018, Dec. 31, 1996; 62 FR 39742, July 23, 1997]



Sec. 1007.62  Announcement of uniform price and butterfat differential.

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

[60 FR 29437, June 2, 1995, as amended at 61 FR 69018, Dec. 31, 1996]

                            Payments for Milk



Sec. 1007.70  Producer-settlement fund.

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



Sec. 1007.71  Payments to the producer-settlement fund.

    (a) On or before the 12th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the amount specified in paragraph (a)(1) of this section exceeds 
the amount specified in paragraph (a)(2) of this section:
    (1) The total value of milk of the handler for such month as 
determined pursuant to Sec. 1007.60.
    (2) The sum of:
    (i) The value at the uniform price as adjusted pursuant to 
Sec. 1007.75, of such handler's receipts of producer milk and milk 
received from handlers pursuant to Sec. 1007.9(c); and
    (ii) The value at the weighted average price applicable at the 
location of the plant from which received of other source milk for which 
a value is computed pursuant to Sec. 1007.60(f).

[[Page 212]]

    (b) On or before the 25th day after the end of the month each person 
who operated an other order plant that was regulated during such month 
under an order providing for individual-handler pooling shall pay to the 
market administrator an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
in route disposition from such plant in the marketing area which was 
allocated to Class I at such plant. If there is route disposition from 
such plant in marketing areas regulated by two or more marketwide pool 
orders, the reconstituted skim milk allocated to Class I shall be 
prorated to each order according to such route disposition in each 
marketing area; and
    (2) Compute the value of the reconstituted skim milk assigned in 
paragraph (b)(1) of this section to route disposition in this marketing 
area by the difference between the Class I price under this part 
applicable at the location of the other order plant (but not to be less 
than the Class III price) and the Class III price.

[60 FR 29437, June 2, 1995, as amended at 61 FR 69018, Dec. 31, 1996]



Sec. 1007.72  Payments from the producer-settlement fund.

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



Sec. 1007.73  Payments to producers and to cooperative associations.

    (a) Each handler shall pay each producer for producer milk for which 
payment is not made to a cooperative association pursuant to paragraph 
(b) of this section, as follows:
    (1) On or before the 26th day of each month, for milk received 
during the first 15 days of the month from such producer who has not 
discontinued delivery of milk to such handler before the 23rd day of the 
month at not less than the Class III price for the preceding month or 90 
percent of the weighted average price for the preceding month, whichever 
is higher, less proper deductions authorized in writing by the producer. 
If the producer had discontinued shipping milk to such handler before 
the 25th day of any month, the applicable rate for making payments to 
such producer shall be the Class III price for the preceding month; and
    (2) On or before the 15th day of the following month, an amount 
equal to not less than the uniform price, as adjusted pursuant to 
Secs. 1007.74 and 1007.75, multiplied by the hundredweight of milk 
received from such producer during the month, subject to the following 
adjustments:
    (i) Less payments made to such producer pursuant to paragraph (a)(1) 
of this section;
    (ii) Less deductions for marketing services made pursuant to 
Sec. 1007.86;
    (iii) Plus or minus adjustments for errors made in previous payments 
made to such producers; and
    (iv) Less proper deductions authorized in writing by such producer.
    (3) If a handler has not received full payment from the market 
administrator pursuant to Sec. 1007.72 by the 15th day of such month, 
such handler may reduce payments pursuant to this paragraph to producers 
on a pro rata basis but not by more than the amount of the underpayment. 
Such payments shall be completed thereafter not later than the date for 
making payments pursuant to this paragraph next following after receipt 
of the balance due from the market administrator.
    (b) On or before the day prior to the dates specified in paragraph 
(a) (1) and (2) of this section, each handler shall make payment to the 
cooperative association for milk from producers who market their milk 
through the cooperative association and who have authorized the 
cooperative to collect such payments on their behalf an amount equal to 
the sum of the individual payments otherwise payable for such producer 
milk pursuant to paragraph (a) (1) and (2) of this section.

[[Page 213]]

    (c) If a handler has not received full payment from the market 
administrator pursuant to Sec. 1007.72 by the 15th day of such month, 
such handler may reduce payments pursuant to paragraph (b) of this 
section to such cooperative association on a pro rata basis, prorating 
such underpayment to the volume of milk received from such cooperative 
association in proportion to the total milk received from producers by 
the handler, but not by more than the amount of the underpayment. Such 
payments shall be completed in the following manner:
    (1) If the handler receives full payment from the market 
administrator by the 15th day of the month, the handler shall make 
payment to the cooperative association of the full value of the 
underpayment on the 15th day of the month;
    (2) If the handler has not received full payment from the market 
administrator by the 15th day of the month, the handler shall make 
payment to the cooperative association of the full value of the 
underpayment on or before the date for making such payments pursuant to 
this paragraph next following after receipt of the balance due from the 
market administrator.
    (d) Each handler pursuant to Sec. 1007.9(a) who receives milk from a 
cooperative association as a handler pursuant to Sec. 1007.9(c), 
including the milk of producers who are not members of such association, 
and who the market administrator determines have authorized such 
cooperative association to collect payment for their milk, shall pay 
such cooperative for such milk as follows:
    (1) On or before the 25th day of the month for milk received during 
the first 15 days of the month, not less than the Class III price for 
the preceding month or 90 percent of the weighted average price for the 
preceding month, whichever is higher; and
    (2) On or before the 14th day of the following month, not less than 
the uniform price as adjusted pursuant to Secs. 1007.74 and 1007.75, and 
less any payments made pursuant to paragraph (d)(1) of this section.
    (e) If a handler has not received full payment from the market 
administrator pursuant to Sec. 1007.72 by the 14th day of such month, 
such handler may reduce payments pursuant to paragraph (d) of this 
section to such cooperative association and complete such payments for 
milk received from such cooperative association in its capacity as a 
handler pursuant to Sec. 1007.9(c), in the manner prescribed in 
paragraph (c) (1) and (2) of this section.
    (f) In making payments to producers pursuant to this section, each 
handler shall furnish each producer, except a producer whose milk was 
received from a handler described in Sec. 1007.9(c), a supporting 
statement in such form that it may be retained by the recipient which 
shall show:
    (1) The month and identity of the producer;
    (2) The daily and total pounds and the average butterfat content of 
producer milk;
    (3) [Reserved]
    (4) The minimum rate at which payment to the producer is required 
pursuant to this order;
    (5) The rate used in making the payment if such rate is other than 
the applicable minimum rate;
    (6) The amount, or rate per hundredweight, and nature of each 
deduction claimed by the handler; and
    (7) The net amount of payment to such producer or cooperative 
association.

[60 FR 29437, June 2, 1995, as amended at 61 FR 69018, Dec. 31, 1996]



Sec. 1007.74  Butterfat differential.

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

[[Page 214]]

month of the Chicago Mercantile Exchange, Grade A butter price as 
reported by the Department.

[60 FR 29437, June 2, 1995, as amended at 61 FR 69018, Dec. 31, 1996]



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

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

[60 FR 29437, June 2, 1995, as amended at 61 FR 69018, Dec. 31, 1996]



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

    Each handler who operates a partially regulated distributing plant 
shall pay on or before the 25th day after the end of the month to the 
market administrator for the producer-settlement fund the amount 
computed pursuant to paragraph (a) of this section. If the handler 
submits pursuant to Secs. 1007.30(b) and 1007.31(b) the information 
necessary for making the computations, such handler may elect to pay in 
lieu of such payment the amount computed pursuant to paragraph (b) of 
this section:
    (a) The payment under this paragraph shall be an amount resulting 
from the following computations:
    (1) Determine the pounds of route disposition in the marketing area 
from the partially regulated distributing plant;
    (2) Subtract the pounds of fluid milk products received at the 
partially regulated distributing plant:
    (i) As Class I milk from pool plants and other order plants, except 
that subtracted under a similar provision of another Federal milk order; 
and
    (ii) From another nonpool plant that is not an other order plant to 
the extent that an equivalent amount of fluid milk products disposed of 
to such nonpool plant by handlers fully regulated under any Federal milk 
order is classified and priced as Class I milk and is not used as an 
offset for any payment obligation under any order;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant;
    (4) Multiply the remaining pounds by the difference between the 
Class I price and the weighted average price, both prices to be 
applicable at the location of the partially regulated distributing plant 
(except that the Class I price and weighted average price shall not be 
less than the Class III price); and
    (5) Add the amount obtained from multiplying the pounds of labeled 
reconstituted milk included in paragraph (a)(3) of this section by the 
difference between the Class I price applicable at the location of the 
partially regulated distributing plant less $1.00 (but not to be less 
than the Class III price) and the Class III price. For any reconstituted 
milk that is not so labeled, the Class I price shall not be reduced by 
$1.00. Alternatively, for such disposition, payments may be made to the 
producer-settlement fund of the order regulating the producer milk used 
to produce the nonfluid milk ingredients at the difference between the 
Class I price applicable under the other order at the location of the 
plant where the nonfluid milk ingredients were processed (but not to be 
less than the Class III price) and the Class III price. This payment 
option shall apply only if a majority of the total milk received at the 
plant that processed the nonfluid milk ingredients is regulated under 
one or more Federal orders and payment may only be made to the producer-
settlement fund of the order pricing a plurality of the milk used to 
produce the nonfluid milk ingredients. This payment option shall not 
apply if the source of the nonfluid ingredients used in reconstituted 
fluid milk products cannot be determined by the market administrator.
    (b) The payment under this paragraph shall be the amount resulting 
from the following computations:
    (1) Determine the value that would have been computed pursuant to

[[Page 215]]

Sec. 1007.60 for the partially regulated distributing plant if the plant 
had been a pool plant, subject to the following modifications:
    (i) Fluid milk products and bulk fluid cream products received at 
the partially regulated distributing plant from a pool plant or an other 
order plant shall be allocated at the partially regulated distributing 
plant to the same class in which such products were classified at the 
fully regulated plant;
    (ii) Fluid milk products and bulk fluid cream products transferred 
from the partially regulated distributing plant to a pool plant or an 
other order plant shall be classified at the partially regulated 
distributing plant in the class to which allocated at the fully 
regulated plant. Such transfers shall be computed to the extent possible 
to those receipts at the partially regulated distributing plant from 
pool plants and other order plants that are classified in the 
corresponding class pursuant to paragraph (b)(1)(i) of this section. Any 
such transfers remaining after the above allocation which are in Class I 
and for which a value is computed for the handler operating the 
partially regulated distributing plant pursuant to Sec. 1007.60 shall be 
priced at the uniform price (or at the weighted average price if such is 
provided) of the respective order regulating the handling of milk at the 
transferee plant, with such uniform price adjusted to the location of 
the nonpool plant (but not to be less than the lowest class price of the 
respective order), except that transfers of reconstituted skim milk in 
filled milk shall be priced at the lowest price class of the respective 
order; and
    (iii) If the operator of the partially regulated distributing plant 
so requests, the value of milk determined pursuant to Sec. 1007.60 for 
such handler shall include, in lieu of the value of other source milk 
specified in Sec. 1007.60(f) less the value of such other source milk 
specified in Sec. 1007.71(a)(2)(ii), a value of milk determined pursuant 
to Sec. 1007.60 for each nonpool plant that is not an other order plant 
which serves as a supply plant for such partially regulated distributing 
plant by making shipments to the partially regulated distributed plant 
during the month equivalent to the requirements of Sec. 1007.7(b), 
subject to the following conditions:
    (A) The operator of the partially regulated distributing plant 
submits with its reports filed pursuant to Secs. 1007.30(b) and 
1007.31(b) similar reports for each such nonpool supply plant;
    (B) The operator of such nonpool plant maintains books and records 
showing the utilization of all skim milk and butterfat received at such 
plant which are made available if requested by the market administrator 
for verification purposes; and
    (C) The value of milk determined pursuant to Sec. 1007.60 for such 
nonpool supply plant shall be determined in the same manner prescribed 
for computing the obligation of such partially regulated distributing 
plant; and
    (2) From the partially regulated distributing plant's value of milk 
computed pursuant to paragraph (b)(1) of this section, subtract:
    (i) The gross payments by the operator of the partially regulated 
distributing plant, adjusted to a 3.5 percent butterfat basis by the 
butterfat differential specified in Sec. 1007.74, for milk received at 
the plant during the month that would have been producer milk had the 
plant been fully regulated;
    (ii) If paragraph (b)(1)(iii) of this section applies, the gross 
payments by the operator of such nonpool supply plant, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1007.74, for milk received at the plant during the month that would 
have been producer milk if the plant had been fully regulated; and
    (iii) The payments by the operator of the partially regulated 
distributing plant to the producer-settlement fund of another order 
under which such plant is also a partially regulated distributing plant 
and like payments by the operator of the nonpool supply plant if 
paragraph (b)(1)(iii) of this section applies.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1007.43(d). Payments may 
be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the

[[Page 216]]

nonfluid milk ingredients at the difference between the Class I price 
applicable under the other order at the location of the plant where the 
nonfluid milk ingredients were processed (but not less than the Class 
III price) and the Class III price. This payment option shall apply only 
if a majority of the total milk received at the plant that processed the 
nonfluid milk ingredients is regulated under one or more Federal orders 
and payment may only be made to the producer-settlement fund of the 
order pricing a plurality of the milk used to produce the nonfluid milk 
ingredients. This payment option shall not apply if the source of the 
nonfluid ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.



