(iii) The Class II price and Class II butterfat differential, both for the preceding month; and

(2) The 14th day of each month, the uniform price and the producer butterfat differential, both for the preceding month;

(k) on or before the 12th day of each month, report to each cooperative association which so requests the amount and class utilization of milk received by each handler during the immediately preceding month from such cooperative association in its capacity as a handler pursuant to § 1060.10 (c) and directly from members of such cooperative association. For the purpose of this report the milk so received shall be prorated to each class in proportion to the utilization by such handler in each class remaining after allocation pursuant to § 1060.46(a) (1) through (10) and the corresponding steps of § 1060.46 (b); and

(1) Whenever required for purpose of allocating receipts from other order plants pursuant to § 1060.46 (a) (9) and the corresponding step of § 1060.46(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;

(m) 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 from an other order plant, the classification to which such receipts are allocated pursuant to § 1060.46 pursuant to such report, and thereafter any change in such allocation required to correct errors disclosed in verification of such report; and

(n) Furnish to each handler operating a pool plant who has shipped fluid milk products to an other order plant, the classification to which the skim milk and butterfat in such fluid milk products were allocated by the market administrator of the other order on the basis of the report of the receiving handler; and, as necessary, any changes in such classification arising in the verification of such report. [32 F.R. 13703, Sept. 30, 1967, as amended at 36 F.R. 9850, May 29, 1971; 37 F.R. 2934, Feb. 10, 1972]

On or before the 7th day after the end of each month each handler who operates a pool plant(s) shall report for each such plant to the market administrator in the detail and on forms prescribed by the market administrator as follows:

(a) The receipts at each plant of milk from each producer (including such handlers' own production), the average butterfat test, the pounds of butterfat contained therein, the number of days on which milk was received from such producer, and the total quantity of milk and butterfat received from each handler pursuant to § 1060.10 (c);

(b) The quantities of skim milk and butterfat contained in (or used in the production of) fluid milk products received from other pool plants;

(c) The quantities of skim milk and butterfat contained in receipts of other source milk;

(d) The utilization of skim milk and butterfat required to be reported pursuant to this section;

(e) A separate statement showing the disposition of fluid milk products on routes in the marketing area and a statement showing separately in-area and outside area route disposition of filled milk;

(f) The pounds of skim milk and butterfat contained in all fluid milk products on hand, both in bulk and in packages, at the beginning and at the end of the month;

(g) Such other information with respect to receipts and utilization as the market administrator may prescribe; and

(h) Each handler specified in § 1060.10(d) who operates a partially regulated distributing plant shall report as required in this section, except that receipts of Grade A milk from dairy farmers shall be reported in lieu of those in producer milk. 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.

[32 F.R. 13703, Sept. 30, 1967, as amended at 34 FR. 18659, Nov. 22, 1969]

§ 1060.36 Payroll reports.

On or before the 20th day after the end of each month each handler, except a producer-handler or a handler making payments pursuant to § 1060.62(b), shall

submit to the market administrator his producer payroll (or in the case of a handler making payments pursuant to § 1060.62(a), his payroll for dairy farmers delivering Grade A milk) for receipts during the preceding month which shall show:

(a) The total pounds of milk, the average butterfat test thereof, and the pounds of butterfat received from each producer and cooperative association and the number of days on which milk was received from such producer;

(b) The amount of payment to each producer and cooperative association; and

(c) The nature and amount of any deductions or charges involved in such payments.

(a) Each producer-handler and each handler making payments pursuant to § 1060.62(b) shall make reports to the market administrator at such time and in such manner as the market administrator may prescribe:

(b) Each handler pursuant to § 1060.10 (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 each month the quantities of skim milk and butterfat in producer milk delivered to each pool plant in such month and all other producer milk for which it is a handler;

(c) Each handler who receives milk from producers, payment for which is to be made to a cooperative association pursuant to § 1060.80 (b), shall report to such cooperative association with respect to each such producer, on forms approved by the market administrator, as follows:

(1) On or before the 20th day of the month, the total pounds of milk received during the first 15 days of the month;

(2) On or before the seventh day after the end of the month:

(1) The pounds per shipment, the total pounds of milk and the average butterfat test of milk received from such producer during the month;

(ii) The amount or rate and nature of any deductions; and

(iii) The amount of any payments to such producer pursuant to § 1060.86.

