KRS § 260.670 — KY Code / Title XXI / Chapter 260 / Section 260.670
260.670 Southern Dairy Compact. (Effective upon contingency)
Status: in_force

260.670 Southern Dairy Compact. (Effective upon contingency)

The Southern Dairy Compact is enacted into law and entered into with all other

jurisdictions legally joining therein in the form substantially as follows:

ARTICLE I

STATEMENT OF PURPOSE, FINDINGS, AND DECLARATION OF POLICY

Section 1. Statement of purpose, findings, and declaration of policy.

The purpose of this compact is to recognize the interstate character of the southern

dairy industry and the prerogative of the states under the United States Constitution to

form an interstate commission for the southern region. The mission of the commission is

to take such steps as are necessary to assure the continued viability of dairy farming in the

South, and to assure consumers of an adequate, local supply of pure and wholesome milk.

The participating states find and declare that the dairy industry is an essential

agricultural activity of the South. Dairy farms, and associated suppliers, marketers,

processors, and retailers, are an integral component of the region's economy. Their ability

to provide a stable, local supply of pure, wholesome milk is a matter of great importance

to the health and welfare of the region.

The participating states further find that dairy farms are essential, and they are an

integral part of the region's rural communities. The farms preserve land for agricultural

purposes and provide needed economic stimuli for rural communities.

By entering into this compact, the participating states affirm that their ability to

regulate the price that southern dairy farmers receive for their product is essential to the

public interest. Assurance of a fair and equitable price for dairy farmers ensures their

ability to provide milk to the market and the vitality of the southern dairy industry, with

all the associated benefits.

Recent dramatic price fluctuations, with a pronounced downward trend, threaten the

viability and stability of the southern dairy region. Historically, individual state regulatory

action had been an effective emergency remedy available to farmers confronting a

distressed market. The system of federal orders, implemented by the Agricultural

Marketing Agreement Act of 1937, establishes only minimum prices paid to producers

for raw milk, without preempting the power of states to regulate milk prices above the

minimum levels so established.

In today's regional dairy marketplace, cooperative, rather than individual, state

action is needed to more effectively address the market disarray. Under our constitutional

system, properly authorized states acting cooperatively may exercise more power to

regulate interstate commerce than they may assert individually without such authority.

For this reason, the participating states invoke their authority to act in common

agreement, with the consent of Congress, under the compact clause of the Constitution.

In establishing their constitutional regulatory authority over the region's fluid milk

market by this compact, the participating states declare their purpose that this compact

neither displace the system of federal orders nor encourage the merging of federal orders.

Specific provisions of the compact itself set forth this basic principle.

Designed as a flexible mechanism able to adjust to changes in a regulated

marketplace, the compact also contains a contingency provision should the system of

federal orders be discontinued. In that event, the interstate commission may regulate the

marketplace in lieu of the system of federal orders. This contingent authority does not

anticipate such a change, however, and should not be so construed. It is only provided

should developments in the market other than establishment of this compact result in

discontinuance of the system of federal orders.

ARTICLE II

DEFINITIONS AND RULES OF CONSTRUCTION

Section 2. Definitions.

For the purposes of this compact, and of any supplemental or concurring legislation

enacted pursuant thereto, except as may be otherwise required by the context:

(1) "Class I milk" means milk disposed of in fluid form or as a fluid milk product,

subject to further definition in accordance with the principles expressed in subsection (b)

of Section 3 of this compact.

(2) "Commission" means the Southern Dairy Compact Commission established by

this compact.

(3) "Commission marketing order" means regulations adopted by the commission

pursuant to Sections 9 and 10 of this compact in place of a terminated federal marketing

order or state dairy regulation. Such order may apply throughout the region or in any part

or parts thereof as defined in the regulations of the commission. Such order may establish

minimum prices for any or all classes of milk.

(4) "Compact" means this interstate compact.

(5) "Compact over-order price" means a minimum price required to be paid to

producers for Class I milk established by the commission in regulations adopted pursuant

to Sections 9 and 10 of this compact, which is above the price established in federal

marketing orders or by state farm price regulation in the regulated area. Such price may

apply throughout the region or in any part or parts thereof as defined in the regulations of

the commission.