Sec. 1007.77  Adjustment of accounts.

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



Sec. 1007.78  Charges on overdue accounts.

    Any unpaid obligation due the market administrator from a handler 
pursuant to Secs. 1007.71, 1007.76, 1007.77, 1007.78, 1007.81, 1007.85, 
and 1007.86 shall be increased 1.5 percent each month beginning with the 
day following the date such obligation was due under the order. Any 
remaining amount due shall be increased at the same rate on the 
corresponding day of each month until paid. The amounts payable pursuant 
to this section shall be computed monthly on each unpaid obligation and 
shall include any unpaid charges previously made pursuant to this 
section. The late charges shall be added to the respective accounts to 
which due. For the purpose of this section, any obligation that was 
determined at a date later than prescribed by the order because of a 
handler's failure to submit a report to the market administrator when 
due shall be considered to have been payable by the date it would have 
been due if the report had been filed when due.

[60 FR 29437, June 2, 1995, as amended at 62 FR 39742, July 23, 1997]

                       Marketwide Service Payments



Sec. 1007.80  Transportation credit balancing fund.

    The market administrator shall maintain a separate fund known as the 
Transportation Credit Balancing Fund into which shall be deposited the 
payments made by handlers pursuant to Sec. 1007.81 and out of which 
shall be made the payments due handlers pursuant to Sec. 1007.82. 
Payments due a handler shall be offset against payments due from the 
handler.

[61 FR 41492, Aug. 9, 1996]



Sec. 1007.81  Payments to the transportation credit balancing fund.

    (a) On or before the 12th day after the end of the month, each 
handler operating a pool plant and each handler specified in Sec. 1007.9 
(b) and (c) shall pay to the market administrator a transportation 
credit balancing fund assessment determined by multiplying the pounds of 
Class I producer milk assigned pursuant to Sec. 1007.44 by $0.07 per 
hundredweight or such lesser amount as the market administrator deems 
necessary to maintain a balance in the fund equal to the total 
transportation credits disbursed during the prior June-January period. 
In the event that during any month of the June-January period the fund 
balance is insufficient to cover the amount of credits that are due, the 
assessment should be based upon the amount of credits that would have 
been disbursed had the fund balance been sufficient.
    (b) The market administrator shall announce publicly on or before 
the 5th day of the month the assessment pursuant to paragraph (a) of 
this section for the following month.

[61 FR 41492, Aug. 9, 1996, as amended at 62 FR 39742, July 23, 1997]

[[Page 217]]



Sec. 1007.82  Payments from the transportation credit balancing fund.

    (a) Payments from the transportation credit balancing fund to 
handlers and cooperative associations requesting transportation credits 
shall be made as follows:
    (1) On or before the 13th day after the end of each of the months of 
July through December and any other month in which transportation 
credits are in effect pursuant to paragraph (b) of this section, the 
market administrator shall pay to each handler that received, and 
reported pursuant to Sec. 1007.30(a)(5), bulk milk transferred from an 
other order plant as described in paragraph (c)(1) of this section or 
that received, and reported pursuant to Sec. 1007.30(a)(6), milk 
directly from producers' farms as specified in paragraph (c)(2) of this 
section, a preliminary amount determined pursuant to paragraph (d) of 
this section to the extent that funds are available in the 
transportation credit balancing fund. If an insufficient balance exists 
to pay all of the credits computed pursuant to this section, the market 
administrator shall distribute the balance available in the 
transportation credit balancing fund by reducing payments prorata using 
the percentage derived by dividing the balance in the fund by the total 
credits that are due for the month. The amount of credits resulting from 
this initial proration shall be subject to audit adjustment pursuant to 
paragraph (a)(2) of this section;
    (2) The market administrator shall accept adjusted requests for 
transportation credits on or before the 20th day of the month following 
the month for which such credits were requested pursuant to 
Sec. 1007.32(a). After such date, a preliminary audit will be conducted 
by the market administrator, who will recalculate any necessary 
proration of transportation credit payments for the preceding month 
pursuant to paragraph (a) of this section. Handlers will be promptly 
notified of any payment adjustments based upon this final computation 
and remedial payments to or from the transportation credit balancing 
fund will be made on or before the next payment date for the following 
month;
    (3) Transportation credits paid pursuant to paragraph (a) (1) and 
(2) of this section shall be subject to final verification by the market 
administrator pursuant to Sec. 1007.77. Adjusted payments to or from the 
transportation credit balancing fund will remain subject to the final 
proration established pursuant to paragraph (a)(2) of this section; and
    (4) In the event that a qualified cooperative association is the 
responsible party for whose account such milk is received and written 
documentation of this fact is provided to the market administrator 
pursuant to Sec. 1007.30(c)(3) prior to the date payment is due, the 
transportation credits for such milk computed pursuant to this section 
shall be made to such cooperative association rather than to the 
operator of the pool plant at which the milk was received.
    (b) The market administrator may extend the period during which 
transportation credits are in effect (i.e., the transportation credit 
period) to the months of January and June if a written request to do so 
is received 15 days prior to the beginning of the month for which the 
request is made and, after conducting an independent investigation, 
finds that such extension is necessary to assure the market of an 
adequate supply of milk for fluid use. Before making such a finding, the 
market administrator shall notify the Director of the Dairy Division and 
all handlers in the market that an extension is being considered and 
invite written data, views, and arguments. Any decision to extend the 
transportation credit period must be issued in writing prior to the 
first day of the month for which the extension is to be effective.
    (c) Transportation credits shall apply to the following milk:
    (1) Bulk milk received from a plant regulated under another Federal 
order, except Federal Orders 1005, 1011, and 1046, allocated to Class I 
milk pursuant to Sec. 1007.44(a)(12); and
    (2) Bulk milk received directly from the farms of dairy farmers at 
pool distributing plants subject to the following conditions:
    (i) The quantity of such milk that shall be eligible for the 
transportation

[[Page 218]]

credit shall be determined by multiplying the total pounds of milk 
received from producers meeting the conditions of this paragraph by the 
lower of:
    (A) The marketwide estimated Class I utilization of all handlers for 
the month pursuant to Sec. 1007.45(a); or
    (B) The Class I utilization of all producer milk of the pool plant 
operator receiving the milk after the computations described in 
Sec. 1007.44;
    (ii) The dairy farmer was not a ``producer'' under this order during 
more than 2 of the immediately preceding months of January through June 
and not more than 50 percent of the production of the dairy farmer 
during those 2 months, in aggregate, was received as producer milk under 
this order during those 2 months. However, if January and/or June are 
months in which transportation credits are disbursed pursuant to 
paragraph (a) of this section, these months shall not be included in the 
2-month limit provided in this paragraph; and
    (iii) The farm on which the milk was produced is not located within 
the specified marketing area of this order or the marketing areas of 
Federal Orders 1005, 1011, or 1046, or within the Kentucky counties of 
Allen, Barren, Metcalfe, Monroe, Simpson, and Warren.
    (d) Transportation credits shall be computed as follows:
    (1) The market administrator shall subtract from the pounds of milk 
described in paragraphs (c) (1) and (2) of this section the pounds of 
bulk milk transferred from the pool plant receiving the supplemental 
milk if milk was transferred to a nonpool plant on the same calendar day 
that the supplemental milk was received. For this purpose, the 
transferred milk shall be subtracted from the most distant load of 
supplemental milk received, and then in sequence with the next most 
distant load until all of the transfers have been offset;
    (2) With respect to the pounds of milk described in paragraph (c)(1) 
of this section that remain after the computations described in 
paragraph (d)(1) of this section, the market administrator shall:
    (i) Determine the shortest hard-surface highway distance between the 
shipping plant and the receiving plant;
    (ii) Multiply the number of miles so determined by 0.35 cent;
    (iii) Subtract the other order's Class I price applicable at the 
shipping plant's location from the Class I price applicable at the 
receiving plant as specified in Sec. 1007.52;
    (iv) Subtract any positive difference computed in paragraph 
(d)(2)(iii) of this section from the amount computed in paragraph 
(d)(2)(ii) of this section; and
    (v) Multiply the remainder computed in paragraph (d)(2)(iv) of this 
section by the hundredweight of milk described in paragraph (d)(2) 
introductory text of this section.
    (3) For the remaining milk described in paragraph (c)(2) of this 
section after computations described in paragraph (d)(1) of this 
section, the market administrator shall:
    (i) Determine an origination point for each load of milk by locating 
the nearest city to the last producer's farm from which milk was picked 
up for delivery to the receiving pool plant. Alternatively, the milk 
hauler that is transporting the milk of producers described in paragraph 
(c)(2) of this section may establish an origination point following the 
last farm pickup by stopping at the nearest independently-operated truck 
stop with a certified truck scale and obtaining a weight certificate 
indicating the weight of the truck and its contents, the date and time 
of weighing, and the location of the truck stop;
    (ii) Determine the shortest hard-surface highway distance between 
the receiving pool plant and the truck stop or city, as the case may be;
    (iii) Subtract 85 miles from the mileage so determined;
    (iv) Multiply the remaining miles so computed by 0.35 cent;
    (v) If the origination point determined pursuant to paragraph 
(d)(3)(i) of this section is in a Federal order marketing area, subtract 
the Class I price applicable at the origination point pursuant to the 
provisions of such other order (as if the origination point were a plant 
location) from the Class I price applicable at the distributing plant 
receiving the milk. If the origination

[[Page 219]]

point is not in any Federal order marketing area, determine the Class I 
price at the origination point based upon the provisions of this order 
and subtract this price from the Class I price applicable at the 
distributing plant receiving the milk;
    (vi) Subtract any positive difference computed in paragraph 
(d)(3)(v) of this section from the amount computed in paragraph 
(d)(3)(iv) of this section; and
    (vii) Multiply the remainder computed in paragraph (d)(3)(vi) by the 
hundredweight of milk described in paragraph (d)(3) introductory text of 
this section.

[62 FR 39742, July 23, 1997]

        Administrative Assessment and Marketing Service Deduction



Sec. 1007.85  Assessment for order administration.

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



Sec. 1007.86  Deduction for marketing services.

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



PART 1011--MILK IN THE TENNESSEE VALLEY MARKETING AREA--Table of Contents




    Authority: Secs. 1-19, 48 Stat. 31, as amended, 7 U.S.C. 601-674.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1011.1  General provisions.

    The terms, definitions, and provisions in Part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

[41 FR 36796, Sept. 1, 1976]

[[Page 220]]



PART 1012--MILK IN TAMPA BAY MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1012.1  General provisions.

                               Definitions

1012.2  Tampa Bay marketing area.
1012.3  Route disposition.
1012.4  [Reserved]
1012.5  Distributing plant.
1012.6  Supply plant.
1012.7  Pool plant.
1012.8  Nonpool plant.
1012.9  Handler.
1012.10  Producer-handler.
1012.11  [Reserved]
1012.12  Producer.
1012.13  Producer milk.
1012.14  Other source milk.
1012.15  Fluid milk product.
1012.16  Fluid cream product.
1012.17  Filled milk.
1012.18  Cooperative association.
1012.19  [Reserved]
1012.20  Commercial food processing establishment.

                             Handler Reports

1012.30  Reports of receipts and utilization.
1012.31  Payroll reports.
1012.32  Other reports.

                         Classification of Milk

1012.40  Classes of utilization.
1012.41  Shrinkage.
1012.42  Classification of transfers and diversions.
1012.43  General classification rules.
1012.44  Classification of producer milk.
1012.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1012.50  Class prices.
1012.51  Basic formula price.
1012.52  Plant location adjustments for handlers.
1012.53  Announcement of class prices.
1012.54  Equivalent price.

                              Uniform Price

1012.60  Handler's value of milk for computing the uniform price.
1012.61  Computation of uniform price.
1012.62  Announcement of uniform price and butterfat differential.

                            Payments for Milk

1012.70  Producer-settlement fund.
1012.71  Payments to the producer-settlement fund.
1012.72  Payments from the producer-settlement fund.
1012.73  Payments to producers and to cooperative associations.
1012.74  Butterfat differential.
1012.75  Plant location adjustments for producers and on nonpool milk.
1012.76  Payments by handler operating a partially regulated 
          distributing plant.
1012.77  Adjustment of accounts.
1012.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1012.85  Assessment for order administration.
1012.86  Deduction for marketing services.

    Authority: Secs. 1-19, 48 Stat. 31, as amended, 7 U.S.C. 601-674.

    Source: 37 FR 17732, Aug. 30, 1972, unless otherwise noted.



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1012.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1012.2  Tampa Bay marketing area.

    The Tampa Bay marketing area, hereinafter called the ``marketing 
area'', means all the territory geographically within the boundaries of 
the following counties, all in the State of Florida, including all 
waterfront facilities connected therewith and all territory wholly or 
partly therein occupied by Government (Municipal, State, or Federal) 
reservations, installations, institutions, or other similar 
establishments.

    Charlotte, Collier, De Soto, Hardee, Hernando, Highlands, 
Hillsborough, Lee, Manatee, Pasco, Pinellas, Polk, Sarasota.



Sec. 1012.3  Route disposition.

