RULES AND REGULATIONS
Title 7--AGRICULTURE
MILK MARKETING BOARD
[7 PA. CODE CHS. 143 and 149]
Transactions Between Dealers and Producers; Uniform System of Accounts
[29 Pa.B. 4952] The Milk Marketing Board amends §§ 143.12, 143.14 and 149.24 (relating to terms of payment; monthly statement to producers; and separating expenditures for raw product into controlled and noncontrolled amounts) to read as set forth in Annex A.
On April 2, 1999, the Agricultural Marketing Service, United States Department of Agriculture (USDA) published in the Federal Register its final decision on Federal milk marketing order reform (referred to hereinafter as final decision). See 64 F.R. 16026 et seq. This document was accompanied by substantial revisions to USDA regulations found in 7 CFR Parts 1000--1199, which govern milk orders. Upon approval of the new orders by the required number of producers in each Federal marketing area, the USDA will publish in the Federal Register a final order implementing the orders. Congress has directed that implementation occur by October 1, 1999.
On June 2 and July 7, 1999, the Board conducted a hearing to receive evidence concerning the impact of Federal order reform on the Board's official general orders governing producer and resale pricing in this Commonwealth. The Board order based on the hearing, Official General Order (OGO) A-903, was issued on August 3, 1999; the effective date of the order is September 1, 1999, inasmuch as prices for producer milk regulated under the new Federal orders are expected to be announced on September 23. (Should Congress delay implementation of the final decision beyond October 1, OGO A-903 provides for an alternative effective date of 30 days before the new implementation date.)
The June 2 and July 7, 1999, hearings also addressed the need to harmonize certain regulatory provisions with Federal practice under the final decision. The amendments to §§ 143.12, 143.14 and 149.24 achieve harmony with Federal requirements governing payments to producers and classification of milk (see 64 F.R. 16173--74 and 16229). Existing § 143.12 requires that advance payments to producers, whether made monthly or weekly, be at least the applicable Class II price for the previous month. The final decision mandates that these payments be at least the lowest announced class price. The final decision also changes the timing for advance and final payments from, respectively, the last day of the month to the 26th day and the 18th day of the month to the 17th day. The amendments to §§ 143.12 and 143.14 reflect these changes. The list in § 149.24 of categories of milk not price-controlled by the Board is amended to include the new Federal Class IV classification.
An additional amendment, unrelated to Federal order reform, is being made to § 143.12(b). Because no milk dealers pay on a weekly basis, the Board does not annually promulgate a weekly payment schedule. Reference to that schedule has therefore been deleted.
Public notice of intention to amend the regulations under the procedures in sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) (CDL) has been omitted under section 204(3) of the CDL (45 P. S. § 1204) because the Board finds that these procedures are impracticable and unnecessary under the circumstances. Because the new Federal orders are due to be implemented on October 1, it would be impracticable to submit the amendments to the procedures associated with proposed rulemaking. Amended § 143.12 requires that producers receive interim payments by the 26th day of each month. That requirement would govern October producer payments. Accordingly the amendment must be effective before October 26, 1999. Although Federal regulations do not govern all milk produced in this Commonwealth, maintenance of uniform timing and minimum payment provisions will ensure that Pennsylvania producers continue to receive payment for both Federally regulated and State-regulated milk on a stable and predictable basis.
Proposed rulemaking is also unnecessary under the circumstances. Milk dealer and producer organizations received notice of and participated in the amendatory process. As noted, testimony at the June 2 and July 7, 1999, hearings addressed the need to amend the regulations. Thereafter, the Board provided for comment by the milk industry during its sunshine meeting on August 3, 1999, and also solicited written comments (none were received). No objections to the amendments have been raised.
Statutory Authority
Section 608 of the Milk Marketing Law (31 P. S. § 700j-608), authorizes the Board to establish the basis on which payment for milk is to be made, the timing of payment, and the contents of the written statement that must accompany payment. Section 5 of the Milk Producers' Security Act (31 P. S. § 626.5), empowers the Board to establish the time period in which milk dealers must make final payments to producers. Section 704 of the Milk Marketing Law (31 P. S. § 700j-704), requires the Board to establish a uniform system of accounts.