(6) "Milk" means the lacteal secretion of cows and includes all skim, butterfat, or

other constituents obtained from separation or any other process. The term is used in its

broadest sense and may be further defined by the commission for regulatory purposes.

(7) "Partially regulated plant" means a milk plant not located in a regulated area but

having Class I distribution within such area. Commission regulations may exempt plants

having such distribution or receipts in amounts less than the limits defined therein.

(8) "Participating state" means a state which has become a party to this compact by

the enactment of concurring legislation.

(9) "Pool plant" means any milk plant located in a regulated area.

(10) "Region" means the territorial limits of the states which are parties to this

compact.

(11) "Regulated area" means any area within the region governed by and defined in

regulations establishing a compact over-order price or commission marketing order.

(12) "State dairy regulation" means any state regulation of dairy prices and

associated assessments, whether by statute, marketing order, or otherwise.

Section 3. Rules of construction.

(a) This compact shall not be construed to displace existing federal milk marketing

orders or state dairy regulation in the region but to supplement them. In the event some or

all federal orders in the region are discontinued, the compact shall be construed to provide

the commission the option to replace them with one or more commission marketing

orders pursuant to this compact.

(b) This compact shall be construed liberally in order to achieve the purposes and

intent enunciated in Section 1 of this compact. It is the intent of this compact to establish

a basic structure by which the commission may achieve those purposes through the

application, adaptation, and development of the regulatory techniques historically

associated with milk marketing and to afford the commission broad flexibility to devise

regulatory mechanisms to achieve the purposes of this compact. In accordance with this

intent, the technical terms which are associated with market order regulation and which

have acquired commonly understood general meanings are not defined in this compact,

but the commission may further define the terms used in this compact and develop

additional concepts and define additional terms as it may find appropriate to achieve its

purposes.

ARTICLE III

COMMISSION ESTABLISHED

Section 4. Commission established.

There is hereby created a commission to administer the compact, composed of

delegations from each state in the region. The commission shall be known as the

Southern Dairy Compact Commission. A delegation shall include not less than three (3)

nor more than five (5) persons. Each delegation shall include at least one (1) dairy farmer

who is engaged in the production of milk at the time of appointment or reappointment,

and one (1) consumer representative. Delegation members shall be residents and voters

of, and subject to such confirmation process as is provided for in, the appointing state.

Delegation members shall serve no more than three (3) consecutive terms with no single

term of more than four (4) years, and be subject to removal for cause. In all other

respects, delegation members shall serve in accordance with the laws of the state

represented. The compensation, if any, of the members of a state delegation shall be

determined and paid by each state, but their expenses shall be paid by the commission.

Section 5. Voting requirements.

All actions taken by the commission, except for the establishment or termination of

an over-order price or commission marketing order, and the adoption, amendment, or

rescission of the commission's bylaws, shall be by majority vote of the delegations

present. Each state delegation shall be entitled to one (1) vote in the conduct of the

commission's affairs. Establishment or termination of an over-order price or commission

marketing order shall require at least a two-thirds (2/3) vote of the delegations present.

The establishment of a regulated area that covers all or part of a participating state shall

require also the affirmative vote of that state's delegation. A majority of the delegations

from the participating states shall constitute a quorum for the conduct of the commission's

business.

Section 6. Administration and management.

(a) The commission shall elect annually from among the members of the

participating state delegations a chairperson, a vice-chairperson, and a treasurer. The

commission shall appoint an executive director and fix his or her duties and

compensation. The executive director shall serve at the pleasure of the commission, and,

together with the treasurer, shall be bonded in an amount determined by the commission.

The commission may establish through its bylaws an executive committee composed of

one (1) member elected by each delegation.

(b) The commission shall adopt bylaws for the conduct of its business by a two-

thirds (2/3) vote and shall have the power by the same vote to amend and rescind these

bylaws. The commission shall publish its bylaws in convenient form with the appropriate

agency or officer in each of the participating states. The bylaws shall provide for

appropriate notice to the delegations of all commission meetings and hearings and of the

business to be transacted at such meetings or hearings. Notice also shall be given to other

agencies or officers of participating states as provided by the laws of those states.