    Route disposition means a delivery either direct or through any 
distribution facility other than a plant (including disposition from a 
plant store, vendor,

[[Page 221]]

or vending machine) of a fluid milk product classified as Class I milk.



Sec. 1012.4  [Reserved]



Sec. 1012.5  Distributing plant.

    Distributing plant means a plant that is approved by an appropriate 
health authority for the processing or packaging of Grade A milk and 
from which there is route disposition of any fluid milk product during 
the month in the marketing area.



Sec. 1012.6  Supply plant.

    Supply plant means a plant from which a fluid milk product that is 
acceptable to the appropriate health authority for distribution in the 
marketing area as Grade A or filled milk is shipped during the month to 
a pool plant.



Sec. 1012.7  Pool plant.

    Except as provided in paragraph (c) of this section, pool plant 
means:
    (a) A distributing plant that has route distribution, except filled 
milk, during the month of not less than 50 percent of the total Grade A 
fluid milk products, except filled milk, that are physically received at 
such plant or diverted as producer milk to a nonpool plant pursuant to 
Sec. 1012.13, and that has route disposition, except filled milk, in the 
marketing area during the month of not less than 10 percent of such 
receipts.
    (b) A supply plant from which not less than 50 percent of the total 
quantity of Grade A fluid milk products that is physically received from 
dairy farmers at such plant or diverted as producer milk to a nonpool 
plant pursuant to Sec. 1012.13 during the month is shipped as fluid milk 
products, except filled milk, to pool plants meeting the requirements of 
Sec. 1012.7(a).
    (c) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) A distributing plant qualified pursuant to paragraph (a) of this 
section which meets the requirements of a fully regulated plant pursuant 
to the provisions of another order issued pursuant to the Act and from 
which a greater quantity of fluid milk products, except filled milk, is 
disposed of during the month from such plant as route disposition in the 
marketing area regulated by the other order than as route disposition in 
this marketing area:
    Provided, That such a distributing plant which was a pool plant 
under this order in the immediately preceding month shall continue to be 
subject to all of the provisions of this part until the third 
consecutive month in which a greater proportion of its route disposition 
is made in such other marketing area, unless the other order requires 
regulation of the plant without regard to its qualifying as a pool plant 
under this order; and
    (3) Any building, premises, or facilities, the primary function of 
which is to hold or store bottled milk or milk products (including 
filled milk) in finished form, nor shall it include any part of a plant 
in which the operations are entirely separated (by wall or other 
partition) from the handling of producer milk.

[54 FR 6384, Feb. 10, 1989]



Sec. 1012.8  Nonpool plant.

    Nonpool plant means a plant (except a pool plant) which receives 
milk from dairy farmers or is a milk or filled milk manufacturing, 
processing or bottling plant. The following categories of nonpool plants 
are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is neither an other order plant nor a producer-handler plant and 
from which fluid milk products in consumer-type packages or dispenser 
units are distributed in the marketing area as route disposition during 
the month.
    (d) Unregulated supply plant means a nonpool plant that is a supply 
plant and is neither an other order plant nor a producer-handler plant.



Sec. 1012.9  Handler.

    Handler means:

[[Page 222]]

    (a) Any person in his capacity as the operator of one or more pool 
plants;
    (b) Any cooperative association with respect to producer milk which 
it causes to be diverted from a pool plant to a nonpool plant for the 
account of such cooperative association;
    (c) A cooperative association with respect to milk of its producers 
which is delivered from the farm to the pool plant of another handler in 
a tank truck owned and operated by or under contract to such cooperative 
association. The milk for which a cooperative association is the handler 
pursuant to this paragraph shall be deemed to have been received at the 
location of the pool plant to which it was delivered;
    (d) Any person in his capacity as the operator of a partially 
regulated distributing plant;
    (e) A producer-handler; or
    (f) Any person in his capacity as the operator of an other order 
plant that is either a distributing plant or a supply plant.



Sec. 1012.10  Producer-handler.

    Producer-handler means any person who meets all the following 
conditions:
    (a) Operates a dairy farm(s) from which the milk produced thereon is 
supplied to a plant operated by him in accordance with the requirements 
set forth in paragraph (b) of this section, and provides proof 
satisfactory to the market administrator that:
    (1) The full maintenance of milk-producing cows on such farm(s) is 
at his sole risk and under his complete and exclusive management and 
control; and
    (2) Each such farm is owned or operated by him, at his sole risk, 
and under his complete and exclusive management and control;
    (b) Operates a plant in which milk approved by a duly constituted 
health authority for fluid consumption is processed or packaged and from 
which there is route disposition during the month in the marketing area 
pursuant to the following requirements:
    (1) No fluid milk products are received at such plant or by him at 
any other location, except:
    (i) From dairy farm(s) as specified in paragraph (a) of this 
section; and
    (ii) Fluid milk products (other than whole milk) from pool plants in 
an amount that is not in excess of the lesser of 5,000 pounds or 5 
percent of his Class I sales during the month;
    (2) Such plant is operated under his complete and exclusive 
management and control and at his sole risk, and is not used during the 
month to process, package, receive, or otherwise handle fluid milk 
products for any other person; and
    (c) Disposes of no other source milk (except that represented by 
nonfat solids used in the fortification of fluid milk products) as Class 
I milk.



Sec. 1012.11  [Reserved]



Sec. 1012.12  Producer.

    (a) Except as provided in paragraph (b) of this section, producer 
means any person who produces milk in compliance with the inspection 
requirements of a duly constituted health authority, which milk is 
received at a pool plant or diverted pursuant to Sec. 1012.13 from a 
pool plant to a nonpool plant.
    (b) The term ``producer'' shall not include:
    (1) A producer-handler as defined in any order (including this part) 
issued pursuant to the Act; or
    (2) Any person with respect to milk produced by him that is reported 
as diverted to an other order plant if any portion of such person's milk 
so moved is assigned to Class I milk under the provisions of such other 
order.

[41 FR 43157, Sept. 30, 1976]



Sec. 1012.13  Producer milk.

    Producer milk means the skim milk and butterfat contained in milk:
    (a) Received at a pool plant directly from a producer or a handler 
described in Sec. 1012.9(c): Provided, That if the milk received at a 
pool plant from a handler described in Sec. 1012.9(c) is purchased on a 
basis other than farm weights, the amount by which the total farm 
weights of such milk exceed the weights on which the pool plant's 
purchases are based shall be producer milk received by the handler 
described in Sec. 1012.9(c) at the location of the pool plant; or
    (b) Diverted from a pool plant to a nonpool plant that is not a 
producer-handler plant, subject to the following conditions:

[[Page 223]]

    (1) Such milk shall be deemed to have been received by the diverting 
handler at the plant to which diverted;
    (2) Not less than 10 days' production of the producer whose milk is 
diverted is physically received at a pool plant: Provided, That any 
delivery during the current month from such producer to an other order 
plant regulated by the order that regulated such pool plant in the prior 
month shall be counted towards meeting the 10-day production 
requirement;
    (3) To the extent that it would result in nonpool plant status for 
the pool plant from which diverted, milk diverted for the account of a 
cooperative association from the pool plant of another handler shall not 
be producer milk;
    (4) A cooperative association may divert for its account the milk of 
a producer. The total quantity of such milk so diverted by a cooperative 
that exceeds the following specified applicable percentage of producer 
milk that the cooperative association caused to be delivered to and 
physically received at pool plants during the month shall not be 
producer milk:
    (i) 40 percent in March-June,
    (ii) 25 percent in December-February, and
    (iii) 20 percent in July-November;
    (5) The operator of a pool plant other than a cooperative 
association may divert for its account any milk of producers that is not 
under the control of a cooperative association that is diverting milk 
during the month pursuant to paragraph (b)(4) of this section. The total 
quantity so diverted by the operator of the pool plant that exceeds the 
following specified applicable percentage of milk physically received at 
such plant during the month that is eligible to be diverted by the plant 
operator shall not be producer milk:
    (i) 40 percent in March-June,
    (ii) 25 percent in December-February, and
    (iii) 20 percent in July-November;
    (6) The diverting handler shall designate the dairy farmers whose 
milk is not producer milk pursuant to paragraphs (b) (4) and (5) of this 
section. If the handler fails to make such designation, milk diverted on 
the last day of the month, then the second-to-last day of the month, and 
so on, shall be excluded until all diversions in excess of the 
prescribed limit are accounted for.

[37 FR 17732, Aug. 30, 1972, as amended at 54 FR 6385, Feb. 10, 1989]

    Effective Date Note: At 57 FR 61780, Dec. 29, 1992, Sec. 1012.13 was 
amended by suspending paragraph (b)(2) indefinitely, effective Dec. 1, 
1992.



Sec. 1012.14  Other source milk.

    Other source milk means the skim milk and butterfat contained in or 
represented by:
    (a) Receipts of fluid milk products and bulk fluid cream products 
from any source except:
    (1) Producer milk;
    (2) Such products from pool plants; and
    (3) Such products in inventory at the beginning of the month;
    (b) Receipts of packaged fluid cream products and eggnog from other 
plants;
    (c) Products, other than fluid milk products and fluid cream 
products, from any source (including those produced at the plant) which 
are reprocessed, converted into, or combined with another product in the 
plant during the month; and
    (d) Any disappearance of nonfluid products in a form in which they 
may be converted into a Class I product and which are not otherwise 
accounted for.

[41 FR 43157, Sept. 30, 1976, as amended at 46 FR 51235, Oct. 19, 1981]



Sec. 1012.15  Fluid milk product.

    (a) Except as provided in paragraph (b) of this section fluid milk 
product means any milk products in fluid or frozen form containing less 
than 9 percent butterfat, that are in bulk or are packaged, distributed 
and intended to be used as beverages. Such products include, but are not 
limited to: Milk, skim milk, lowfat milk, milk drinks, buttermilk, and 
filled milk, including any such beverage products that are flavored, 
cultured, modified with added nonfat milk solids, sterilized, 
concentrated (to not more than 50 percent total milk solids), or 
reconstituted.
    (b) The term fluid milk product shall not include:
    (1) Plain or sweetened evaporated milk, plain or sweetened 
evaporated

[[Page 224]]

skim milk, sweetened condensed milk or skim milk, formulas especially 
prepared for infant feeding or dietary use that are packaged in 
hermetically sealed containers, any product that contains by weight less 
than 6.5 percent nonfat milk solids, and whey; and
    (2) The quantity of skim milk in any modified product specified in 
paragraph (a) of this section that is in excess of the quantity of skim 
milk in an equal volume of an unmodified product of the same nature and 
butterfat content.

[58 FR 27797, May 11, 1993]



Sec. 1012.16  Fluid cream product.

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

[58 FR 27797, May 11, 1993]



Sec. 1012.17  Filled milk.

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



Sec. 1012.18  Cooperative association.

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



Sec. 1012.19  [Reserved]



Sec. 1012.20  Commercial food processing establishment.

    Commercial food processing establishment means any facility other 
than a milk or filled milk plant, to which bulk fluid milk products and 
bulk fluid cream products are disposed of, or producer milk is diverted, 
that uses such receipts as ingredients in food products and has no 
disposition of fluid milk products or fluid cream products other than 
those received in consumer-type packages. Producer milk diverted to 
commercial food processing establishments shall be subject to the same 
provisions relating to diversions to plants, including but not limited 
to, provisions in Secs. 1012.13, 1012.41 and 1012.52.

[58 FR 27797, May 11, 1993]

                             Handler Reports



Sec. 1012.30  Reports of receipts and utilization.

    On or before the 7th day after the end of each month, each handler 
(except a handler described in Sec. 1012.9 (e) or (f)) shall report to 
the market administrator for such month with respect to each plant at 
which milk is received or at which filled milk is processed or packaged, 
reporting in detail and on forms prescribed by the market administrator:
    (a) The quantities of skim milk and butterfat contained in or 
represented by:
    (1) Producer milk (including such handler's own production) or, in 
the case of handlers described in Sec. 1012.9(d), milk received from 
dairy farmers;
    (2) Fluid milk products and bulk fluid cream products received from 
pool plants of other handlers;
    (3) Other source milk;
    (4) Milk diverted to nonpool plants pursuant to Sec. 1012.13; and
    (5) Inventories of fluid milk products and fluid cream products at 
the beginning and end of the month;
    (b) The utilization of all skim milk and butterfat required to be 
reported pursuant to this section, including a separate statement 
showing:

[[Page 225]]

    (1) The respective amounts of skim milk and butterfat disposed of as 
route disposition in the marketing area, showing separately the in-area 
disposition of filled milk; and
    (2) For a handler described in Sec. 1012.9(d), the amount of 
reconstituted skim milk in fluid milk products disposed of in the 
marketing area as route disposition; and
    (c) Such other information with respect to the receipts and 
utilization of skim milk and butterfat as the market administrator may 
prescribe.

[37 FR 17732, Aug. 30, 1972, as amended at 41 FR 43157, Sept. 30, 1976]



Sec. 1012.31  Payroll reports.