CLASSIFICATION OF MILK

§ 1060.40 Skim milk and butterfat to be classified.

(a) The skim milk and butterfat which are required to be reported pur

41

suant to § 1060.35 and § 1060.37(b) shall be classified each month by the market administrator pursuant to the provisions of §§ 1060.41 through 1060.46; and

(b) If any 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 utilized 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. § 1060.41 Classes of utilization.

Subject to the conditions set forth in §§ 1060.42 through 1060.46, the classes of utilization shall be as follows:

(a) Class I milk. Class I milk shall be all skim milk (including that used to produce reconstituted skim milk) and butterfat:

(1) Disposed of in the form of a fluid milk product except:

(i) Fluid milk products classified as Class II pursuant to paragraph (b) (2) and (3) of this section;

(ii) Fluid milk products which are fortified with nonfat milk solids shall be Class I in an amount equal only to the weight of an equal volume of an unfortified product of the same butterfat content;

(2) Contained in inventory of packaged fluid milk products on hand at the end of the month; and

(3) Not accounted for as Class II milk: (b) Class II milk. Class II milk shall be:

(1) Skim milk and butterfat used to produce any product other than a fluid milk product;

(2) Skim milk and butterfat disposed of:

(i) For livestock feed; or

(ii) Dumped after prior notification to and opportunity for verification by the market administrator;

(3) The weight of skim milk in any fortified fluid milk product in excess of the pounds classified as Class I milk pursuant to paragraph (a)(1)(ii) of this section;

(4) In inventory of bulk fluid milk products on hand at the end of the month;

(5) Skim milk and butterfat, respectively, in actual shrinkage at each pool plant allocated pursuant to § 1060.42 (b) (1) but not in excess of:

(i) Two percent of producer milk except that received from a handler pur

suant to § 1060.10 (c) or diverted pursuant to § 1060.16 to a nonpool plant;

(ii) Plus 1.5 percent of milk received in bulk tank lots from other pool plants; (iii) Plus 1.5 percent of producer milk received from a handler pursuant to § 1060.10 (c), except that if the handler operating the pool plant files notice with the market administrator that the purchase of such milk is on the basis of farm tests and weights determined by farm bulk tank calibrations, the applicable percentage shall be two percent;

(iv) Plus 1.5 percent of milk received in bulk tank lots from other order plants exclusive of the quantity for which Class II utilization was requested by the operators of both plants;

(v) Plus 1.5 percent of milk in bulk tank lots from unregulated supply plants, exclusive of the quantity for which Class II utilization was requested by the handler;

(vi) Less 1.5 percent of milk in bulk tank lots transferred from pool plants to other plants; and

(vii) Plus 0.5 percent of milk received by a cooperative handler pursuant to § 1060.10 (b) and (c) from producers as determined by farm tests and weights measured by farm bulk tank calibrations, unless the exception in subparagraph (5) (iii) of this paragraph applies; and

(6) Skim milk and butterfat in shrinkage allocated pursuant to § 1060.42(b)(2).

§ 1060.42 Shrinkage.

The market administrator shall allocate shrinkage over a handler's receipts at each pool plant as follows:

(a) Compute the total shrinkage of skim milk and butterfat, respectively, for each handler at each plant; and

(b) Prorate the resulting amounts among the receipts of skim milk and butterfat contained in:

(1) The net quantity of producer milk and other milk specified in § 1060.41 (b) (5) (except milk diverted to a nonpool plant pursuant to § 1060.15); and

(2) Other source milk exclusive of that specified in § 1060.41(b) (5). § 1060.44

Transfers.

