2006 Annual Report 4d.Progress report. This report serves to document research conducted under a specific cooperative agreement between ARS and Pennsylvania State University (University Park, PA). Additional details of research can be found in the report for the parent project 1265-31000-085-00D "Improving Genetic Prediction of Economic Merit of Dairy Animals"; research conducted under the agreement is related to objective 2 (improved accuracy of yield evaluations) of the parent project. Estimates of genetic parameters from sire and animal models were compared for herds with high and low heritabilities for milk, fat, and protein yields and somatic cell score. Both daughter-dam and daughter-sire regression techniques reflected heritability differences among herds accurately. Average daughter-dam heritability for milk yield was 0.41 for high-heritability herds and 0.29 for low heritability herds; corresponding daughter-sire estimates were 0.35 and 0.13. Sire model heritability estimates were more closely correlated to daughter-sire regression estimates, and animal model estimates were more closely correlated to daughter-dam estimates. Herds with high heritability for an individual trait had higher heritabilities for all traits.