    (a) Each handler described in Sec. 1012.9 (a), (b), and (c) shall 
report to the market administrator in detail and on forms prescribed by 
the market administrator on or before the 20th day after the end of the 
month his producer payroll for such month which shall show for each 
producer:
    (1) His identity;
    (2) The quantity of milk received from such producer and the number 
of days, if less than the entire month, on which milk was received from 
such producer;
    (3) The average butterfat content of such milk; and
    (4) The net amount of such handler's payment, together with the 
price paid and the amount and nature of any deductions.
    (b) Each handler operating a partially regulated distributing plant 
who does not elect to make payments pursuant to Sec. 1012.76(b) shall 
report to the market administrator on or before the 20th day after the 
end of the month the same information required of handlers pursuant to 
paragraph (a) of this section. In such report, payments to dairy farmers 
delivering Grade A milk shall be reported in lieu of payments to 
producers.



Sec. 1012.32  Other reports.

    (a) Each producer-handler shall make reports to the market 
administrator at such time and in such manner as the market 
administrator may prescribe.
    (b) Each handler who operates an other order plant shall report 
total receipts and utilization or disposition of skim milk and butterfat 
at the plant at such time and in such manner as the market administrator 
may require and allow verification of such reports by the market 
administrator.
    (c) Each handler described in Sec. 1012.9(c) shall report to the 
market administrator in detail and on forms prescribed by the market 
administrator on or before the 7th day after the end of the month the 
quantities of skim milk and butterfat in producer milk delivered to each 
pool plant in such month.

                         Classification of Milk



Sec. 1012.40  Classes of utilization.

    Except as provided in Sec. 1012.42, all skim milk and butterfat 
required to be reported by a handler pursuant to Sec. 1012.30 shall be 
classified as follows:
    (a) Class I milk. Class I milk shall be all skim milk and butterfat:
    (1) Disposed of in the form of a fluid milk product, except as 
otherwise provided in paragraphs (b) and (c) of this section;
    (2) In packaged fluid milk products in inventory at the end of the 
month; and
    (3) Not specifically accounted for as Class II or Class III milk.
    (b) Class II milk. Class II milk shall be all skim milk and 
butterfat:
    (1) Disposed of in the form of a fluid cream product or any product 
containing artificial fat, fat substitutes, or 6 percent or more nonmilk 
fat (or oil) that resembles a fluid cream product, except as otherwise 
provided in paragraph (c) of this section;
    (2) In packaged inventory at the end of the month of the products 
specified in paragraph (b)(1) of this section and in bulk concentrated 
fluid milk products in inventory at the end of the month;
    (3) In bulk fluid milk products and bulk fluid cream products 
disposed of or diverted to a commercial food processor if the market 
administrator is permitted to audit the records of the commercial food 
processing establishment for the purpose of verification. Otherwise, 
such uses shall be Class I;
    (4) Used to produce:
    (i) Cottage cheese, lowfat cottage cheese, dry curd cottage cheese, 
ricotta cheese, pot cheese, Creole cheese, and

[[Page 226]]

any similar soft, high-moisture cheese resembling cottage cheese in form 
or use;
    (ii) Milkshake and ice milk mixes (or bases), frozen desserts, and 
frozen dessert mixes distributed in one-quart containers or larger and 
intended to be used in soft or semi-solid form;
    (iii) Aerated cream, frozen cream, sour cream and sour half-and-
half, sour cream mixtures containing nonmilk items, yogurt and any other 
semi-solid product resembling a Class II product;
    (iv) Eggnog, custards, puddings, pancake mixes, buttermilk biscuit 
mixes, coatings, batter, and similar products;
    (v) Formulas especially prepared for infant feeding or dietary use 
(meal replacement) that are packaged in hermetically sealed containers;
    (vi) Candy, soup, bakery products and other prepared foods which are 
processed for general distribution to the public, and intermediate 
products, including sweetened condensed milk, to be used in processing 
such prepared food products; and
    (vii) Any product not otherwise specified in this section.
    (c) Class III milk. Class III milk shall be all skim milk and 
butterfat:
    (1) Used to produce:
    (i) Cream cheese and other spreadable cheeses, and hard cheeses of 
types that may be shredded, grated, or crumbled, and are not included in 
paragraph (b)(4)(i) of this section;
    (ii) Butter, plastic cream, anhydrous milkfat and butteroil;
    (iii) Any milk product in dry form;
    (iv) Evaporated or sweetened condensed milk in a consumer-type 
package and evaporated or sweetened condensed skim milk in a consumer-
type package; and
    (2) In inventory at the end of the month of unconcentrated fluid 
milk products in bulk form and products specified in paragraph (b)(1) of 
this section in bulk form;
    (3) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are disposed of by a handler for animal feed;
    (4) In fluid milk products, products specified in paragraph (b)(1) 
of this section, and products processed by the disposing handler that 
are specified in paragraphs (b)(4)(i) through (iv) of this section, that 
are dumped by a handler. The market administrator may require 
notification by the handler of such dumping in advance for the purpose 
of having the opportunity to verify such disposition. In any case, 
classification under this paragraph requires a handler to maintain 
adequate records of such use. If advance notification of such dumping is 
not possible, or if the market administrator so requires, the handler 
must notify the market administrator on the next business day following 
such use;
    (5) In fluid milk products and products specified in paragraph 
(b)(1) of this section that are destroyed or lost by a handler in a 
vehicular accident, flood, fire, or in a similar occurrence beyond the 
handler's control, to the extent that the quantities destroyed or lost 
can be verified from records satisfactory to the market administrator;
    (6) In skim milk in any modified fluid milk product or in any 
product specified in paragraph (b)(1) of this section that is in excess 
of the quantity of skim milk in such product that was included within 
the fluid milk product definition pursuant to Sec. 1012.15 and the fluid 
cream product definition pursuant to Sec. 1012.16; and
    (7) In shrinkage assigned pursuant to Sec. 1012.41(a) to the 
receipts specified in Sec. 1012.41(a)(2) and in shrinkage specified in 
Sec. 1012.41(b) and (c).

[58 FR 27797, May 11, 1993]



Sec. 1012.41  Shrinkage.

    For purposes of classifying all skim milk and butterfat to be 
reported by a handler pursuant to Sec. 1012.30, the market administrator 
shall determine the following:
    (a) The pro rata assignment of shrinkage of skim milk and butterfat, 
respectively, at each pool plant to the respective quantities of skim 
milk and butterfat:
    (1) In the receipts specified in paragraphs (b) (1) through (6) of 
this section on which shrinkage is allowed pursuant to such paragraphs; 
and
    (2) In other source milk not specified in paragraphs (b) (1) through 
(6) of this section which was received in the form

[[Page 227]]

of a bulk fluid milk product or a bulk fluid cream product.
    (b) The shrinkage of skim milk and butterfat, respectively, assigned 
pursuant to paragraph (a) of this section to the receipts specified in 
paragraph (a)(1) of this section that is not in excess of:
    (1) Two percent of the skim milk and butterfat, respectively, in 
producer milk (excluding milk diverted by the plant operator to another 
plant and milk received from a handler described in Sec. 1012.9(c));
    (2) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in milk received from a handler described in Sec. 1012.9(c), except that 
if the operator of the plant to which the milk is delivered purchases 
such milk on the basis of weights determined from its measurement at the 
farm, the applicable percentage under this paragraph shall be 2 percent;
    (3) Plus 0.5 percent of the skim milk and butterfat, respectively, 
in producer milk diverted from such plant by the plant operator to 
another plant, except that if the operator of the plant to which the 
milk is diverted purchases such milk on the basis of weights determined 
from its measurement on the farm, the applicable percentage under this 
paragraph shall be zero;
    (4) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other pool plants;
    (5) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received by transfer from other order 
plants, excluding the quantity for which Class II classification is 
requested by the operator of both plants;
    (6) Plus 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products received from unregulated supply plants, 
excluding the quantity for which Class II classification is requested by 
the handler; and
    (7) Less 1.5 percent of the skim milk and butterfat, respectively, 
in bulk fluid milk products transferred to other plants that is not in 
excess of the respective quantities of skim milk and butterfat to which 
percentages are applied in paragraphs (b) (1), (2), (4), (5), and (6) of 
this section; and
    (c) The quantity of skim milk and butterfat, respectively, in 
shrinkage of milk from producers for which a cooperative association is 
the handler pursuant to Sec. 1012.9 (b) and (c), but not in excess of 
0.5 percent of the skim milk and butterfat, respectively, in such milk. 
If the operator of the plant to which the milk is delivered purchases 
such milk on the basis of weights determined from its measurement at the 
farm, the applicable percentage under this paragraph for the cooperative 
association shall be zero.

[54 FR 6385, Feb. 10, 1989]



Sec. 1012.42  Classification of transfers and diversions.

    (a) Transfers to pool plants. Skim milk or butterfat transferred in 
the form of a fluid milk product or a bulk fluid cream product from a 
pool plant to another pool plant shall be classified as Class I milk 
unless the operators of both plants request the same classification in 
another class. In either case, the classification of such transfers 
shall be subject to the following conditions:
    (1) The skim milk and butterfat classified in each class shall be 
limited to the amount of skim milk and butterfat, respectively, 
remaining in such class at the transferee-plant after the computations 
pursuant to Sec. 1012.44(a)(12) and the corresponding step of 
Sec. 1012.44(b). The amount of skim milk or butterfat classified in each 
class shall include the assigned utilization of skim milk or butterfat 
in transfers of concentrated fluid milk products;
    (2) If the transferor-plant received during the month other source 
milk to be allocated pursuant to Sec. 1012.44(a)(7) or the corresponding 
step of Sec. 1012.44(b), the skim milk or butterfat so transferred shall 
be classified so as to allocate the least possible Class I utilization 
to such other source milk; and
    (3) If the transferor-handler received during the month other source 
milk to be allocated pursuant to Sec. 1012.44(a)(11) or (a)(12) or the 
corresponding steps of Sec. 1012.44(b), the skim milk or butterfat so 
transferred, up to the total of the skim milk and butterfat, 
respectively, in such receipts of other source milk, shall not be 
classified as Class I milk

[[Page 228]]

to a greater extent than would be the case if the other source milk had 
been received at the transferee-plant.
    (b) Transfers and diversions to other order plants. Skim milk or 
butterfat transferred or diverted in the form of a fluid milk product or 
a bulk fluid cream product from a pool plant to an other order plant 
shall be classified in the following manner. Such classification shall 
apply only to the skim milk or butterfat that is in excess of any 
receipts at the pool plant from the other order plant of skim milk and 
butterfat, respectively, in fluid milk products and bulk fluid cream 
products, respectively, that are in the same category as described in 
paragraph (b)(1), (b)(2), or (b)(3) of this section:
    (1) If transferred as packaged fluid milk products, classification 
shall be in the classes to which allocated as a fluid milk product under 
the other order;
    (2) If transferred in bulk form, classification shall be in the 
classes to which allocated under the other order (including allocation 
under the conditions set forth in paragraph (b)(3) of this section);
    (3) If the operators of both plants so request in their reports of 
receipts and utilization filed with their respective market 
administrators, transfers or diversions in bulk form shall be classified 
as Class II or Class III milk to the extent of such utilization 
available for such classification pursuant to the allocation provisions 
of the other order;
    (4) If information concerning the classes to which such transfers or 
diversions were allocated under the other order is not available to the 
market administrator for the purpose of establishing classification 
under this paragraph, classification shall be as Class I, subject to 
adjustment when such information is available;
    (5) For purposes of this paragraph, if the other order provides for 
a different number of classes of utilization than is provided for under 
this part, skim milk or butterfat allocated to a class consisting 
primarily of fluid milk products shall be classified as Class I milk, 
and skim milk or butterfat allocated to the other classes shall be 
classified as Class III milk; and
    (6) If the form in which any fluid milk product that is transferred 
to an other order plant is not defined as a fluid milk product under 
such other order, classification under this paragraph shall be in 
accordance with the provisions of Sec. 1012.40.
    (c) Transfers to producer-handlers. Skim milk or butterfat in the 
following forms that is transferred from a pool plant to a producer-
handler under this or any other Federal order shall be classified:
    (1) As Class I milk, if so moved in the form of a fluid milk 
product; and
    (2) In accordance with the utilization assigned to it by the market 
administrator, if transferred in the form of a bulk fluid cream product. 
For this purpose, the transferee's utilization of skim milk and 
butterfat in each class, in series beginning with Class III, shall be 
assigned to the extent possible to its receipts of skim milk and 
butterfat, respectively, in bulk fluid cream products, pro rata to each 
source.
    (d) Transfers and diversions to other nonpool plants. Skim milk or 
butterfat transferred or diverted in the following forms from a pool 
plant to a nonpool plant that is not an other order plant or a producer-
handler plant shall be classified:
    (1) As Class I milk, if transferred in the form of a packaged fluid 
milk product; and
    (2) As Class I milk, if transferred or diverted in the form of a 
bulk fluid milk product or a bulk fluid cream product, unless the 
following conditions apply:
    (i) If the conditions described in paragraphs (d)(2)(i)(A) and (B) 
of this section are met, transfers or diversions in bulk form shall be 
classified on the basis of the assignment of the nonpool plant's 
utilization to its receipts as set forth in paragraphs (d)(2)(ii) 
through (viii) of this section:
    (A) The transferor-handler or divertor-handler claims such 
classification in its report of receipts and utilization filed pursuant 
to Sec. 1012.30 for the month within which such transaction occurred; 
and
    (B) The nonpool plant operator maintains books and records showing 
the utilization of all skim milk and butterfat received at such plant 
which are

