SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Dairy Pricing Deregulation Act''.

SEC. 2. REFORM OF FEDERAL MILK MARKETING ORDERS.

    (a) Terms and Conditions of Milk and Milk Products Orders.--Section 
8c of the Agricultural Adjustment Act (7 U.S.C. 608c), reenacted with 
amendments by the Agricultural Marketing Agreement Act of 1937, is 
amended--
            (1) in subsection (5)--
                    (A) by striking paragraphs (C), (D), (H), (I), (J), 
                and (K);
                    (B) by amending paragraph (A) to read as follows:
                    ``(A) Fixing a differential which all handlers of 
                milk used for fluid purposes shall pay with respect to 
                such milk, and the time when payments shall be made, 
                for milk purchased from producers or associations of 
                producers. Such differential shall be uniform as to all 
                such handlers, subject only to adjustment for the 
                locations at which delivery of such milk is made to 
                such handlers.'';
                    (C) by amending paragraph (B) to read as follows:
                    ``(B) Providing for the payment to all producers 
                and associations of producers delivering milk to any 
                fluid milk handler regulated by the order, or to any 
                non-fluid milk handler which supplies milk to such 
                fluid milk handler in conformity with such requirements 
                as the Secretary may establish, a proportionate share, 
                based on volume of delivered milk, of all differentials 
                required to be paid under paragraph (A) of this 
                subsection (5), subject only to adjustment for the 
                locations at which delivery of such milk is made.'';
                    (D) by amending paragraph (F) to read as follows:
                    ``(F) Nothing contained in this subsection is 
                intended or shall be construed to prevent a cooperative 
                marketing association qualified under the provisions of 
                the Act of Congress of February 18, 1922, known as the 
                `Capper-Volstead Act' (7 U.S.C. 291 et seq.), engaged 
                in making collective sales or marketing of milk or its 
                products for the producers thereof, from blending the 
                net proceeds of all of its sales of milk or its 
                products in all markets, and making distribution 
                thereof to its producers in accordance with the 
                contract between the association and its producers.'';
                    (E) by amending paragraph (L) to read as follows:
                    ``(L) Providing that adjustments in payments by 
                handlers under paragraph (A) need not be the same as 
                adjustments to producers under paragraph (B).'';
                    (F) by amending paragraph (M) to read as follows:
                    ``(M)(i) Application of requirements.--
                Notwithstanding any other provision of this section, a 
                milk handler described in clause (ii) shall be subject 
                to all of the fluid milk differential requirements of a 
                Federal milk marketing order issued pursuant to this 
                section applicable to the county in which the plant of 
                the handler is located, if the handler has packaged 
                fluid milk product route dispositions, or sales of 
                packaged fluid milk products to other plants, in a 
                marketing area located in a State that requires 
                handlers to pay minimum prices for raw milk purchases.
                    ``(ii) Covered milk handlers.--Except as provided 
                in clause (iv), clause (i) applies to a handler of 
                Class I milk products (including a producer-handler or 
                producer operating as a handler) that--
                    ``(I) operates a plant that is located within the 
                boundaries of a Federal order milk marketing area (as 
                those boundaries are in effect as of April 11, 2006);
                    ``(II) has packaged fluid milk product route 
                dispositions, or sales of packaged fluid milk products 
                to other plants, in a milk marketing area located in a 
                State that requires handlers to pay fluid milk 
                differentials for raw milk purchases; and
                    ``(III) is not otherwise obligated by a Federal 
                milk marketing order, or a regulated milk pricing plan 
                operated by a State, to pay minimum class prices or 
                fluid milk differentials for the raw milk that is used 
                for such dispositions or sales.
                    ``(iii) Obligation to pay fluid milk 
                differentials.--For purposes of clause (ii)(III), the 
                Secretary may not consider a handler of Class I milk 
                products to be obligated by a Federal milk marketing 
                order to pay fluid milk differentials for raw milk 
                unless the handler operates the plant as a fully 
                regulated fluid milk distributing plant under a Federal 
                milk marketing order.
                    ``(iv) Certain handlers exempted.--Clause (i) does 
                not apply to--