(c) The commission shall file an annual report with the Secretary of Agriculture of

the United States, and with each of the participating states by submitting copies to the

Governor, both houses of the legislature, and the head of the state department having

responsibilities for agriculture.

(d) In addition to the powers and duties elsewhere prescribed in this compact, the

commission may engage in all of the following:

(1) Sue and be sued in any state or federal court.

(2) Have a seal and alter the same at pleasure.

(3) Acquire, hold, and dispose of real and personal property by gift, purchase, lease,

license, or other similar manner, for its corporate purposes.

(4) Borrow money and issue notes, provide for the rights of the holders thereof, and

pledge the revenue of the commission as security therefor, subject to the provisions of

Section 18 of this compact.

(5) Appoint such officers, agents, and employees as it may deem necessary, and

prescribe their powers, duties, and qualifications.

(6) Create and abolish such offices, employments, and positions as it deems

necessary for the purposes of the compact and provide for the removal, term, tenure,

compensation, fringe benefits, pension, and retirement rights of its officers and

employees.

(7) Retain personal services on a contract basis.

Section 7. Rule-making power.

In addition to the power to promulgate a compact over-order price or commission

marketing orders as provided by this compact, the commission is further empowered to

make and enforce such additional rules and regulations as it deems necessary to

implement any provisions of this compact, or to effectuate in any other respect the

purposes of this compact.

ARTICLE IV

POWERS OF THE COMMISSION

Section 8. Powers to promote regulatory uniformity, simplicity, and interstate

cooperation.

The commission may:

(1) Investigate or provide for investigations or research projects designed to review

the existing laws and regulations of the participating states, to consider their

administration and costs, and to measure their impact on the production and marketing of

milk and their effects on the shipment of milk and milk products within the region.

(2) Study and recommend to the participating states joint or cooperative programs

for the administration of the dairy marketing laws and regulations and prepare estimates

of cost savings and benefits of such programs.

(3) Encourage the harmonious relationships between the various elements in the

industry for the solution of their material problems. Conduct symposia or conferences

designed to improve industry relations, or a better understanding of problems.

(4) Prepare and release periodic reports on activities and results of the

commission's efforts to the participating states.

(5) Review the existing marketing system for milk and milk products and

recommend changes in the existing structure for assembly and distribution of milk which

may assist, improve, or promote more efficient assembly and distribution of milk.

(6) Investigate costs and charges for producing, hauling, handling, processing,

distributing, selling, and for all other services, performed with respect to milk.

(7) Examine current economic forces affecting producers, probable trends in

production and consumption, the level of dairy farm prices in relation to costs, the

financial conditions of dairy farmers, and the need for an emergency order to relieve

critical conditions on dairy farms.

Section 9. Equitable farm prices.

(a) The powers granted in this section and Section 10 of this compact shall apply

only to the establishment of a compact over-order price, so long as federal milk marketing

orders remain in effect in the region. In the event that any or all such orders are

terminated, this article authorizes the commission to establish one (1) or more

commission marketing orders, as provided in this compact, in the region or parts thereof

as defined in the order.

(b) A compact over-order price established pursuant to this section shall apply only

to Class I milk. Such compact over-order price shall not exceed one dollar and fifty cents

($1.50) per gallon at Atlanta, Georgia; however, this compact over-order price shall be

adjusted upward or downward at other locations in the region to reflect differences in

minimum federal order prices. Beginning in 1990, and using that year as a base, the

foregoing one dollar and fifty cents ($1.50) per gallon maximum shall be adjusted

annually by the rate of change in the Consumer Price Index as reported by the Bureau of

Labor Statistics of the United States Department of Labor. For purposes of the pooling

and equalization of an over-order price, the value of milk used in other use classifications

shall be calculated at the appropriate class price established pursuant to the applicable

federal order or state dairy regulation and the value of unregulated milk shall be

calculated in relation to the nearest prevailing class price in accordance with and subject

to such adjustments as the commission may prescribe in regulations.

(c) A commission marketing order shall apply to all classes and uses of milk.