[[Page 229]]

made available for verification purposes if requested by the market 
administrator;
    (ii) Route disposition in the marketing area of each Federal milk 
order from the nonpool plant and transfers of packaged fluid milk 
products from such nonpool plant to plants fully regulated thereunder 
shall be assigned to the extent possible in the following sequence:
    (A) Pro rata to receipts of packaged fluid milk products at such 
nonpool plant from pool plants;
    (B) Pro rata to any remaining unassigned receipts of packaged fluid 
milk products at such nonpool plant from other order plants;
    (C) Pro rata to receipts of bulk fluid milk products at such nonpool 
plant from pool plants; and
    (D) Pro rata to any remaining unassigned receipts of bulk fluid milk 
products at such nonpool plant from other order plants;
    (iii) Any remaining Class I disposition of packaged fluid milk 
products from the nonpool plant shall be assigned to the extent possible 
pro rata to any remaining unassigned receipts of packaged fluid milk 
products at such nonpool plant from pool plants and other order plants;
    (iv) Transfers of bulk fluid milk products from the nonpool plant to 
a plant fully regulated under any Federal milk order, to the extent that 
such transfers to the regulated plant exceed receipts of fluid milk 
products from such plant and are allocated to Class I at the transferee-
plant, shall be assigned to the extent possible in the following 
sequence:
    (A) Pro rata to receipts of fluid milk products at such nonpool 
plant from pool plants; and
    (B) Pro rata to any remaining unassigned receipts of fluid milk 
products at such nonpool plant from other order plants;
    (v) Any remaining unassigned Class I disposition from the nonpool 
plant shall be assigned to the extent possible in the following 
sequence:
    (A) To such nonpool plant's receipts from dairy farmers who the 
market administrator determines constitute regular sources of Grade A 
milk for such nonpool plant; and
    (B) To such nonpool plant's receipts of Grade A milk from plants not 
fully regulated under any Federal milk order which the market 
administrator determines constitute regular sources of Grade A milk for 
such nonpool plant;
    (vi) Any remaining unassigned receipts of bulk fluid milk products 
at the nonpool plant from pool plants and other order plants shall be 
assigned, pro rata among such plants, to the extent possible first to 
any remaining Class I utilization, then to Class II utilization, and 
then to Class III utilization at such nonpool plant;
    (vii) Receipts of bulk fluid cream products at the nonpool plant 
from pool plants and other order plants shall be assigned, pro rata 
among such plants, to the extent possible first to any remaining Class 
II utilization, then to any remaining Class III utilization, and then to 
Class I utilization at such nonpool plant; and
    (viii) In determining the nonpool plant's utilization for purposes 
of this paragraph, any fluid milk products and bulk fluid cream products 
transferred from such nonpool plant to a plant not fully regulated under 
any Federal milk order shall be classified on the basis of the second 
plant's utilization using the same assignment priorities at the second 
plant that are set forth in paragraph (d)(2) of this section.

[58 FR 27798, May 11, 1993]



Sec. 1012.43  General classification rules.

    In determining the classification of producer milk pursuant to 
Sec. 1012.44, the following rules shall apply:
    (a) Each month, the market administrator shall correct for 
mathematical and other obvious errors, the reports submitted by each 
handler pursuant to Sec. 1012.30 and compute the total pounds of skim 
milk and butterfat, respectively, in each class at each pool plant.
    (b) If any of the water contained in the milk from which a product 
is made is removed before the product is utilized or disposed of by a 
handler, the pounds of skim milk used or disposed of in such product 
shall be considered to be a quantity equivalent to the nonfat milk 
solids contained in such product plus all the water originally 
associated with such solids.

[[Page 230]]

    (c) The classification of producer milk for which a cooperative 
association is the handler pursuant to Sec. 1012.9(b) or (c) shall be 
determined separately from the operations of any pool plant operated by 
such cooperative association.
    (d) Skim milk and butterfat contained in receipts of bulk 
concentrated fluid milk and nonfluid milk products that are 
reconstituted for fluid use shall be assigned to Class I use, up to the 
reconstituted portion of labeled reconstituted fluid milk products, on a 
pro rata basis (except for any Class I use of specific concentrated 
receipts that is established by the handler) prior to any assignments 
under Sec. 1012.44. Any remaining skim milk and butterfat in 
concentrated receipts shall be assigned to uses under Sec. 1012.44 on a 
pro rata basis, unless a specific use of such receipts is established by 
the handler.

[58 FR 27799, May 11, 1993]



Sec. 1012.44  Classification of producer milk.

    For each month the market administrator shall determine the 
classification of producer milk of each handler described in 
Sec. 1012.9(a) for each of the handler's pool plants separately and of 
each handler described in Sec. 1012.9(b) and (c) by allocating the 
handler's receipts of skim milk and butterfat to such handler's 
utilization as follows:
    (a) Skim milk shall be allocated in the following manner:
    (1) Subtract from the total pounds of skim milk in Class III the 
pounds of skim milk in shrinkage specified in Sec. 1012.41(b);
    (2) Subtract from the total pounds of skim milk in Class I the 
pounds of skim milk in:
    (i) Receipts of packaged fluid milk products from an unregulated 
supply plant to the extent that an equivalent amount of skim milk 
disposed of to such plant by handlers fully regulated under any Federal 
milk order is classified and priced as Class I milk and is not used as 
an offset for any other payment obligation under any order;
    (ii) Packaged fluid milk products in inventory at the beginning of 
the month. This paragraph shall apply only if the pool plant was subject 
to the provisions of this paragraph or comparable provisions of another 
Federal milk order in the immediately preceding month;
    (3) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in fluid milk products received in packaged form 
from an other order plant, except that to be subtracted pursuant to 
paragraph (a)(7)(vi) of this section, as follows:
    (i) From Class III milk, the lesser of the pounds remaining or 2 
percent of such receipts; and
    (ii) From Class I the remainder of such receipts.
    (4) Subtract from the pounds of skim milk in Class II the pounds of 
skim milk in products specified in Sec. 1012.40(b)(1) that were received 
in packaged form from other plants, but not in excess of the pounds of 
skim milk remaining in Class II;
    (5) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in products specified in Sec. 1012.40(b)(1) in 
packaged form and in bulk concentrated fluid milk products that were in 
inventory at the beginning of the month, but not in excess of the pounds 
of skim milk remaining in Class II. This paragraph shall apply only if 
the pool plant was subject to the provisions of this paragraph (a)(5) or 
comparable provisions of another Federal milk order in the immediately 
preceding month;
    (6) Subtract from the remaining pounds of skim milk in Class II the 
pounds of skim milk in bulk concentrated fluid milk products and in 
other source milk (except other source milk received in the form of an 
unconcentrated fluid milk product or a fluid cream product) that is used 
to produce, or added to, any product specified in Sec. 1012.40(b) 
(excluding the quantity of such skim milk that was classified as Class 
III milk pursuant to Sec. 1012.40(c)(6)), but not in excess of the 
pounds of skim milk remaining in Class II; and
    (7) Subtract in the order specified below from the pounds of skim 
milk remaining in each class, in series beginning with Class III, the 
pounds of skim milk in each of the following:
    (i) Bulk concentrated fluid milk products and other source milk 
(except

[[Page 231]]

other source milk received in the form of an unconcentrated fluid milk 
product) and, if paragraph (a)(5) of this section applies, packaged 
inventory at the beginning of the month of products specified in 
Sec. 1012.40(b)(1) that was not subtracted pursuant to paragraphs 
(a)(4), (a)(5), and (a)(6) of this section;
    (ii) Receipts of fluid milk products (except filled milk) for which 
Grade A certification is not established;
    (iii) Receipts of fluid milk products from unidentified sources;
    (iv) Receipts of fluid milk products from a producer-handler as 
defined under this or any other Federal milk order;
    (v) Receipts of reconstituted skim milk in filled milk from an 
unregulated supply plant that were not subtracted pursuant to paragraph 
(a)(2)(i) of this section; and
    (vi) Receipts of reconstituted skim milk in filled milk from an 
other order plant that is regulated under any Federal milk order 
providing for individual-handler pooling, to the extent that 
reconstituted skim milk is allocated to Class I at the transferor-plant.
    (8) Subtract in the order specified below from the pounds of skim 
milk remaining in Class II and Class III, in sequence beginning with 
Class III:
    (i) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i) and (a)(7)(v) of this section for which the handler 
requests a classification other than Class I, but not in excess of the 
pounds of skim milk remaining in Class II and Class III combined;
    (ii) The pounds of skim milk in receipts of fluid milk products from 
an unregulated supply plant that were not subtracted pursuant to 
paragraphs (a)(2)(i), (a)(7)(v), and (a)(8)(i) of this section which are 
in excess of the pounds of skim milk determined pursuant to paragraphs 
(a)(8)(ii)(A) through (C) of this section. Should the pounds of skim 
milk to be subtracted from Class II and Class III combined exceed the 
pounds of skim milk remaining in such classes, the pounds of skim milk 
in Class II and Class III combined shall be increased (increasing as 
necessary Class III and then Class II to the extent of available 
utilization in such classes at the nearest other pool plant of the 
handler, and then at each successively more distant pool plant of the 
handler) by an amount equal to such excess quantity to be subtracted, 
and the pounds of skim milk in Class I shall be decreased by a like 
amount. In such case, the pounds of skim milk remaining in each class at 
this allocation step at the handler's other pool plants shall be 
adjusted in the reverse direction by a like amount:
    (A) Multiply by 1.25 the sum of the pounds of skim milk remaining in 
Class I at this allocation step at all pool plants of the handler 
(excluding any duplication of Class I utilization resulting from 
reported Class I transfers between pool plants of the handler);
    (B) Subtract from the above result the sum of the pounds of skim 
milk in receipts at all pool plants of the handler of producer milk, 
fluid milk products from pool plants of other handlers, and bulk fluid 
milk products from other order plants that were not subtracted pursuant 
to paragraph (a)(7)(vi) of this section; and
    (C) Multiply any plus quantity resulting above by the percentage 
that the receipts of skim milk in fluid milk products from unregulated 
supply plants that remain at this pool plant is of all such receipts 
remaining at this allocation step at all pool plants of the handler; and
    (iii) The pounds of skim milk in receipts of bulk fluid milk 
products from an other order plant that are in excess of bulk 
unconcentrated fluid milk products transferred or diverted to such plant 
and that were not subtracted pursuant to paragraph (a)(7)(vi) of this 
section, if Class II or Class III classification is requested by the 
operator of the other order plant and the handler, but not in excess of 
the pounds of skim milk remaining in Class II and Class III combined;
    (9) Subtract from the pounds of skim milk remaining in each class, 
in series beginning with Class III, the pounds of skim milk in fluid 
milk products and products specified in Sec. 1012.40(b)(1) in inventory 
at the beginning of the

[[Page 232]]

month that were not subtracted pursuant to paragraphs (a)(2)(ii), (a)(5) 
and (a)(7)(i) of this section;
    (10) Add to the remaining pounds of skim milk in Class III the 
pounds of skim milk subtracted pursuant to paragraph (a)(1) of this 
section;
    (11) Subject to the provisions of paragraphs (a)(11)(i) and (ii) of 
this section, subtract from the pounds of skim milk remaining in each 
class at the plant, pro rata to the total pounds of skim milk remaining 
in Class I and in Class II and Class III combined at this allocation 
step at all pool plants of the handler (excluding any duplication of 
utilization in each class resulting from transfers between pool plants 
of the handler), with the quantity prorated to Class II and Class III 
combined being subtracted first from Class III and then from Class II, 
the pounds of skim milk in receipts of fluid milk products from an 
unregulated supply plant that were not subtracted pursuant to paragraphs 
(a)(2)(i), (a)(7)(v), and (a)(8)(i) and (ii) of this section and that 
were not offset by transfers or diversions of fluid milk products to the 
same unregulated supply plant from which fluid milk products to be 
allocated at this step were received:
    (i) Should the pounds of skim milk to be subtracted from Class II 
and Class III combined pursuant to paragraph (a)(11) of this section 
exceed the pounds of skim milk remaining in such classes, the pounds of 
skim milk in Class II and Class III combined shall be increased 
(increasing as necessary Class III and then Class II to the extent of 
available utilization in such classes at the nearest other pool plant of 
the handler, and then at each successively more distant pool plant of 
the handler) by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class I shall be decreased by 
a like amount. In such case, the pounds of skim milk remaining in each 
class at this allocation step at the handler's other pool plants shall 
be adjusted in the reverse direction by a like amount; and
    (ii) Should the pounds of skim milk to be subtracted from Class I 
pursuant to paragraph (a)(11) of this section exceed the pounds of skim 
milk remaining in such class, the pounds of skim milk in Class I shall 
be increased by an amount equal to such excess quantity to be 
subtracted, and the pounds of skim milk in Class II and Class III 
combined shall be decreased by a like amount (decreasing as necessary 
Class III and then Class II). In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount, 
beginning with the nearest plant at which Class I utilization is 
available;
    (12) Subtract in the manner specified below from the pounds of skim 
milk remaining in each class the pounds of skim milk in receipts of bulk 
fluid milk products from an other order plant that are in excess of bulk 
fluid milk products transferred or diverted to such plant and that were 
not subtracted pursuant to paragraphs (a)(7)(vi) and (a)(8)(iii) of this 
section:
    (i) Subject to the provisions of paragraphs (a)(12)(ii), (iii), and 
(iv) of this section, such subtraction shall be pro rata to the pounds 
of skim milk in Class I and in Class II and Class III combined, with the 
quantity prorated to Class II and Class III combined being subtracted 
first from Class III and then from Class II, with respect to whichever 
of the following quantities represents the lower proportion of Class I 
milk:
    (A) The estimated utilization of skim milk of all handlers in each 
class as announced for the month pursuant to Sec. 1012.45(a); or
    (B) The total pounds of skim milk remaining in each class at this 
allocation step at all pool plants of the handler (excluding any 
duplication of utilization in each class resulting from transfers 
between pool plants of the handler):
    (ii) Should the proration pursuant to paragraph (a)(12)(i) of this 
section result in the total pounds of skim milk at all pool plants of 
the handler that are to be subtracted at this allocation step from Class 
II and Class III combined exceeding the pounds of skim milk remaining in 
Class II and Class III at all such plants, the pounds of such excess 
shall be subtracted from the pounds of skim milk remaining in Class I 
after such proration at the pool