Skim milk or butterfat in the form of a fluid milk product shall be classified:

(a) At the utilization indicated by the transferee and transferor handlers in their reports pursuant to § 1060.35, otherwise as Class I milk, if transferred from a pool plant to another pool plant

subject in either event to the following conditions:

(1) The skim milk or butterfat so assigned to either class shall be limited to the amount thereof remaining in such class in the transferee plant after computations pursuant to § 1060.46 (a) (9) and the corresponding step of § 1060.46 (b);

(2) If the transferor handler received during the month other source milk to be allocated pursuant to § 1060.46 (a) (4) and the corresponding step of § 1060.46 (b), the skim milk and 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 § 1060.46 (a) (8) or (9) and the corresponding steps of § 1060.46(b), the skim milk and butterfat so transferred up to the total of such receipts shall not be classified as Class I milk to a greater extent than would be applicable to a like quantity of such other source milk received at the transferee plant, if such classification would change the classification of producer milk on the market or the classification of such other source milk received by the transferor handler during the month;

(b) As Class I milk, if transferred from a pool plant to a producer-handler or to an exempt government institution as defined in § 1060.60;

(c) As Class I if transferred from a pool plant in packaged form to a nonpool plant that is neither an other order plant nor a producer-handler plant;

(d) As Class I milk, if transferred or diverted to a nonpool plant that is neither an other order plant nor a producer-handler plant and is located more than 300 miles by shortest highway distance as determined by the market administrator, from the nearer of the city halls of Fargo or Grand Forks, N. Dak., except that cream so transferred may be classified as Class II if the hanIdler claims classification of such cream in Class II in his report pursuant to § 1060.35, the handler tags the container of such cream as for manufacturing purposes only (and so noticed on invoice), and the handler gives the market administrator sufficient notice to allow him to verify the shipment;

(e) As Class I milk if transferred or diverted in bulk to a nonpool plant that is neither an other order plant nor a pro

ducer-handler plant and is not more than 300 miles by shortest highway distance as determined by the market administrator from the nearer of the city halls of Fargo or Grand Forks, N. Dak., unless the requirements of subparagraphs (1) and (2) of this paragraph are met, in which case the skim milk and butterfat so transferred or diverted shall be classified in accordance with the assignment resulting from subparagraph (3) of this paragraph:

(1) The transferring or diverting handler claims classification pursuant to the assignment set forth in subparagraph (3) of this paragraph in his report submitted to the market administrator pursuant to § 1060.35 for the month within which such transaction occurred;

(2) 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 the purpose of verification; and

(3) The skim milk and butterfat so transferred or diverted shall be classified on the basis of the following assignment of utilization at such nonpool plant in excess of receipts of packaged fluid milk products from all pool plants and other order plants;

(i) Any Class I utilization disposed of on routes in the marketing area shall be first assigned to the skim milk and butterfat in the fluid milk products so transferred or diverted from pool plants, next pro rata to receipts from other order plants and thereafter to receipts from dairy farmers who the market administrator determines constitute regular sources of supply of Grade A milk for such nonpool plant;

(ii) Any Class I utilization disposed of on routes in the marketing area of another order issued pursuant to the Act shall be first assigned to receipts from plants fully regulated by such order, next pro rata to receipts from pool plants and other order plants not regulated by such order, and thereafter to receipts from dairy farmers who the market administrator determines constitute regular sources of supply for such nonpool plant;

(iii) Class I utilization in excess of that assigned pursuant to subdivisions (i) and (ii) of this subparagraph shall be assigned first to remaining receipts from dairy farmers who the market administrator determines constitute the

regular source of supply for such nonpool plant and Class I utilization in excess of such receipts shall be assigned pro rata to unassigned receipts at such nonpool plant from all pool and other order plants;

(iv) To the extent that Class I utilization is not so assigned to it the skim milk and butterfat so transferred or diverted shall be classified as Class II milk;

(v) If any skim milk or butterfat is transferred to a second nonpool plant under this paragraph, the same conditions of audit, classification and allocation shall apply;

(f) As follows, if transferred to an other order plant in excess of receipts from such plant in the same category as described in subparagraph (1), (2), or (3) of this paragraph:

(1) If transferred in packaged form, 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 as a fluid milk product under the other order (including allocation under the conditions set forth in subparagraph (3) of this paragraph);

(3) If the operators of both the transferor and 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 to the extent of the Class II utilization (or comparable utilization under such other order) available for such assignment pursuant to the allocation provisions of the transferee order;

(4) If information concerning the classification to which allocated under the other order is not available to the market administrator for purposes of establishing classification pursuant to this paragraph, classification shall be as Class I subject to adjustment when such information is available;

(5) For purposes of this paragraph, if the transferee order provides for more than two classes of utilization, skim milk and butterfat allocated to a class consisting primarily of fluid milk products shall be classified as Class I and skim milk and butterfat allocated to other classes shall be classified as Class II; and

(6) If the form in which any fluid milk product is transferred to another order plant is not defined as a fluid milk product under such other order, classi

fication shall be in accordance with the provisions of § 1060.41.

