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(1) 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.

REPORTS, RECORDS, AND FACILITIES § 1061.30 Monthly reports of receipts

and utilization. On or before the eighth day after the end of each month each handler who operates a pool plant shall report to the market administrator in the detail and on forms prescribed by the market administrator for each of his pool plants as follows:

(a) The quantities of skim milk and butterfat contained in or represented by:

(1) Milk received from producers including milk received from farms and diverted pursuant to § 1061.17 for such handler's account;

(2) Producer milk received from handlers pursuant to $ 1061.13(c);

(3) Fluid milk products received from other pool plants;

(4) Other source milk; and

(5) Inventories of fluid milk products at the beginning and end of the month, showing separately the quantities in bulk and in packages;

(b) The utilization of all skim milk and butterfat required to be reported pursuant to this section, including a separate statement showing the respective amounts of skim milk and butterfat disposed of as Class I milk inside and outside the marketing area on routes; and

(c) Such other information with respect to the receipts and utilization of skim milk and butterfat as the market administrator may prescribe. 6 1061.31

Other reports. (a) Each producer-handler and each handler who operates an other order plant shall report the receipts and disposition of skim milk and butterfat at such plant at such time and in such manner as the market administrator may require.

(b) Each handler pursuant to § 1061. 13 (b) and (c) shall report to the market administrator on or before the eighth

day after the end of the month in detail and on forms prescribed by the market administrator, the total quantity of skim milk and butterfat in milk received by such handler from all producer member farms for which it is the handler pursuant to § 1061.13 (b) and (c); and

(1) For milk for which it is the handler pursuant to § 1061.13(b), report the quantities of skim milk and butterfat in milk diverted for its account during the month from each pool plant and the utilization of such skim milk and butterfat; and

(2) For milk for which it is the handler pursuant to § 1061.13 (c), report the quantities of skim milk and butterfat in milk delivered to each pool plant during the month.

(c) Each handler operating a partially regulated distributing plant shall report for each such plant the information required of pool plant operators pursuant to § 1061.30 substituting receipts from dairy farmers for producer milk.

(d) Each handler receiving milk from producers' farms shall report to the market administrator in detail and on forms prescribed by the market administrator on or before the 25th 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 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. § 1061.32 Records and facilities.

Each handler shall maintain and make available to the market administrator, or his representative, during the usual hours of business, such accounts and records of his operations, together with such facilities as are necessary to enable the market administrator to verify or establish the correct data with respect to:

(a) The receipts and utilization of all skim milk and butterfat handled in any form during the month;

(b) The weights and tests for butterfat and other content of all milk and milk products handled during the month;

(c) The pounds of skim milk and butterfat contained in or represented by all milk products in inventory at the beginning and end of each month;

(d) Payments to dairy farmers and cooperative associations, including the nature of any deductions and the disbursement of money so deducted; and

(e) Whether or not a person claiming producer-handler status meets the criteria set forth in § 1061.14. § 1061.33 Retention of records.

All books and records required under this part 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 books and records pertain: Provided, That if within such 3-year period the market administrator notifies the handler in writing that the retention of such books and records, or of specified books and records, is necessary in connection with a proceeding under section 8(c) (15) (A) of the Act or a court action specified in such notice, the handler shall retain such books and records or specified books and records until further written notification from the market administrator. In either case 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.

CLASSIFICATION OF MILK § 1061.40 Skim milk and butterfat to

be classified. (a) The skim milk and butterfat which are required to be reported pursuant to $ $ 1061.30 and 1061.31 shall be classified each month by the market administrator pursuant to the provisions of $ $ 1061.41 through 1061.46; 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.

§ 1061.41 Classes of utilization.

Subject to the conditions set forth in $ $ 1061.42 through 1061.46, inclusive, the classes of utilization shall be as follows:

(a) Class I milk. Class I milk shall be all skim milk and butterfat:

(1) Disposed of as a fluid milk product except as provided in subparagraphs (2), (3), and (4) of paragraph (b);

(2) In inventory of fluid milk products in packaged form 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 all skim milk and butterfat:

(1) Used to produce butter, butteroil, anhydrous milkfat, plain or sweetened condensed milk or skim milk, and condensed buttermilk; nonfat dry milk, dry whole milk, dried buttermilk, dried whey, and blends of dried milk products including dry ice cream mix; cheese and cheese foods; ice cream, ice milk and frozen desserts including mixes for freezing; sterile products in hermetically sealed metal or glass containers;

(2) Represented by the nonfat milk solids added to a fluid milk product which is in excess of the weight of an equivalent volume of the fluid milk product prior to such addition;

(3) Disposed of in bulk in the form of a fluid milk product to any commercial food processing establishment where food products are prepared only for consumption off the premises;

(4) Dumped or disposed of for animal feed;

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

(6) In shrinkage of the skim milk and butterfat, respectively, assigned pursuant to § 1061.42(a) but not in excess of:

(i) Two percent of producer milk described in § 1061.16(a) and producer milk diverted pursuant to $ 1061.17(b) by a pool plant operator;

(11) Plus 1.5 percent of milk received in bulk tank lots from other pool plants;

(iii) Plus 1.5 percent of producer milk described in § 1061.16(b) except that if the handler operating the pool plant files notice with the market administrator that he is purchasing such milk on the basis of farm weights, the applicable percentage shall be 2 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 use 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) Less 1.5 percent of producer milk diverted pursuant to § 1061.17(b) except that if the operator of the plant to which the milk is diverted accounts for such milk on the basis of farm weights, the applicable percentage shall be 2 percent;

(7) In shrinkage of skim milk and butterfat allocated pursuant to § 1061.42 (b); and

(8) In shrinkage of skim milk anu butterfat, respectively, resulting from milk for which the cooperative association is the handler pursuant to § 1061.13 (b) and (c) not being delivered to nonpool plants and pool plants, but not in excess of one-half percent of the quantity received by the cooperative association from producers as determined by farm weights exclusive of the quantity for which farm weights are used as the basis of receipt at the plant to which delivered. § 1061.42 Shrinkage.