[[Page 233]]

plants at which such other source milk was received;
    (iii) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class II 
and Class III combined that exceeds the pounds of skim milk remaining in 
such classes, the pounds of skim milk in Class II and Class III combined 
shall be increased (increasing as necessary Class III and then Class II 
to the extent of available utilization in such classes at the nearest 
other pool plant of the handler, and then at each successively more 
distant pool plant of the handler) by an amount equal to such excess 
quantity to be subtracted, and the pounds of skim milk in Class I shall 
be decreased by a like amount. In such case, the pounds of skim milk 
remaining in each class at this allocation step at the handler's other 
pool plants shall be adjusted in the reverse direction by a like amount; 
and
    (iv) Except as provided in paragraph (a)(12)(ii) of this section, 
should the computations pursuant to paragraph (a)(12)(i) or (ii) of this 
section result in a quantity of skim milk to be subtracted from Class I 
that exceeds the pounds of skim milk remaining in such class, the pounds 
of skim milk in Class I shall be increased by an amount equal to such 
excess quantity to be subtracted, and the pounds of skim milk in Class 
II and Class III combined shall be decreased by a like amount 
(decreasing as necessary Class III and then Class II). In such case, the 
pounds of skim milk remaining in each class at this allocation step at 
the handler's other pool plants shall be adjusted in the reverse 
direction by a like amount beginning with the nearest plant at which 
Class I utilization is available;
    (13) Subtract from the pounds of skim milk remaining in each class 
the pounds of skim milk in receipts of fluid milk products and bulk 
fluid cream products from another pool plant according to the 
classification of such products pursuant to Sec. 1012.42(a); and
    (14) If the total pounds of skim milk remaining in all classes 
exceed the pounds of skim milk in producer milk, subtract such excess 
from the pounds of skim milk remaining in each class in series beginning 
with Class III. Any amount so subtracted shall be known as overage;
    (b) Butterfat shall be allocated in accordance with the procedure 
outlined for skim milk in paragraph (a) of this section; and
    (c) The quantity of producer milk in each class shall be the 
combined pounds of skim milk and butterfat remaining in each class after 
the computations pursuant to paragraph (a)(14) of this section and the 
corresponding step of paragraph (b) of this section.

[58 FR 27799, May 11, 1993]



Sec. 1012.45  Market administrator's reports and announcements concerning classification.

    The market administrator shall make the following reports and 
announcements concerning classification:
    (a) Whenever required for purposes of allocating receipts from other 
order plants pursuant to Sec. 1012.44(a)(12) and the corresponding step 
of Sec. 1012.44(b), the market administrator shall estimate and publicly 
announce the utilization (to the nearest whole percentage) in each class 
during the month of skim milk and butterfat, respectively, in producer 
milk of all handlers. Such estimate shall be based upon the most current 
available data and shall be final for such purpose.
    (b) Report to the market administrator of the other order, as soon 
as possible after the report of receipts and utilization for the month 
is received from a handler who has received fluid milk products or bulk 
fluid cream products from an other order plant, the class to which such 
receipts are allocated pursuant to Sec. 1012.43(d) and Sec. 1012.44 on 
the basis of such report, (including any reclassification of inventories 
of bulk concentrated fluid milk products), and thereafter, any change in 
such allocation required to correct errors disclosed in the verification 
of such report.
    (c) Furnish to each handler operating a pool plant who has shipped 
fluid milk products or bulk fluid cream products to an other order plant 
the class to which such shipments were allocated by the market 
administrator of the other order on the basis of the report

[[Page 234]]

by the receiving handler, and as necessary, any changes in such 
allocation arising from the verification of such report.
    (d) On or before the 12th day after the end of each month, report to 
each cooperative association, upon request by such association, the 
percentage of the milk caused to be delivered by the cooperative 
association for its members which was utilized in each class at each 
pool plant receiving such milk. For the purpose of this report, the milk 
so received shall be allocated to each class at each pool plant in the 
same ratio as all producer milk received at such plant during the month.

[37 FR 17732, Aug. 30, 1972, as amended at 41 FR 43158, Sept. 30, 1976; 
58 FR 27801, May 11, 1993]

                              Class Prices



Sec. 1012.50  Class prices.

    Subject to the provisions of Sec. 1012.52, the class prices for the 
month per hundredweight of milk shall be as follows:
    (a) Class I price. From the effective date hereof through April 30, 
1988, and thereafter until amended, the Class I price shall be the basic 
formula price for the second preceding month plus $3.88.
    (b) Class II price. The Class II price shall be the basic formula 
price for the second preceding month plus $0.30.
    (c) Class III price. The Class III price shall be the basic formula 
price for the month.

[42 FR 46914, Sept. 19, 1977, as amended at 47 FR 42965, Sept. 30, 1982; 
51 FR 12831, Apr. 16, 1986; 58 FR 27801, May 11, 1993; 60 FR 6608, Feb. 
2, 1995]



Sec. 1012.51  Basic formula price.

    The basic formula price shall be the preceding month's average pay 
price for manufacturing grade milk in Minnesota and Wisconsin using the 
``base month'' series, as reported by the Department, adjusted to a 3.5 
percent butterfat basis using the butterfat differential for the 
preceding month computed pursuant to Sec. 1012.74 and rounded to the 
nearest cent, plus or minus the change in gross value yielded by the 
butter-nonfat dry milk and Cheddar cheese product price formula computed 
pursuant to paragraphs (a) through (e) of this section.
    (a) The gross values of per hundredweight of milk used to 
manufacture butter-nonfat dry milk and Cheddar cheese shall be computed, 
using price data determined pursuant to paragraph (b) of this section 
and annual yield factors, for the preceding month and separately for the 
current month as follows:
    (1) The gross value of milk used to manufacture butter-nonfat dry 
milk shall be the sum of the following computations:
    (i) Multiply the Grade AA butter price by 4.27;
    (ii) Multiply the nonfat dry milk price by 8.07; and
    (iii) Multiply the dry buttermilk price by 0.42.
    (2) The gross value of milk used to manufacture Cheddar cheese shall 
be the sum of the following computations:
    (i) Multiply the Cheddar cheese price by 9.87; and
    (ii) Multiply the Grade A butter price by 0.238.
    (b) The following product prices shall be used pursuant to paragraph 
(a) of this section:
    (1) Grade AA butter price. Grade AA butter price means the simple 
average for the month of the Chicago Mercantile Exchange, Grade AA 
butter price, as reported by the Department.
    (2) Nonfat dry milk price. Nonfat dry milk price means the simple 
average for the month of the Western Nonfat Dry Milk Low/Medium Heat 
price, as reported by the Department.
    (3) Dry buttermilk price. Dry buttermilk price means the simple 
average for the month of the Western Dry Buttermilk price, as reported 
by the Department.
    (4) Cheddar cheese price. Cheddar cheese price means the simple 
average for the month of the National Cheese Exchange 40-pound block 
Cheddar cheese price, as reported by the Department.
    (5) Grade A butter price. Grade A butter price means the simple 
average for the month of the Chicago Mercantile Exchange Grade A butter 
price, as reported by the Department.
    (c) Determine the amounts by which the gross value per hundredweight 
of

[[Page 235]]

milk used to manufacture butter-nonfat dry milk and the gross value per 
hundredweight of milk used to manufacture Cheddar cheese for the current 
month exceed or are less than the respective gross values for the 
preceding month.
    (d) Compute weighting factors to be applied to the changes in gross 
values determined pursuant to paragraph (c) of this section by 
determining the relative proportion that the data included in each of 
the following paragraphs is of the total of the data represented in 
paragraphs (d)(1) and (d)(2) of this section:
    (1) Combine the total nonfat dry milk production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
nonfat dry milk, 8.07, to determine the quantity (in hundredweights) of 
milk used in the production of butter-nonfat dry milk; and
    (2) Combine the total American cheese production for the States of 
Minnesota and Wisconsin, as reported by the Department, for the most 
recent preceding period, and divide by the annual yield factor for 
Cheddar cheese, 9.87, to determine the quantity (in hundredweights) of 
milk used in the production of American cheese.
    (e) Compute a weighted average of the changes in gross values per 
hundredweight of milk determined pursuant to paragraph (c) of this 
section in accordance with the relative proportions of milk determined 
pursuant to paragraph (d) of this section.

[60 FR 18959, Apr. 14, 1995]



Sec. 1012.52  Plant location adjustments for handlers.

    (a) The Class I price for producer milk and other source milk at a 
plant located outside the State of Florida or within the State of 
Florida but outside the defined marketing area shall be adjusted at the 
rates set forth in the following schedule:

------------------------------------------------------------------------
             Location of plant                      Rate per cwt.
------------------------------------------------------------------------
Outside the State of Florida:
    For each 10 miles or fraction thereof   Subtract 2.0 cents.
     from the city hall in Tampa, Fla.
Inside the State of Florida:
    In the defined marketing area of Part   Add 30 cents.
     1013.
    South of a line forming the southern    No adjustment.
     boundary of the counties of Alachua,
     Dixie, Gilchrist, Putnam and St.
     Johns, but outside the defined
     marketing area of Part 1013.
    The remaining area within the State of  Minus 30 cents.
     Florida.
------------------------------------------------------------------------

    (b) For the purpose of calculating location adjustments, receipts of 
fluid milk products from pool plants shall be assigned any remainder of 
Class I milk at the transferee plant that is in excess of the sum of 
producer milk receipts at such plant and that assigned as Class I to 
receipts from other order plants and unregulated supply plants. Such 
assignment shall be made in sequence according to the location 
adjustment applicable at each plant, beginning with the plant nearest 
the Tampa City Hall.
    (c) The Class I price resulting from such adjustments specified in 
this section shall not result in a price less than the Class II price 
for the month and the Class I price applicable to other source milk 
shall be adjusted at the rates specified in paragraph (a) of this 
section, except that the adjusted Class I price shall not be less than 
the Class II price for the month.

[37 FR 17732, Aug. 30, 1972, as amended at 49 FR 37568, Sept. 25, 1984; 
52 FR 5072, Feb. 19, 1987; 54 FR 6386, Feb. 10, 1989; 55 FR 17589, Apr. 
26, 1990]



Sec. 1012.53  Announcement of class prices.

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

[60 FR 6608, Feb. 2, 1995]



Sec. 1012.54  Equivalent price.

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

[[Page 236]]

                              Uniform Price



Sec. 1012.60  Handler's value of milk for computing the uniform price.