[32 F.R. 13703, Sept. 30, 1967, as amended at 34 F.R. 18659, Nov. 22, 1969]

§ 1060.45 Computation of skim milk and butterfat in each class.

For each month the market administrator shall correct for mathematical and for other obvious errors the reports of receipts and utilization submitted pursuant to § 1060.35 by each handler and shall compute the pounds of skim milk and butterfat in each class at all pool plants of such handler. Allocation pursuant to § 1060.46 and computation of obligations pursuant to § 1060.70 shall be based upon the combined utilization so computed.

§ 1060.46

Allocation of skim milk and butterfat classified.

After making the computations pursuant to § 1060.45, the market administrator shall determine the classification of producer milk 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 II the pounds of skim milk classified as Class II pursuant to § 1060.41 (b) (5);

(2) Subtract from the pounds of skim milk in each class the pounds of skim milk in fluid milk products received in packaged form from other order plants, except that to be subtracted pursuant to subparagraph (4) (v) of this paragraph, as follows:

(i) From Class II milk, the lesser of the pounds remaining or 2 percent of such receipts; and

(ii) From Class I milk, the remainder of such receipts;

(3) Subtract from the remaining pounds of skim milk in Class I, the pounds of skim milk in inventory of packaged fluid milk products on hand at the beginning of the month;

(4) Subtract in the order specified below from the pounds of skim milk remaining in each class, in series beginning with Class II, the pounds of skim milk in each of the following:

(i) Other source milk in a form other than that of a fluid milk product;

(ii) Receipts of fluid milk products (except filled milk) for which Grade A certification is not established, and receipts of fluid milk products from unidentified sources;

(iii) Receipts of fluid milk products from a producer-handler, as defined under this or any other Federal order, and from exempt institutions as defined in § 1060.60 (b);

(iv) Receipts of reconstituted skim milk in filled milk from unregulated supply plants; and

(v) Receipts of reconstituted skim milk in filled milk from other order plants which are regulated under an order providing for individual handler pooling, to the extent that reconstituted skim milk is allocated to Class I at the transferor plant;

(5) Subtract, in the order specified below, from the pounds of skim milk remaining in Class II, but not in excess of such quantity:

(i) The pounds of skim milk in receipts of fluid milk products from an unregulated supply plant that were not subtracted pursuant to subparagraph (4) (iv) of this paragraph;

(a) For which the handler requests Class II utilization; or

(b) The pounds of skim milk in receipts which are in excess of the pounds of skim milk determined by subtracting from 125 percent of the pounds of skim milk remaining in Class I milk (exclusive of transfers between pool plants of the same handler) the sum of the pounds of skim milk in producer milk, receipts of fluid milk products from pool plants of other handlers, and receipts of fluid milk products in bulk from other order plants that were not subtracted pursuant to subparagraph (4) (v) of this paragraph;

and

(ii) The pounds of skim milk in receipts of fluid milk products in bulk from an other order plant that were not subtracted pursuant to subparagraph (4) (v) of this paragraph, in excess of similar transfers to such plant, if Class II utilization was requested by the operator of such plant and the transferee handler but not in excess of the pounds of skim milk remaining in Class II milk;

(6) Subtract from the pounds of skim milk remaining in each class, in series beginning with Class II, the pounds of skim milk in inventory of fluid milk products in bulk on hand at the beginning of the month;

(7) Add to the remaining pounds of skim milk in Class II milk the pounds subtracted pursuant to subparagraph (1) of this paragraph;

(8) Subtract from the pounds of skim milk remaining in each class, pro rata