To amend the Agricultural Adjustment Act to terminate Federal milk marketing orders and to replace such orders with a program to verify receipts of milk.

SECTION 1. TERMINATION OF MILK MARKETING ORDERS.

    (a) Termination.--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 by striking paragraphs (5) and (18) 
relating to milk and its products.
    (b) Prohibition on Subsequent Orders Regarding Milk.--Paragraph (2) 
of such section is amended--
            (1) by striking ``Milk, fruits'' and inserting ``Fruits''; 
        and
            (2) by inserting ``milk,'' after ``honey,'' in subparagraph 
        (B).
    (c) Conforming Amendments.--(1) Section 2(3) of such Act (7 U.S.C. 
602(3) is amended by striking ``, other than milk and its products,''.
    (2) Section 8c of such Act (7 U.S.C. 608c) is amended--
            (A) in paragraph (6), by striking ``, other than milk and 
        its products,'';
            (B) in paragraph (7)(B), by striking ``(except for milk and 
        cream to be sold for consumption in fluid form)'';
            (C) in paragraph (11)(B), by striking ``Except in the case 
        of milk and its products, orders'' and inserting ``Orders'';
            (D) in paragraph (13)(A), by striking ``, except to a 
        retailer in his capacity as a retailer of milk and its 
        products''; and
            (E) in paragraph (17), by striking the second proviso, 
        which relates to milk orders.
    (3) Section 8d(2) of such Act (7 U.S.C. 608d(2)) is amended by 
striking the second sentence, which relates to information from milk 
handlers.
    (4) Section 10(b)(2) of such Act (7 U.S.C. 610(b)) is amended--
            (A) by striking clause (i);
            (B) by redesignating clauses (ii) and (iii) as clauses (i) 
        and (ii), respectively; and
            (C) in clause (i) (as so redesignated), by striking ``other 
        commodity'' in the first sentence and inserting ``commodity''.
    (5) Section 11 of such Act (7 U.S.C. 611) is amended by striking 
``and milk, and its products,''.
    (6) Section 715 of the Agriculture, Rural Development, Food and 
Drug Administration, and Related Agencies Appropriations Act, 1994 
(Public Law 103-111; 107 Stat. 1079; 7 U.S.C. 608d note), is amended by 
striking the third proviso, which relates to information from milk 
handlers.
    (d) Effective Date.--The amendments made by this section shall take 
effect on ________________.

SEC. 2. PROGRAM TO VERIFY RECEIPTS OF MILK.

    (a) Program Required.--The Secretary of Agriculture shall establish 
a program through which the verification of receipts of all cow's milk 
marketed in the 48 contiguous States and the auditing of marketing 
agreements with respect to receipts of such milk may be accomplished.
    (b) Market Services.--The program shall provide a means by which 
(1) market statistics and information are collected and provided to 
producers, handlers, and consumers, (2) the weighing, sampling, and 
testing of milk purchased from producers is accomplished and verified, 
(3) authorized deductions from payments to producers, including 
assessments for research and promotion programs, are collected, (4) 
assurance of proper payment by handlers for milk purchased is achieved, 
and (5) the reports, records, and facilities of handlers are reviewed 
and inspected to assure their accuracy. However, this subsection shall 
not apply to producers for whom such market services are being rendered 
by a cooperative marketing association qualified under the provisions 
of the Act of February 18, 1922 (7 U.S.C. 291-292; commonly known as 
the Co-operative Marketing Associations Act).
    (c) Reporting Requirements.--The program shall provide for the 
filing of reports by handlers of milk and milk products, and the 
publication of statistics by the Secretary, with respect to receipts of 
milk, prices paid for milk, and the purposes for which milk was used by 
handlers.
    (d) Administrative Assessment.--The program shall provide for an 
assessment on handlers, based on relative volume of receipts of milk, 
for expenses related to the administration of the program, and for a 
deduction from producer payments by handlers, based on relative 
marketings of milk, for expenses related to market services provided 
under the program by the Secretary or a cooperative marketing 
association. The total revenue from such assessments and deductions 
shall not exceed the total cost of providing those services.
    (e) Marketing Agreements.--Producers or associations of producers, 
including cooperative marketing associations qualified under the 
provisions of the Act of February 18, 1922 (7 U.S.C. 291-292; commonly 
known as the Co-operative Marketing Associations Act), may negotiate 
and enter into marketing agreements or other private contracts with 
handlers for the marketing and receipt of milk. Upon the request of 
either or both of the parties, the Secretary may perform an audit of 
the agreement or contract to assure compliance with its terms, except 
that the Secretary shall be reimbursed for any costs associated with 
the audit in the manner provided in the agreement or contract. If there 
is no provision for the reimbursement of the Secretary in the agreement 
or contract, the party or parties requesting the audit shall provide 
such reimbursement.
    (f) Prohibition on Marketing Limitations.--No marketing agreement 
or Government order or regulation applicable to milk and its products 
in any marketing area or jurisdiction shall prohibit or in any manner 
limit the marketing in that area of any milk or product of milk 
produced in any production area in the United States.
    (g) Final Regulations.--Not later than ____________, the Secretary 
shall issue final regulations to establish the verification program 
required by this section. The regulations shall take effect on that 
date.

Summary: Amends the Agricultural Adjustment Act, as reenacted with amendments by the Agricultural Marketing Agreement Act of 1937, to terminate milk marketing order authority. Directs the Secretary of Agriculture to establish a program to verify the receipts of all cow's milk marketed in the 48 contiguous States, which shall include: (1) specified market services, (2) reporting requirements, (3) handler assessments, (4) producer marketing agreement authority, and (5) a prohibition on marketing limitations.