    For the purpose of computing the uniform price the market 
administrator shall determine for each month the value of milk of each 
handler with respect to each of the handler's pool plants and of each 
handler described in Sec. 1012.9 (b) and (c) as follows:
    (a) Multiply the pounds of producer milk in each class as determined 
pursuant to Sec. 1012.44(c) by the applicable class prices and add the 
resulting amounts;
    (b) Add the amounts obtained from multiplying the pounds of overage 
subtracted from each class pursuant to Sec. 1012.44(a)(14) and the 
corresponding step of Sec. 1012.44(b) by the respective class prices, as 
adjusted by the butterfat differential specified in Sec. 1012.74, that 
are applicable at the location of the pool plant;
    (c) Add the amount obtained from multiplying the difference between 
the Class III price for the preceding month and the Class I price 
applicable at the location of the pool plant or the Class II price, as 
the case may be, for the current month by the hundredweight of skim milk 
and butterfat subtracted from Class I and Class II pursuant to 
Sec. 1012.44(a)(9) and the corresponding step of Sec. 1012.44(b);
    (d) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the pool plant and the 
Class III price by the hundredweight of skim milk and butterfat assigned 
to Class I pursuant to Sec. 1012.43(d) and the hundredweight of skim 
milk and butterfat subtracted from Class I pursuant to 
Sec. 1012.44(a)(7) (i) through (iv) and the corresponding step of 
Sec. 1012.44(b), excluding receipts of bulk fluid cream products from an 
other order plant and bulk concentrated fluid milk products from pool 
plants, other order plants and unregulated supply plants;
    (e) Add the amount obtained from multiplying the difference between 
the Class I price applicable at the location of the transferor-plant and 
the Class III price by the hundredweight of skim milk and butterfat 
subtracted from Class I pursuant to Sec. 1012.44(a)(7) (v) and (vi) and 
the corresponding step of Sec. 1012.44(b);
    (f) Add the amount obtained from multiplying the Class I price 
applicable at the location of the nearest unregulated supply plants from 
which an equivalent volume was received by the pounds of skim milk and 
butterfat in receipts of concentrated fluid milk products assigned to 
Class I pursuant to Sec. 1012.43(d) and Sec. 1012.44(a)(7)(i) and the 
pounds of skim milk and butterfat subtracted from Class I pursuant to 
Sec. 1012.44(a)(11) and the corresponding steps of Sec. 1012.44(b), 
excluding such skim milk and butterfat in receipts of bulk fluid milk 
products from an unregulated supply plant to the extent that an 
equivalent amount of skim milk or butterfat disposed of to such plant by 
handlers fully regulated under any Federal milk order is classified and 
priced as Class I milk and is not used as an offset for any other 
payment obligation under any order;
    (g) Subtract, for reconstituted milk made from receipts of nonfluid 
milk products, an amount computed by multiplying $1.00 (but not more 
than the difference between the Class I price applicable at the location 
of the pool plant and the Class III price) by the hundredweight of skim 
milk and butterfat contained in receipts of nonfluid milk products that 
are allocated to Class I use pursuant to Sec. 1012.43(d);
    (h) Exclude, for pricing purposes under this section, receipts of 
nonfluid milk products that are distributed as labeled reconstituted 
milk for which payments are made to the producer-settlement fund of 
another order under Sec. 1012.76(b)(5) or (c); and
    (i) For pool plants that transfer bulk concentrated fluid milk 
products to other pool plants and other order plants, add or subtract 
the amount per hundredweight of any class price change from the previous 
month that results from any inventory reclassification of bulk 
concentrated fluid milk products that occurs at the transferee plant. 
Any such applicable class price change shall be applied to the plant 
that used the concentrated milk in the event that the concentrated fluid 
milk products were made from bulk

[[Page 237]]

unconcentrated fluid milk products received at the plant during the 
prior month.

[58 FR 27801, May 11, 1993]



Sec. 1012.61  Computation of uniform price.

    For each month, the market administrator shall compute a uniform 
price for milk of 3.5 percent butterfat content as follows:
    (a) Combine into one total the values computed pursuant to 
Sec. 1012.60 for all handlers who filed the reports pursuant to 
Sec. 1012.30 for the month, except those in default of payments required 
pursuant to Sec. 1012.71 for the preceding month;
    (b) [Reserved]
    (c) Add an amount equal to the total value of the minus location 
adjustments computed pursuant to Sec. 1012.75;
    (d) Subtract an amount equal to the total value of the plus location 
adjustments computed pursuant to Sec. 1012.75;
    (e) Add an amount equal to one-half the unobligated balance in the 
producer-settlement fund;
    (f) Divide the resulting amount by the sum of the following for all 
handlers included in these computations:
    (1) The total hundredweight of producer milk; and
    (2) The total hundredweight for which a value is computed pursuant 
to Sec. 1012.60(f); and
    (g) Subtract not less than four cents nor more than five cents per 
hundredweight.

[37 FR 17732, Aug. 30, 1972, as amended at 42 FR 46914, Sept. 19, 1977]



Sec. 1012.62  Announcement of uniform price and butterfat differential.

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

[42 FR 46914, Sept. 19, 1977]

                            Payments For Milk



Sec. 1012.70  Producer-settlement fund.

    The market administrator shall maintain a separate fund known as the 
``producer-settlement fund'' into which he shall deposit all payments 
into such fund pursuant to Secs. 1012.71 and 1012.76 and out of which he 
shall make all payments from such fund pursuant to Sec. 1012.72: 
Provided, That the market administrator shall offset the payment due to 
a handler against payments due from such handler.



Sec. 1012.71  Payments to the producer-settlement fund.

    (a) On or before the 12th day after the end of the month, each 
handler shall pay to the market administrator the amount, if any, by 
which the total amounts specified in paragraph (a)(1) of this section 
exceed the amounts specified in paragraph (a)(2) of this section:
    (1) The net pool obligation pursuant to Sec. 1012.60 for such 
handler; and
    (2) The sum of:
    (i) The value of such handler's producer milk at the uniform price, 
as adjusted pursuant to Sec. 1012.75; and
    (ii) The value at the uniform price applicable at the location of 
the plant(s) from which received (not to be less than the value at the 
Class II price) of other source milk for which a value is computed 
pursuant to Sec. 1012.60(f).
    (b) Each handler who operates an other order plant that is regulated 
under an order providing for individual-handler pooling shall pay to the 
market administrator for the producer-settlement fund, on or before the 
25th day after the end of the month, an amount computed as follows:
    (1) Determine the quantity of reconstituted skim milk in filled milk 
disposed of as route disposition in the marketing area which was 
allocated to Class I at such other order plant. If reconstituted skim 
milk in filled milk is disposed of from such plant as route disposition 
in marketing areas regulated by two or more market pool orders, the 
reconstituted skim milk assigned to Class I shall be prorated according 
to such disposition in each marketing area; and
    (2) Compute the value of the quantity of reconstituted skim milk 
assigned in paragraph (b)(1) of this section to Class I disposition in 
this marketing area at the Class I price under this part applicable at 
the location of the other order

[[Page 238]]

plant (not to be less than the Class II price), and subtract its value 
at the Class II price.

[37 FR 17732, Aug. 30, 1972, as amended at 42 FR 46915, Sept. 19, 1977]



Sec. 1012.72  Payments from the producer-settlement fund.

    On or before the 13th day after the end of each month, the market 
administrator shall pay to each handler the amount, if any, by which the 
amount computed pursuant to Sec. 1012.71(a)(2) exceeds the amount 
computed pursuant to Sec. 1012.71(a)(1). If, at such time, the balance 
in the producer-settlement fund is insufficient to make all payments 
pursuant to this section, the market administrator shall reduce 
uniformly such payments and shall complete such payments as soon as the 
funds are available.



Sec. 1012.73  Payments to producers and to cooperative associations.

    (a) Except as provided in paragraph (b) of this section, each 
handler shall make payment for producer milk as follows:
    (1) On or before the 20th day of the month to each producer who had 
not discontinued shipping milk to such handler before the 15th day of 
the month, not less than 85 percent of the uniform price for the 
preceding month per hundredweight of milk received during the first 15 
days of the month, less proper deductions authorized in writing by such 
producer;
    (2) On or before the 5th day of the following month to each producer 
who had not discontinued shipping milk to such handler before the last 
day of the month, not less than 85 percent of the uniform price for the 
preceding month per hundredweight of milk received from the 16th through 
the last day of the month, less proper deductions authorized in writing 
by such producer; and
    (3) On or before the 15th day of each month to each producer for 
milk received during the preceding month, not less than the uniform 
price per hundredweight, adjusted pursuant to Secs. 1012.74, 1012.75, 
and 1012.86, subject to the following:
    (i) Minus payments made pursuant to paragraphs (a)(1) and (2) of 
this section;
    (ii) Less proper deductions authorized in writing by such producer; 
and
    (iii) If by such date such handler has not received full payment 
from the market administrator pursuant to Sec. 1012.72 for such month, 
he may reduce pro rata his payments to producers by not more than the 
amount of such underpayment. Payment to producers shall be completed 
thereafter not later than the date for making payments pursuant to this 
paragraph next following after receipt of the balance due from the 
market administrator.
    (b) In the case of a cooperative association which the market 
administrator determines is authorized by its members to collect payment 
for their milk and which has so requested any handler in writing, 
together with a written promise of such association to reimburse the 
handler the amount of any actual loss incurred by him because of any 
improper claim on the part of the association, such handler on or before 
the second day prior to the date on which payments are due individual 
producers, shall pay the cooperative association for milk received 
during the month from the producer-members of such association as 
determined by the market administrator an amount not less than the total 
due such producer-members pursuant to paragraph (a) of this section, 
subject to the following:
    (1) Payment pursuant to this paragraph shall be made for milk 
received from any producer beginning on the first day of the month 
following receipt from the cooperative association of its certification 
that such producer is a member, and continuing through the last day of 
the month next preceding receipt of notice from the cooperative 
association of a termination of membership or until the original request 
is rescinded in writing by the cooperative association; and
    (2) Copies of the written request of the cooperative association to 
receive payments on behalf of its members, together with its promise to 
reimburse and its certified list of members shall be submitted 
simultaneously both to the handler and to the market administrator and 
shall be subject to verification by the market administrator at his 
discretion, through audit

[[Page 239]]

of the records of the cooperative association. Exceptions, if any, to 
the accuracy of such certification claimed by any producer or by a 
handler shall be made by written notice to the market administrator and 
shall be subject to his determination.



Sec. 1012.74  Butterfat differential.

    For milk containing more or less than 3.5 percent butterfat, the 
uniform price shall be increased or decreased, respectively, for each 
one-tenth percent butterfat variation from 3.5 percent by a butterfat 
differential, rounded to the nearest one-tenth cent, which shall be 
0.138 times the current month's butter price less 0.0028 times the 
preceding month's average pay price per hundredweight, at test, for 
manufacturing grade milk in Minnesota and Wisconsin, using the ``base 
month'' series, adjusted pursuant to Sec. 1012.51 (a) through (e), as 
reported by the Department. The butter price means the simple average 
for the month of the Chicago Mercantile Exchange, Grade A butter price 
as reported by the Department.

[60 FR 18959, Apr. 14, 1995]



Sec. 1012.75  Plant location adjustments for producers and on nonpool milk.

    (a) The uniform price for producer milk received at a pool plant 
shall be reduced according to the location of the pool plant at the 
rates set forth in Sec. 1012.52; and
    (b) For purposes of computations pursuant to Secs. 1012.71 and 
1012.72, the uniform price shall be adjusted at the rates set forth in 
Sec. 1012.52 applicable at the location of the nonpool plant from which 
the milk was received, except that the resulting adjusted price shall 
not be less than the Class II price for the month.

[37 FR 17732, Aug. 30, 1972, as amended at 54 FR 6386, Feb. 10, 1989]



Sec. 1012.76  Payments by handler operating a partially regulated distributing plant.

    Each handler who operates a partially regulated distributing plant 
shall pay to the market administrator for the producer-settlement fund 
on or before the 25th day after the end of the month either of the 
amounts (at the handler's election) calculated pursuant to paragraph (a) 
or (b) of this section. If the handler fails to report pursuant to 
Secs. 1012.30 and 1012.31(b) the information necessary to compute the 
amount specified in paragraph (a) of this section, he shall pay the 
amount computed pursuant to paragraph (b) of this section:
    (a) An amount computed as follows:
    (1) The obligation that would have been computed pursuant to 
Sec. 1012.60 at such plant shall be determined as though such plant were 
a pool plant, subject to the following modifications:
    (i) Receipts at such nonpool plant from a pool plant or an other 
order plant shall be assigned to the utilization at which classified at 
the pool plant or other order plant;
    (ii) Transfers from such nonpool plant to a pool plant or an other 
order plant shall be classified in the class to which allocated at the 
pool plant or other order plant. Class I milk transferred from such 
nonpool plant to pool plants and other order plants shall be valued at 
the uniform price of the respective order, except that reconstituted 
skim milk (including that in filled milk), and milk or skim milk from 
producer-handlers and exempt plants defined in any order shall be valued 
at the Class II price. No obligation shall apply to Class I milk 
transferred to a pool plant or an other order plant if such Class I 
utilization is assigned to receipts at the partially regulated 
distributing plant from pool plants and other order plants at which such 
milk was classified and priced as Class I milk;
    (iii) Such handler's obligation shall include any charges computed 
pursuant to Sec. 1012.60(f) and any credits computed pursuant to 
Sec. 1012.71(a)(2)(ii) with respect to receipts of Class I milk from an 
unregulated supply plant, except that the credit for receipts of 
reconstituted skim milk (including that in filled milk), and milk or 
skim milk from producer-handlers and exempt plants defined in any order 
shall be at the Class II price, unless an obligation with respect to 
such plant is computed as specified in (a)(1)(iv) of this section;

[[Page 240]]