                    ``(I) a handler (otherwise described in clause 
                (ii)) that operates a nonpool plant (as defined in 
                section 1000.8(e) of title 7, Code of Federal 
                Regulations, as in effect on the date of the enactment 
                of this subparagraph);
                    ``(II) a producer-handler (otherwise described in 
                clause (ii)) for any month during which the producer-
                handler has route dispositions, and sales to other 
                plants, of packaged fluid milk products equaling less 
                than 3,000,000 pounds of milk; or
                    ``(III) a handler (otherwise described in clause 
                (ii)) for any month during which--
                    ``(aa) less than 25 percent of the total quantity 
                of fluid milk products physically received at the plant 
                of the handler (excluding concentrated milk received 
                from another plant by agreement for other than Class I 
                use) is disposed of as route disposition or is 
                transferred in the form of packaged fluid milk products 
                to other plants; or
                    ``(bb) less than 25 percent in aggregate of the 
                route disposition or transfers are in a marketing area 
                or areas located in one or more States that require 
                handlers to pay minimum prices for raw milk 
                purchases.''; and
                    (G) by amending paragraph (N) to read as follows:
                    ``(N) Exemption for certain milk handlers.--
                Notwithstanding any other provision of this section, no 
                handler with distribution of Class I milk products in 
                the marketing area described in Order No. 131 shall be 
                exempt during any month from any fluid milk 
                differential requirement established by the Secretary 
                under this subsection if the total distribution of 
                Class I products during the preceding month of any such 
                handler's own farm production exceeds 3,000,000 
                pounds.''; and
            (2) by amending subsection (18) to read as follows:
            ``(18) Fluid milk differentials.--The Secretary of 
        Agriculture, in prescribing any term in any marketing agreement 
        or order, or amendment thereto, relating to milk or its 
        products, if such term is to fix the differential to be paid to 
        producers or associations of producers, shall fix such 
        differential as follows. Such differentials shall during the 
        first year after the effective date of the Dairy Pricing 
        Deregulation Act be equal to the differentials for milk used 
        for fluid purposes as they existed under federal milk marketing 
        orders on January 1, 2011, subject to all location adjustments 
        as they existed under federal milk marketing orders on such 
        date. Such differentials shall in each successive year be 
        reduced by an amount equal to 20 percent of the differentials 
        that existed during the first year after the effective date of 
        such Act, and shall be discontinued in the fifth year after the 
        effective date of such Act.''.
    (b) Conforming Amendment.--Section 10(b)(2)(i) of the Agricultural 
Adjustment Act (7 U.S.C. 610(b)(2)(i)), reenacted with amendments by 
the Agricultural Marketing Agreement Act of 1937, is amended by 
striking ``each handler subject thereto'' and inserting ``each fluid 
milk handler subject thereto and each non-fluid milk handler which 
supplies milk to such fluid milk handler''.
    (c) Notice and Comment.--The Secretary of Agriculture shall use the 
notice and comment procedures provided in section 553 of title 5, 
United States Code, to implement the requirements of the amendments 
made by subsection (a) of this section.
    (d) Surveys.--
            (1) In general.--The Secretary of Agriculture shall survey 
        and publish on a regular basis data regarding the payments made 
        by all handlers of milk used for any purpose for milk purchased 
        from producers or associations of producers.
            (2) Bases for publication.--The Secretary shall publish 
        such data on a national weighted-average basis and on a 
        regional basis with respect to as many multi-state regions as 
        the Secretary determines to be of practical use.
            (3) Mandatory participation.--Participation in such surveys 
        by handlers shall be mandatory.

SEC. 3. EFFECTIVE DATE.

    The amendments made by this Act shall be effective on the first day 
of the first month beginning one year after the date of the enactment 
of this Act.
Dairy Pricing Deregulation Act - Amends the Agricultural Adjustment Act, reenacted with amendments by the Agricultural Marketing Agreement Act of 1937, to revise the terms of federal milk marketing orders.

Directs the Secretary of Agriculture (USDA) to: (1) survey and publish data regarding milk handler payments for milk purchased from producers or associations of producers, and (2) publish such data on a national weighted-average basis and on a regional basis with respect to as many multi-state regions as the Secretary determines appropriate.
To amend the Agricultural Adjustment Act to deregulate the Federal milk marketing order program, to publish competitive milk price survey data, and for other purposes.