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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

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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 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 § 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.

7 C.F.R. § 1002.12 (1999).

DECISION

Decision Summary

a

The Market Administrator's failure to designate Petitioner producer-handler under former Milk Marketing Order 2, for each month during the period December 1995 through December 1999, was not contrary to law. A handler seeking designation as a producer-handler under former Milk Marketing Order No. 2, in order to be exempt from paying into the producer-settlement fund, must file an application with the Market Administrator and must be designated by the Market Administrator as a producer-handler pursuant to 7 C.F.R. § 1002.12 (1999). Petitioner's January 1991 "Application for Designation as Producer-Handler" (PX C) did not constitute an application for designation as a producer-handler for the period December 1995 through December 1999.

Issue

Did the Market Administrator unlawfully fail to designate Petitioner a producer-handler for each month during the period December 1995 through December 1999, under former Milk Marketing Order 2?

Discussion

Petitioner's Operation

Petitioner, a Pennsylvania corporation, has its place of business in Manheim, Lancaster County, Pennsylvania. Petitioner produces, processes, and distributes fluid milk products. During the period December 1995 through December 1999, Petitioner produced milk on its own dairy farm, processed that milk in its own processing plant on its farm, and distributed that milk in its own trucks to the various customers. (Amended Pet. ¶¶ 1-2; Tr. 106-07.) Petitioner asserts each month, during the period December 1995 through December 1999, it met the former Milk Marketing Order No. 2 requirements

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for designation as a producer-handler (Amended Pet. ¶¶ 15-159).

Application Required

In 1990, the Market Administrator became aware that Petitioner was distributing fluid milk products into the area covered by former Milk Marketing Order No. 2. In a letter dated December 19, 1990, the Market Administrator informed Petitioner that it must pay into the producer-settlement fund or apply for and obtain designation as a producer-handler, as follows:

It has come to the attention of this office that you are supplying packaged fluid milk products to Ahava Dairy Products, Inc., 120 Third Street, Brooklyn, NY 11231 for distribution in the New York-New Jersey Milk Marketing Area. Pursuant to Section 1002.30 of the orders regulating milk in the New York-New Jersey milk marketing area, you are required to submit a report of receipts and utilization to this office. Accordingly, you will find enclosed copies of the required report forms, along with a copy of Order No. 2 Regulating the handling of milk in the New York-New Jersey Marketing Area. The report for the month of November 1990 or any prior period in which you supplied milk to Ahava Dairy should be promptly filed with this office.

You may qualify as a Producer-Handler under this order pursuant to Section 1002.12. If you believe this to be the case, please contact John Poole at this office for the appropriate application forms. Otherwise, you may have a payment obligation to the Producer Settlement Fund of the order.

PX B.

In January 1991, Petitioner filed its first and only application for designation as a producer-handler under former Milk Marketing Order No. 2 with the Market Administrator (PX C). The Market Administrator did not designate Petitioner as a producer-handler and in August 1992 denied Petitioner's application for designation as a producer-handler (PX E). Petitioner litigated the Market Administrator's denial of its January 1991

'Petitioner's Amended Petition contains two paragraphs identified as “15.”

application. Judge Bernstein upheld the Market Administrator's denial of Petitioner's application for designation as a producer-handler under former Milk Marketing Order No. 2.10 Petitioner failed to file a timely appeal of Judge Bernstein's Kreider I Decision and Order on Remand and the Kreider I Decision and Order on Remand became final."

Petitioner never reapplied for designation as a producer-handler under former Milk Marketing Order No. 2. Ronald Kreider testified on cross-examination that he did not believe Petitioner was required to file another application for designation as a producer-handler, as follows:

[BY MS. DESKINS:]

Q. Okay. Okay. Let's move on then. Sometime in the 1990s did Kreider stop selling milk to Ahava?

[BY MR. RONALD KREIDER:]

A. Yes.

Q. I think you testified earlier that Ahava was one of your biggest customers?

A. Yes.

Q. And, of course, you're aware that Kreider did have a previous case against the Department of Agriculture regarding its status under Order No. 2, correct?

A. That's correct.

Q. Okay. And one of the issues in that case was whether Kreider's sales to Ahava affected its status under Order No. 2, right?

A. Yes.

10In re Kreider Dairy Farms, Inc., 59 Agric. Dec. 21 (1997).

"In re Kreider Dairy Farms, Inc., 57 Agric. Dec. 397 (1998) (Order Denying Late Appeal), aff'd, 190 F.3d 113 (3d Cir. 1999), reprinted in 58 Agric. Dec. 719 (1999).

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