Fiscal Impact and Paperwork Requirements
These amendments will have no fiscal impact on the Commonwealth or its political subdivisions, nor will they create new paperwork requirements for these entities. The addition of a Class IV category in § 149.24 will create a modest change in reporting requirements for milk dealers.
Regulatory Review
Under section 5.1(c) of the Regulatory Review Act (71 P. S. § 745.5a(c)), on August 9, 1999, a copy of these amendments was submitted to the Independent Regulatory Review Commission (IRRC) and the Chairpersons of the Senate and House Committees on Agriculture and Rural Affairs. At the same time, the amendments were submitted to the Office of Attorney General for review and comment under the Commonwealth Attorneys Act (71 P. S. §§ 732-101--732-506).
Under section 5.1(d) and (e) of the Regulatory Review Act, these final-omitted regulations were deemed approved by the Senate and House Committees on Agriculture and Rural Affairs on August 30, 1999, and were approved by IRRC on September 9, 1999.
Additional Information
Persons may submit inquiries about these amendments to Chief Counsel, Pennsylvania Milk Marketing Board, 2301 N. Cameron Street, Harrisburg, PA 17110, (717) 787-4194.
Findings
The Board finds that:
(1) Public notice of intention to amend the final-omitted regulations as adopted by this order under the procedures specified in sections 201 and 202 of the CDL has been omitted under section 204(3) of the CDL because the Board has, for good cause, found that the procedures in sections 201 and 202 are impracticable and unnecessary under the circumstances inasmuch as the amendments harmonize certain State practices with Federal practices due to be implemented on October 1, 1999, and inasmuch as affected persons had the opportunity to participate in the amendatory process and had no objections to the amendments set out in Annex A.
(2) Amending the Board's regulations in the manner provided in this order is necessary and appropriate for the administration of the Board's authorizing statutes.
Order
The Board, acting under its authorizing statutes, orders that:
(a) The Board's regulations, 7 Pa. Code Chapters 143 and 149, are amended by amending §§ 143.12, 143.14 and 149.24 to read as set forth in Annex A.
(b) The Chairperson of the Board shall submit this order and Annex A to the Office of Attorney General for approval as to legality as required by law.
(c) The Chairperson of the Board shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.
(d) This order shall be effective on October 1, 1999.
BEVERLY R. MINOR,
Chairperson(Editor's Note: For the text of the Order of the Independent Regulatory Review Commission relating to this document, see 29 Pa.B. 5033 (September 25, 1999).)
Fiscal Note: 47-6. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 7. AGRICULTURE
PART VI. MILK MARKETING BOARD
CHAPTER 143. TRANSACTIONS BETWEEN DEALERS AND PRODUCERS
PAYMENT § 143.12. Terms of payment.
(a) Producers shall be paid not later than the 26th day of each month and the 17th day of the following month, as follows:
(1) Payment that covers the approximate value of milk or cream purchased from the first to the 15th of each month shall be made not later than the 26th day of each month. This payment need not be accompanied by an itemized statement. This payment shall be at least the lowest announced class price for the previous month for the number of pounds purchased or received during the first 15 days of the month.
(2) Final settlement for all milk and cream purchased during any month shall be made not later than the 17th day of the following month. The final settlement shall include any balances due for the first 15-day period and shall be accompanied by a statement to each producer setting forth the information required under § 143.14 (relating to monthly statement to producers).
(b) This section may not be interpreted as prohibiting a dealer from paying its producers on a weekly basis; however, when a dealer pays on this basis, it shall also provide its producers with a monthly statement as prescribed by § 143.14. All advance payments on the weekly basis shall be at least at the lowest announced class price for the previous month for the number of pounds purchased or received during the week in question. The final settlement shall include any balances due for the initial weeks during the month and shall be accompanied by a statement to each producer setting forth the information required under § 143.14.
§ 143.14. Monthly statement to producers.