(d) The commission may establish a compact over-order price for milk to be paid

by pool plants and partially regulated plants. The commission also may establish a

compact over-order price to be paid by all other handlers receiving milk from producers

located in a regulated area. This price shall be established either as a compact over-order

price or by one or more commission marketing orders. Whenever such a price has been

established by either type of regulation, the legal obligation to pay such price shall be

determined solely by the terms and purpose of the regulation without regard to the situs of

the transfer of title, possession, or any other factors not related to the purposes of the

regulation and this compact. Producer-handlers as defined in an applicable federal market

order shall not be subject to a compact over-order price. The commission shall provide

for similar treatment of producer-handlers under commission marketing orders.

(e) In determining the price, the commission shall consider the balance between

production and consumption of milk and milk products in the regulated area, the costs of

production including, but not limited to, the price of feed, the cost of labor including the

reasonable value of the producer's own labor and management, machinery expense and

interest expense, the prevailing price for milk outside the regulated area, the purchasing

power of the public, and the price necessary to yield a reasonable return to the producer

and distributor.

(f) When establishing a compact over-order price, the commission shall take such

other action as is necessary and feasible to help ensure that the over-order price does not

cause or compensate producers so as to generate local production of milk in excess of

those quantities necessary to assure consumers of an adequate supply for fluid purposes.

(g) The commission shall whenever possible enter into agreements with state or

federal agencies for exchange of information or services for the purpose of reducing

regulatory burden and cost of administering the compact. The commission may reimburse

other agencies for the reasonable cost of providing these services.

Section 10. Optional provisions for pricing order.

Regulations establishing a compact over-order price or a commission marketing order

may contain, but shall not be limited to, any of the following:

(1) Provisions classifying milk in accordance with the form in which or purpose for

which it is used, or creating a flat pricing program.

(2) With respect to a commission marketing order only, provisions establishing or

providing a method for establishing separate minimum prices for each use classification

prescribed by the commission, or a single minimum price for milk purchased from

producers or associations of producers.

(3) With respect to an over-order minimum price, provisions establishing or

providing a method for establishing such minimum price for Class I milk.

(4) Provisions for establishing either an over-order price or a commission

marketing order may make use of any reasonable method for establishing such price or

prices including flat pricing and formula pricing. Provision may also be made for location

adjustments, zone differentials, and competitive credits with respect to regulated handlers

who market outside the regulated area.

(5) Provisions for the payment to all producers and associations of producers

delivering milk to all handlers of uniform prices for all milk so delivered, irrespective of

the uses made of such milk by the individual handler to whom it is delivered, or for the

payment of producers delivering milk to the same handler of uniform prices for all milk

delivered by them.

a. With respect to regulations establishing a compact over-order price, the

commission may establish one (1) equalization pool within the regulated area for the sole

purpose of equalizing returns to producers throughout the regulated area.

b. With respect to any commission marketing order, as defined in Section 2,

subdivision (3), of this compact, which replaces one (1) or more terminated federal orders

or state dairy regulation, the marketing area of now separate state or federal orders shall

not be merged without the affirmative consent of each state, voting through its delegation,

which is partly or wholly included within any such new marketing area.

(6) Provisions requiring persons who bring Class I milk into the regulated area to

make compensatory payments with respect to all such milk to the extent necessary to

equalize the cost of milk purchased by handlers subject to a compact over-order price or

commission marketing order. No such provisions shall discriminate against milk

producers outside the regulated area. The provisions for compensatory payments may

require payment of the difference between the Class I price required to be paid for such

milk in the state of production by a federal milk marketing order or state dairy regulation

and the Class I price established by the compact over-order price or commission

marketing order.

(7) Provisions specially governing the pricing and pooling of milk handled by

partially regulated plants.

(8) Provisions requiring that the account of any person regulated under the compact

over-order price shall be adjusted for any payments made to or received by such persons

with respect to a producer settlement fund of any federal or state milk marketing order or

other state dairy regulation within the regulated area.

(9) Provision requiring the payment by handlers of an assessment to cover the costs

of the administration and enforcement of such order pursuant to subsection (a) of Section

18 of Article VII of this compact.

(10) Provisions for reimbursement to participants of the Women, Infants and

Children Special Supplemental Food Program of the United States Child Nutrition Act of

1966.