The market administrator shall prorate shrinkage of skim milk and butterfat, respectively, in producer milk and in other source milk at each pool plant between the following:

(a) The net quantity of roducer milk and other fluid products specified in § 1061.41(b) (6); and

(b) Other source milk exclusive of that specified in § 1061.41(b) (6). $ 1061.43 Responsibility of handlers

dler shall have the burden of proving the classification of the skim milk and butterfat defined in § 1061.16(c).

(b) Milk received by a handler operating a pool plant from a cooperative association handler pursuant to § 1061.13 (c), shall be classified according to use or disposition at the receiving plant and the value thereof at class prices shall be included in the receiving handler's net pool obligation pursuant to $ 1061.70; and

(c) Any skim milk or butterfat shall be reclassified if verification by the market administrator discloses that the original classification was incorrect. § 1061.44 Transfers.

Skim milk or butterfat transferred in the form of a fluid milk product from a pool plant to another plant or diverted in such form to a nonpool plant shall be classified:

(a) At the utilization indicated by the operators of both plants, otherwise as Class I milk, if transferred from a pool plant to the pool plant of another handler, 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 $ 1061.46(a) (9) and the corresponding step of (b);

(2) If the transferor plant received during the month other source milk to be allocated pursuant to § 1061.46(a) (4) and the corresponding step of (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 § 1061.46(a) (8) or (9) and the corresponding steps of § 1061.46(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;

(b) As Class I milk, if transferred from a pool plant to a producer-handler;

(c) As Class I milk if transferred from a pool plant in packaged form to a nonpool plant that is not an other order. plant;

and reclassification of milk. (a) All skim milk and butterfat shall be classified as Class I unless the handler who first receives such skim milk and butterfat proves to the market administrator that such skim milk or butterfat should be classified otherwise, however as to milk delivered to a pool plant by a cooperative association handler pursuant to § 1061.13(c), said pool plant operator shall have the burden of proving the classification of such skim milk and butterfat defined in § 1061.16 (b) and the cooperative association han

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(d) As Class I milk if transferred or diverted in bulk to a nonpool plant that is not an other order plant, a producerhandler plant or an exempt governmental plant 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 han. dler claims classification in Class II in his report submitted pursuant to § 1061.30 or § 1061.31;

(2) The operator of such nonpool plant maintains books and records showing the utilization of all skim milk and butterfat received such plant which are made available if requested by the market administrator for the purpose of verification;

(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 products received 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 an other 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 subdivision (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; and

(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;

(e) As follows, if transferred or diverted 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 under the other order;

(2) If transferred or diverted in bulk form, classification shall be in the classes to which allocated under the other order (including allocation under the conditions set forth in subparagraph (3) of this paragraph);

(3) If both the transferor and transferee handlers so request in the reports of receipts and utilization filed with their respective market administrators, transfers or diversions 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, milk allocated to a class consisting primarily of fluid products shall be classified as Class I, and milk allocated to other classes shall be classified as Class II; and

(6) If the form in which any fluid milk product 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 g 1061.41; and

(f) As Class I milk, if transferred or diverted to an exempt governmental plant.

§ 1061.45 Computation of skim milk

and butterfat in each class. For each month the market administrator shall correct mathematical and other obvious errors in the reports submitted pursuant to $ $ 1061.30 and 1061.31 by each handler and compute the total pounds of skim milk and butterfat in each class for each handler as follows:

(a) The market administrator shall combine the receipts and utilization in each of the respective classes at all pool plants of a handler including diversions from such pool plants by the handler and shall allocate such combined utilization pursuant to § 1061.46 and shall compute the obligation of such handler pursuant to $ 1061.70 based on the combined utilization; and

(b) The market administrator shall allocate pursuant to § 1061.46 and compute the obligation pursuant to § 1061.70 of a cooperative association on producer milk pursuant to § 1061.16 (c) and (d) for which it is the handler pursuant to § 1061.13 (b) and (c) separately from the operations of any pool plant operated by such cooperative association. 8 1061.46 Allocation of skim milk and

butterfat classified. After making the computations pursuant to § 1061.45, 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 § 1061.41(b) (6);

(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 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) Except for the first month this order is effective, 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 be. low from the pounds of skim milk re

maining 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 for which Grade A certification is not established, or which are from unidentified sources;

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

(iv) Receipts of fluid milk products from an exempt governmental 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;

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

(6) 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 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; and

(ii) The pounds of skim milk in receipts of fluid milk products in bulk from an other order plant in excess of similar transfers to such plant, if Class II utilization was requested by the operator of such plant and the transferee handler;

(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 bulk fluid milk products (and for the first month this order is effective, in packaged fluid milk products) 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 to such quantities, the pounds of skim milk in receipts of fluid milk products from unregulated supply plants which were not subtracted pursuant to subparagraph (5) (i) of this paragraph;

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