    (iv) If the operator of the partially regulated distributing plant 
so requests and provides with his report pursuant to Sec. 1012.30 a 
similar report for each nonpool plant which serves as a supply plant for 
such partially regulated distributing plant by shipment to such plant 
during the month equivalent to the requirements of Sec. 1012.7(b) with 
agreement of the operator of such plant that the market administrator 
may examine the books and records of such plant for purposes of 
verification of such reports, there will be added the amount of the 
obligation computed at such nonpool supply plant in the same manner and 
subject to the same conditions as for the partially regulated 
distributing plant.
    (2) From this obligation, deduct the sum of:
    (i) The gross payments made by such handler, adjusted to a 3.5 
percent butterfat basis by the butterfat differential specified in 
Sec. 1012.74, for Grade A milk received during the month from dairy 
farmers at such plant and like payments made by the operator of a supply 
plant(s) included in the computations pursuant to paragraph (a)(1) of 
this section; and
    (ii) Payments to the producer-settlement fund of another order under 
which such plant is also a partially regulated distributing plant.
    (b) An amount computed as follows:
    (1) Determine the respective amounts of skim milk and butterfat 
disposed of as route disposition in the marketing area;
    (2) Deduct the respective amounts of skim milk and butterfat 
received at the partially regulated distributing plant as follows:
    (i) Any Class I milk from pool plants and other order plants, except 
that deducted under a similar provision of another order issued pursuant 
to the Act; and
    (ii) Receipts from a nonpool plant that is not an other order plant 
to the extent that an equivalent amount of skim milk or butterfat 
disposed of to such nonpool plant by handlers fully regulated under any 
order issued pursuant to the Act is classified and priced as Class I 
milk and is not used as an offset on any other payment obligation 
pursuant to any other order;
    (3) Subtract the pounds of reconstituted milk that are made from 
nonfluid milk products and which are then disposed of as route 
disposition in the marketing area from the partially regulated 
distributing plant and milk or skim milk contained in receipts from 
producer-handlers and exempt plants defined in any order disposed of as 
route disposition in the marketing area;
    (4) Combine the amounts of skim milk and butterfat remaining into 
one total;
    (5) From the value of such milk at the Class I price applicable at 
the location of the nonpool plant, subtract its value at the uniform 
price applicable at such location, and add the amount obtained from 
multiplying the pounds of labeled reconstituted milk included in 
paragraph (b)(3) of this section by the difference between the Class I 
price applicable at the location of the partially regulated distributing 
plant less $1.00 (but not to be less than the Class III price) and the 
Class III price. For any reconstituted milk that is not so labeled, the 
Class I price shall not be reduced by $1.00. Alternatively, for such 
disposition, payments may be made to the producer-settlement fund of the 
order regulating the producer milk used to produce the nonfluid milk 
ingredients at the difference between the Class I price applicable under 
the other order at the location of the plant where the nonfluid milk 
ingredients were processed (but not to be less than the Class III price) 
and the Class III price. This payment option shall apply only if a 
majority of the total milk received at the plant that processed the 
nonfluid milk ingredients is regulated under one or more Federal orders 
and payment may only be made to the producer-settlement fund of the 
order pricing a plurality of the milk used to produce the nonfluid milk 
ingredients. This payment option shall not apply if the source of the 
nonfluid ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.
    (c) Any handler may elect partially regulated distributing plant 
status for any plant with respect to receipts of nonfluid milk 
ingredients assigned to Class I use under Sec. 1012.43(d). Payments

[[Page 241]]

may be made to the producer-settlement fund of the order regulating the 
producer milk used to produce the nonfluid milk ingredients at the 
difference between the Class I price applicable under the other order at 
the location of the plant where the nonfluid milk ingredients were 
processed (but not to be less than the Class III price) and the Class 
III price. This payment option shall apply only if a majority of the 
total milk received at the plant that processed the nonfluid milk 
ingredients is regulated under one or more Federal orders and payment 
may only be made to the producer-settlement fund of the order pricing a 
plurality of the milk used to produce the nonfluid milk ingredients. 
This payment option shall not apply if the source of the nonfluid 
ingredients used in reconstituted fluid milk products cannot be 
determined by the market administrator.

[37 FR 17732, Aug. 30, 1972, as amended at 42 FR 46915, Sept. 19, 1977; 
58 FR 27802, May 11, 1993]



Sec. 1012.77  Adjustment of accounts.

    When verification by the market administrator of reports or payments 
of a handler discloses errors resulting in monies due the market 
administrator from such handler, such handler from the market 
administrator, or a producer or cooperative association from such 
handler, the market administrator shall promptly notify such handler of 
any amount so due and payment thereof shall be made not later than the 
date for making payment next following such disclosure.



Sec. 1012.78  Charges on overdue accounts.

    Any unpaid obligation of a handler pursuant to Sec. 1012.71, 
1012.73, 1012.76, 1012.77, 1012.85, or 1012.86 shall be increased 1 
percent for each month or portion thereof that such obligation is 
overdue, subject to the following conditions:
    (a) The amounts payable pursuant to this section shall be computed 
monthly on each unpaid obligation, which shall include any unpaid 
charges previously computed pursuant to this section;
    (b) For the purposes of this section, any obligation that was 
determined at a date later than prescribed by the order because of a 
handler's failure to submit a report to the market administrator when 
due shall be considered to have been payable by the date it would have 
been due if the report had been filed when due; and
    (c) All monies collected pursuant to this section shall be paid to 
the administrative assessment fund maintained by the market 
administrator.

[54 FR 6386, Feb. 10, 1989]

        Administrative Assessment and Marketing Service Deduction



Sec. 1012.85  Assessment for order administration.

    As his pro rata share of the expense of administration of this part, 
each handler shall pay to the market administrator on or before the 15th 
day after the end of the month 4 cents per hundredweight or such lesser 
amount as the Secretary may prescribe with respect to:
    (a) Producer milk (including such handler's own production);
    (b) Receipts of concentrated fluid milk products from unregulated 
supply plants and receipts of nonfluid milk products assigned to Class I 
use pursuant to Sec. 1012.43(d) and other source milk allocated to Class 
I pursuant to Sec. 1012.44(a)(7) and (a)(11) and the corresponding steps 
of Sec. 1012.44(b), except such other source milk that is excluded from 
the computations pursuant to Sec. 1012.60(d) and (f); and
    (c) Class I milk disposed of in the marketing area from a partially 
regulated distributing plant that exceeds the hundredweight of Class I 
milk:
    (1) Received during the month at such plant from pool plants and 
other order plants that is not used as an offset under a similar 
provision of another order issued pursuant to the Act; and
    (2) Specified in Sec. 1012.76(b)(2)(ii).

[37 FR 17732, Aug. 30, 1972, as amended at 41 FR 43158, Sept. 30, 1976; 
58 FR 27802, May 11, 1993]



Sec. 1012.86  Deduction for marketing services.

    (a) Except as provided in paragraph (b) of this section, each 
handler in making payments for producer milk received during the month 
shall deduct 4

[[Page 242]]

cents per hundredweight or such lesser amount as the Secretary may 
prescribe (except on such handler's own farm production) and shall pay 
such deductions to the market administrator not later than the 15th day 
after the end of the month. Such money shall be used by the market 
administrator to verify or establish weights, samples and tests of 
producer milk and to provide producers with market information. Such 
services shall be performed in whole or in part by the market 
administrator or by an agent engaged by and responsible to him.
    (b) In the case of products for whom a cooperative association is 
performing, as determined by the Secretary, the services set forth in 
paragraph (a) of this section, each handler shall make, in lieu of the 
deductions specified in paragraph (a) of this section, such deductions 
as are authorized by such producers and, on or before the 15th day after 
the end of each month, pay over such deductions to the association 
rendering such services.



PART 1013--MILK IN SOUTHEASTERN FLORIDA MARKETING AREA--Table of Contents




                   Subpart--Order Regulating Handling

                           General Provisions

Sec.
1013.1  General provisions.

                               Definitions

1013.2  Southeastern Florida marketing area.
1013.3  Route disposition.
1013.4  [Reserved]
1013.5  Distributing plant.
1013.6  Supply plant.
1013.7  Pool plant.
1013.8  Nonpool plant.
1013.9  Handler.
1013.10  Producer-handler.
1013.11  [Reserved]
1013.12  Producer.
1013.13  Producer milk.
1013.14  Other source milk.
1013.15  Fluid milk product.
1013.16  Fluid cream product.
1013.17  Filled milk.
1013.18  Cooperative association.
1013.19  [Reserved]
1013.20  Commercial food processing establishment.

                             Handler Reports

1013.30  Reports of receipts and utilization.
1013.31  Payroll reports.
1013.32  Other reports.

                         Classification of Milk

1013.40  Classes of utilization.
1013.41  Shrinkage.
1013.42  Classification of transfers and diversions.
1013.43  General classification rules.
1013.44  Classification of producer milk.
1013.45  Market administrator's reports and announcements concerning 
          classification.

                              Class Prices

1013.50  Class prices.
1013.51  Basic formula price.
1013.52  Plant location adjustments for handlers.
1013.53  Announcement of class prices.
1013.54  Equivalent price.

                              Uniform Price

1013.60  Handler's value of milk for computing the uniform price.
1013.61  Computation of uniform price.
1013.62  Announcement of uniform price and butterfat differential.

                            Payments for Milk

1013.70  Producer-settlement fund.
1013.71  Payments to the producer-settlement fund.
1013.72  Payments from the producer-settlement fund.
1013.73  Payments to producers and to cooperative associations.
1013.74  Butterfat differential.
1013.75  Plant location adjustments for producers and on nonpool milk.
1013.76  Payments by handler operating a partially regulated 
          distributing plant.
1013.77  Adjustment of accounts.
1013.78  Charges on overdue accounts.

        Administrative Assessment and Marketing Service Deduction

1013.85  Assessment for order administration.
1013.86  Deduction for marketing services.

    Authority: Secs. 1-19, 48 Stat. 31, as amended; 7 U.S.C. 601-674.

    Source: 37 FR 17739, Aug. 30, 1972, unless otherwise noted.

[[Page 243]]



                   Subpart--Order Regulating Handling

                           General Provisions



Sec. 1013.1  General provisions.

    The terms, definitions, and provisions in part 1000 of this chapter 
are hereby incorporated by reference and made a part of this order.

                               Definitions



Sec. 1013.2  Southeastern Florida marketing area.

    The Southeastern Florida marketing area, hereinafter called the 
``marketing area,'' means all the territory geographically within the 
boundaries of the following counties, all in the State of Florida, 
including all Government reservations and incorporated municipalities 
within this territory:

    Broward, Dade, Glades, Hendry, Indian River, Martin, Monroe, 
Okeechobee, Palm Beach, St. Lucie.



Sec. 1013.3  Route disposition.

    Route disposition means any delivery to retail or wholesale outlets 
(including delivery by a vendor, or a sale from or through a plant 
store, or by vending machine) of any product in a form designated as 
Class I milk pursuant to Sec. 1013.40(a), but does not include delivery 
to a milk or filled milk receiving or processing plant.



Sec. 1013.4  [Reserved]



Sec. 1013.5  Distributing plant.

    Distributing plant means a plant approved by a duly constituted 
health authority for the processing or packaging of Grade A milk which 
has route disposition of fluid milk products in the marketing area 
during the month.



Sec. 1013.6  Supply plant.

    Supply plant means a plant from which a fluid milk product 
acceptable to a duly constituted health authority is shipped during the 
month to a pool plant.



Sec. 1013.7  Pool plant.

    Except as provided in paragraph (c) of this section, pool plant 
means:
    (a) A distributing plant that has route distribution, except filled 
milk, during the month of not less than 50 percent of the total Grade A 
fluid milk products, except filled milk, that are physically received at 
such plant or diverted as producer milk to a nonpool plant pursuant to 
Sec. 1013.13, and that has route disposition, except filled milk, in the 
marketing area during the month of not less than 10 percent of such 
receipts.
    (b) A supply plant from which not less than 50 percent of the total 
quantity of Grade A fluid milk products that is physically received from 
dairy farmers at such plant or diverted as producer milk to a nonpool 
plant pursuant to Sec. 1013.13 during the month is shipped as fluid milk 
products, except filled milk, to pool plants meeting the requirements of 
Sec. 1013.7(a).
    (c) The term ``pool plant'' shall not apply to the following plants:
    (1) A producer-handler plant;
    (2) A distributing plant qualified pursuant to paragraph (a) of this 
section which meets the requirements of a fully regulated plant pursuant 
to the provisions of another order issued pursuant to the Act and from 
which a greater quantity of fluid milk products, except filled milk, is 
disposed of during the month from such plant as route disposition in the 
marketing area regulated by the other order than as route disposition in 
this marketing area: Provided, That such a distributing plant which was 
a pool plant under this order in the immediately preceding month shall 
continue to be subject to all of the provisions of this part until the 
third consecutive month in which a greater proportion of its route 
disposition is made in such other marketing area, unless the other order 
requires regulation of the plant without regard to its qualifying as a 
pool plant under this order; and
    (3) Any building, premises, or facilities, the primary function of 
which is to hold or store bottled milk or milk products (including 
filled milk) in finished form, nor shall it include any part of a plant 
in which the operations are entirely separated (by wall or other 
partition) from the handling of producer milk.

[54 FR 6386, Feb. 10, 1989]

[[Page 244]]



Sec. 1013.8  Nonpool plant.

    Nonpool plant means any milk or filled milk receiving, 
manufacturing, or processing plant other than a pool plant. The 
following categories of nonpool plants are further defined as follows:
    (a) Other order plant means a plant that is fully subject to the 
pricing and pooling provisions of another order issued pursuant to the 
Act.
    (b) Producer-handler plant means a plant operated by a producer-
handler as defined in any order (including this part) issued pursuant to 
the Act.
    (c) Partially regulated distributing plant means a nonpool plant 
that is neither an other order plant nor a producer-handler plant, from 
which skim milk and butterfat in the form of products designated as 
Class I milk pursuant to Sec. 1013.40(a) in consumer-type packages or 
dispenser units are distributed as route disposition in the marketing 
area during the month.
    (d) Unregulated supply plant means a nonpool plant that is neither 
an other order plant nor a producer-handler plant from which skim milk 
and butterfat in the form of products designated as Class I milk 
pursuant to Sec. 1013.40(a) are moved to a pool plant during the month.



Sec. 1013.9  Handler.

    Handler means:
    (a) Any person in his capacity as the operator of one or more