(11) Other provisions and requirements as the commission may find are necessary

or appropriate to effectuate the purposes of this compact and to provide for the payment

of fair and equitable minimum prices to producers.

ARTICLE V

RULE-MAKING PROCEDURE

Section 11. Rule-making procedure.

Before promulgation of any regulations establishing a compact over-order price or

commission marketing order, including any provision with respect to milk supply under

subsection (f) of Section 9 of this compact, or amendment thereof, as provided in Article

IV of this compact, the commission shall conduct an informal rule-making proceeding to

provide interested persons with an opportunity to present data and views. Such rule-

making proceeding shall be governed by Section 4 of the Federal Administrative

Procedure Act, as amended (5 U.S.C. sec. 553). In addition, the commission shall, to the

extent practicable, publish notice of rule-making proceedings in the official register of

each participating state. Before the initial adoption of regulations establishing a compact

over-order price or a commission marketing order and thereafter before any amendment

with regard to prices or assessments, the commission shall hold a public hearing. The

commission may commence a rule-making proceeding on its own initiative or may in its

sole discretion act upon the petition of any person including individual milk producers,

any organization of milk producers or handlers, general farm organizations, consumer or

public interest groups, and local, state or federal officials.

Section 12. Findings and referendum.

(a) In addition to the concise general statement of basis and purpose required by

section 4(b) of the Federal Administrative Procedure Act, as amended (5 U.S.C. sec. 553

(c)), the commission shall make findings of fact with respect to:

(1) Whether the public interest will be served by the establishment of minimum

milk prices to dairy farmers under Article IV of this compact.

(2) What level of prices will assure that producers receive a price sufficient to

cover their costs of production and will elicit an adequate supply of milk for the

inhabitants of the regulated area and for manufacturing purposes.

(3) Whether the major provisions of the order, other than those fixing minimum

milk prices, are in the public interest and are reasonably designed to achieve the purposes

of the order.

(4) Whether the terms of the proposed regional order or amendment are approved

by producers as provided in Section 13 of this compact.

Section 13. Producer referendum.

(a) For the purpose of ascertaining whether the issuance or amendment of

regulations establishing a compact over-order price or a commission marketing order,

including any provision with respect to milk supply under subsection (f) of Section 9 of

this compact, is approved by producers, the commission shall conduct a referendum

among producers. The referendum shall be held in a timely manner, as determined by

regulation of the commission. The terms and conditions of the proposed order or

amendment shall be described by the commission in the ballot used in the conduct of the

referendum, but the nature, content, or extent of such description shall not be a basis for

attacking the legality of the order or any action relating thereto.

(b) An order or amendment shall be deemed approved by producers if the

commission determines that it is approved by at least two-thirds (2/3) of the voting

producers who, during a representative period determined by the commission, have been

engaged in the production of milk the price of which would be regulated under the

proposed order or amendment.

(c) For purposes of any referendum, the commission shall consider the approval or

disapproval by any cooperative association of producers, qualified under the provisions of

the Act of Congress of February 18, 1922, as amended, known as the Capper-Volstead

Act, bona fide engaged in marketing milk, or in rendering services for or advancing the

interests of producers of such commodity, as the approval or disapproval of the producers

who are members or stockholders in, or under contract with, such cooperative association

of producers, except as provided in subdivision (1) of this subsection and subject to the

provisions of subdivisions (2) through (5) of this subsection.

(1) No cooperative that has been formed to act as a common marketing agency for

both cooperatives and individual producers shall be qualified to block vote for either.

(2) Any cooperative that is qualified to block vote shall, before submitting its

approval or disapproval in any referendum, give prior written notice to each of its

members as to whether and how it intends to cast its vote. The notice shall be given in a

timely manner as established, and in the form prescribed, by the commission.

(3) Any producer may obtain a ballot from the commission in order to register

approval or disapproval of the proposed order.

(4) A producer who is a member of a cooperative which has provided notice of its

intent to approve or not to approve a proposed order, and who obtains a ballot and with

such ballot expresses his or her approval or disapproval of the proposed order, shall notify

the commission as to the name of the cooperative of which he or she is a member, and the

commission shall remove such producer's name from the list certified by such cooperative

with its corporate vote.