Dealers purchasing milk or cream from producers shall furnish producers with statements containing each of the following items, by not later than the 17th day of each month:
(1) The name and address of dealer issuing statement.
(2) The date of statement.
(3) The period for which statement is rendered.
(4) The name of producer for whom statement is intended.
(5) The butterfat test for the first half of the month, or the average of fresh samples, with a minimum of two taken, evenly spaced, the first half of the month.
(6) The butterfat test for the last half of the month, or the average of fresh samples, with a minimum of two taken, evenly spaced, in the last half of the month.
(7) The average butterfat test for the month.
(8) The percentage of milk utilized in each classification.
(9) The rate paid per hundredweight for 3.5% milk for each classification as established by applicable Official General Order, which may be obtained from the Milk Marketing Board, 2301 N. Cameron Street, Harrisburg, Pennsylvania 17120.
(10) Three and one-half percent blend rate per hundredweight and butterfat differential per 0.1%.
(11) The blend rate paid at the producer's average test.
(12) The total pounds of milk purchased from producer.
(13) The gross amount paid for milk.
(14) Additional amounts paid as premiums, bonuses or similar payments.
(15) The gross amount due after addition of premiums, bonuses or similar payment.
(16) Itemization of advance payments and authorized deductions.
(17) The total deductions.
(18) The net amount due and paid.
CHAPTER 149. UNIFORM SYSTEM OF ACCOUNTS
SPECIFIC INSTRUCTIONS § 149.24. Separating expenditures for raw product into controlled and noncontrolled amounts.
(a) From the milk dealer's monthly report, the product and butterfat pounds sold or utilized shall be determined for each producer payment category, as follows:
(1) Controlled, Class I
(2) Controlled, Class II
(3) Noncontrolled, Class I
(4) Noncontrolled, Class II
(5) Noncontrolled, Class III
(6) Noncontrolled, Class IV
(b) The value of each category, using the applicable Federal or State prices adjusted for zone and butterfat differentials, shall be determined.
(c) The pounds and dollar values for controlled and noncontrolled shall be totalled.
(d) The difference between the total dollars accounted for in subsection (c) and the total paid for the milk, including payments to settlement and assessment funds shall be determined. This difference shall consist of market administration fees, shrinkage, plant loss and premiums.
(e) The dollar difference specified in subsection (d) shall be divided between controlled and noncontrolled, in the same proportion as the controlled and noncontrolled pounds totalled in subsection (c).
(f) Add or subtract the differences separated in subsection (e) to the two dollar figures computed in subsection (c). The total of the controlled and noncontrolled dollar figures shall then equal the total payment for milk for the month.
(g) If bulk product is purchased from other sources in addition to producers, the payments to both shall be totalled and divided between controlled and noncontrolled, using the steps set forth in subsections (a)--(f). The amounts of the total controlled and total noncontrolled shall then be divided between purchases and purchases from others, in the same proportion as the totals paid to producers and to others. The resultant four figures shall next be charged to the four accounts specified in § 149.42(c)(2)--(4) (relating to income and cost of sales accounts), with a credit to ''Total Purchases of Milk,'' specified in § 149.42(c)(1).
(h) At the end of an accounting period, either calendar or as specified by the Board for cross-section purposes, the summarization of the monthly total figures may not equal the figure from the adjusted trial balance because of period beginning and ending inventory or other adjustments. This difference, plus or minus, shall be divided between controlled and noncontrolled in the same proportion as the total controlled and noncontrolled pounds sold in the entire period.
(i) A dealer operating a partially Federally regulated plant paying marketing administration fees and payments to settlement funds for fluid milk products delivered to a Federal order area should assign all such payments to controlled cost of sales except for deliveries to locations on which the Board does not establish prices, such as out-of-State locations and Federally owned land.
(j) If a dealer that produces both fluid and manufactured products purchases items, such as cream and powder that can be readily identified as raw product for the manufactured items, the cost of these items may be excluded from the computations specified in subsections (a)--(h) and assigned directly to noncontrolled cost of sales accounts.
[Pa.B. Doc. No. 99-1625. Filed for public inspection September 24, 1999, 9:00 a.m.]
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