(5) In order to ensure that all milk producers are informed regarding a proposed

order, the commission shall notify all milk producers that an order is being considered

and that each producer may register his or her approval or disapproval with the

commission either directly or through his or her cooperative.

Section 14. Termination of over-order price or marketing order.

(a) The commission shall terminate any regulations establishing an over-order price

or commission marketing order issued under this article whenever it finds that such order

or price obstructs or does not tend to effectuate the declared policy of this compact.

(b) The commission shall terminate any regulations establishing an over-order price

or a commission marketing order issued under this article whenever it finds that such

termination is favored by a majority of the producers who, during a representative period

determined by the commission, have been engaged in the production of milk, the price of

which is regulated by such order; but such termination shall be effective only if

announced on or before such date as may be specified in such marketing agreement or

order.

(c) The termination or suspension of any order or provision thereof, shall not be

considered an order within the meaning of this article and shall require no hearing, but

shall comply with the requirements for informal rule making prescribed by Section 4 of

the Federal Administrative Procedure Act, as amended (5 U.S.C. sec. 553).

ARTICLE VI

ENFORCEMENT

Section 15. Records, reports, access to premises.

(a) The commission may by rule and regulation prescribe recordkeeping and

reporting requirements for all regulated persons. For purposes of the administration and

enforcement of this compact, the commission may examine the books and records of any

regulated person relating to his or her milk business and for that purpose, the

commission's properly designated officers, employees, or agents shall have full access

during normal business hours to the premises and records of all regulated persons.

(b) Information furnished to or acquired by the commission officers, employees, or

its agents pursuant to this section shall be confidential and not subject to disclosure

except to the extent that the commission deems disclosure to be necessary in any

administrative or judicial proceeding involving the administration or enforcement of this

compact, an over-order price, a compact marketing order, or other regulations of the

commission. The commission may adopt rules further defining the confidentiality of

information pursuant to this section. Nothing in this section shall be deemed to prohibit

(i) the issuance of general statements based upon the reports of a number of handlers,

which do not identify the information furnished by any person, or (ii) the publication by

direction of the commission of the name of any person violating any regulation of the

commission, together with a statement of the particular provisions violated by such

person.

(c) No officer, employee, or agent of the commission shall intentionally disclose

information, by inference or otherwise, that is made confidential pursuant to this section.

Any person violating the provisions of this section shall, upon conviction, be subject to a

fine of not more than one thousand dollars ($1,000) or to imprisonment for not more than

one (1) year, or both, and shall be removed from office. The commission shall refer any

allegation of a violation of this section to the appropriate state enforcement authority or

United States Attorney.

Section 16. Subpoena, hearings, and judicial review.

(a) The commission is hereby authorized and empowered by its members and its

properly designated officers to administer oaths and issue subpoenas throughout all

signatory states to compel the attendance of witnesses and the giving of testimony and the

production of other evidence.

(b) Any handler subject to an order may file a written petition with the commission

stating that any order or any provision of any such order or any obligation imposed in

connection therewith is not in accordance with law and praying for a modification thereof

or to be exempted therefrom. The handler shall thereupon be given an opportunity for a

hearing upon such petition, in accordance with regulations made by the commission.

After such hearing, the commission shall make a ruling upon the prayer of such petition

which shall be final, if in accordance with law.

(c) The district courts of the United States in any district in which the handler is an

inhabitant, or has his or her principal place of business, are hereby vested with

jurisdiction to review such ruling, provided a complaint for that purpose is filed within

thirty (30) days from the date of the entry of the ruling. Service of process in these

proceedings may be had upon the commission by delivering to it a copy of the complaint.

If the court determines that the ruling is not in accordance with law, it shall remand such

proceedings to the commission with directions either (i) to make such ruling as the court

shall determine to be in accordance with law, or (ii) to take such further proceedings as,

in its opinion, the law requires. The pendency of proceedings instituted pursuant to this

subdivision shall not impede, hinder, or delay the commission from obtaining relief

pursuant to Section 17 of this compact. Any proceedings brought pursuant to Section 17

of this compact, except where brought by way of counterclaim in proceedings instituted

pursuant to this section, shall abate whenever a final decree has been rendered in

proceedings between the same parties, and covering the same subject matter, instituted

pursuant to this section.

Section 17. Enforcement with respect to handlers.

(a) Any violation by a handler of the provisions of regulation establishing an over-

order price or a commission marketing order, or other regulations adopted pursuant to this

compact shall:

(1) Constitute a violation of the laws of each of the signatory states. Such violation

shall render the violator subject to a civil penalty in an amount as may be prescribed by

the laws of each of the participating states, recoverable in any state or federal court of

competent jurisdiction. Each day such violation continues shall constitute a separate

violation.

(2) Constitute grounds for the revocation of license or permit to engage in the milk

business under the applicable laws of the participating states.

(b) With respect to handlers, the commission shall enforce the provisions of this

compact, regulations establishing an over-order price, a commission marketing order, or

other regulations adopted hereunder by:

(1) Commencing an action for legal or equitable relief brought in the name of the

commission in any state or federal court of competent jurisdiction; or

(2) Referral to the state agency for enforcement by judicial or administrative

remedy with the agreement of the appropriate state agency of a participating state.

(c) With respect to handlers, the commission may bring an action for injunction to

enforce the provisions of this compact or the order or regulations adopted thereunder

without being compelled to allege or prove that an adequate remedy of law does not exist.

ARTICLE VII

FINANCE

Section 18. Finance of start-up and regular costs.

(a) To provide for its start-up costs, the commission may borrow money pursuant to

its general power under Section 6, subdivision (d), paragraph 4 of this compact. In order

to finance the cost of administration and enforcement of this compact, including payback

of start-up costs, the commission may collect an assessment from each handler who

purchases milk from producers within the region. If imposed, this assessment shall be

collected on a monthly basis for up to one (1) year from the date the commission

convenes, in an amount not to exceed $0.015 per hundred weight of milk purchased from

producers during the period of the assessment. The initial assessment may apply to the

projected purchases of handlers for the two (2) month period following the date the

commission convenes. In addition, if regulations establishing an over-order price or a

compact marketing order are adopted, they may include an assessment for the specific

purpose of their administration. These regulations shall provide for establishment of a

reserve for the commission's ongoing operating expenses.

(b) The commission shall not pledge the credit of any participating state or of the

United States. Notes issued by the commission and all other financial obligations incurred

by it shall be its sole responsibility, and no participating state or the United States shall be

liable therefor.

Section 19. Audit and accounts.

(a) The commission shall keep accurate accounts of all receipts and disbursements,

which shall be subject to the audit and accounting procedures established under its rules.

In addition, all receipts and disbursements of funds handled by the commission shall be

audited yearly by a qualified public accountant, and the report of the audit shall be

included in and become part of the annual report of the commission.

(b) The accounts of the commission shall be open at any reasonable time for

inspection by duly constituted officers of the participating states and by any persons

authorized by the commission.

(c) Nothing contained in this article shall be construed to prevent commission

compliance with laws relating to audit or inspection of accounts by or on behalf of any

participating state or of the United States.

ARTICLE VIII

ENTRY INTO FORCE; ADDITIONAL MEMBERS; AND WITHDRAWAL

Section 20. Entry into force; additional members.

The compact shall enter into force effective when enacted into law by any three (3)

states of the group of states composed of Alabama, Arkansas, Florida, Georgia,

Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina,

Tennessee, Texas, Virginia, and West Virginia, and when the consent of Congress has

been obtained.

Section 21. Withdrawal from compact.

Any participating state may withdraw from this compact by enacting a statute

repealing the same, but no such withdrawal shall take effect until one (1) year after notice

in writing of the withdrawal is given to the commission and the governors of all the

participating states. No withdrawal shall affect any liability already incurred by or

chargeable to a participating state prior to the time of such withdrawal.

Section 22. Severability.

If any part or provision of this compact is adjudged invalid by any court, such

judgment shall be confined in its operation to the part or provision directly involved in

the controversy in which such judgment shall have been rendered and shall not affect or

impair the validity of the remainder of this compact. In the event Congress consents to

this compact subject to conditions, said conditions shall not impair the validity of this

compact when said conditions are accepted by three (3) or more compacting states. A

compact state may accept the conditions of Congress by implementation of this compact.