To establish a counter-cyclical income support program for dairy producers.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Family Dairy Farmer Preservation Act 
of 2003''.

SEC. 2. NATIONAL COUNTER-CYCLICAL INCOME SUPPORT PROGRAM FOR DAIRY 
              PRODUCERS.

    (a) Income Support for Eligible Producers.--During the period 
beginning on the date of the enactment of this Act and ending on 
September 30, 2011, the Secretary shall carry out a program to support 
the income of eligible producers of milk.
    (b) Definitions.--In this section:
            (1) The term ``Board'' means a Regional Dairy Board 
        established under subsection (e).
            (2) The terms ``Class I milk'', ``Class II milk'', ``Class 
        III milk'', and ``Class IV milk'' mean milk (including 
        components of milk) classified as Class I, II, III, or IV milk, 
        respectively, under an order.
            (3) The term ``Class I mover'' means the greater of--
                    (A) the Advanced Class III milk price (as 
                determined under section 1000.50(q)(4)(i) of title 7, 
                Code of Federal Regulations (or a successor 
                regulation)); and
                    (B) the Advanced Class IV milk price (as determined 
                under section 1000.50(q)(4)(ii) of title 7, Code of 
                Federal Regulations (or a successor regulation)).
            (4) The term ``covered processor'' means a milk plant 
        located in a participating State or a milk plant that, while 
        not located in a participating State, distributes Class I milk 
        products in a participating State.
            (5) The term ``District'' means a Regional Dairy District 
        established under subsection (d).
            (6) The term ``eligible producer'' means an individual or 
        entity that directly or indirectly has an interest in the 
        production of milk in a participating State.
            (7) The term ``eligible production'' means the lesser of--
                    (A) the quantity of milk produced by an eligible 
                producer during a month; or
                    (B) 500,000 pounds per month.
            (8) The term ``marketing area'' means a marketing area 
        subject to an order.
            (9) The term ``order'' means an order issued under section 
        8c of the Agricultural Adjustment Act (7 U.S.C. 608c), 
        reenacted with amendments by the Agricultural Marketing 
        Agreement Act of 1937, or a comparable State order, as 
        determined by the Secretary.
            (10) The term ``participating State'' means a State covered 
        by subsection (c).
            (11) The term ``Secretary'' means the Secretary of 
        Agriculture.
            (12) The term ``State'' means each of the 48 contiguous 
        States of the United States.
            (13) The term ``Trust Fund'' means the National Dairy 
        Producers Trust Fund.
    (c) Participating States.--
            (1) Specified states.--The following States are 
        participating States for purposes of the program authorized by 
        this section: Alabama, Arkansas, Connecticut, Delaware, 
        Georgia, Kansas, Kentucky, Louisiana, Maine, Maryland, 
        Massachusetts, Mississippi, Missouri, New Hampshire, New 
        Jersey, New York, North Carolina, Oklahoma, Pennsylvania, Rhode 
        Island, South Carolina, Tennessee, Vermont, Virginia, and West 
        Virginia.
            (2) Other states.--The Governor of a State not specified in 
        paragraph (1) may designate the State as a participating State 
        by providing notice to the Secretary in the manner prescribed 
        by the Secretary.
            (3) Withdrawal.--To withdraw a State from participation in 
        the program, the Governor of the State (with the concurrence of 
        the legislature of the State) shall provide written notice to 
        the Secretary of the withdrawal of the State.
            (4) Effective date of withdrawal.--The withdrawal of a 
        State from participation in the program takes effect--
                    (A) in the case of written notice provided during 
                the 180-day period beginning on the date of the 
                enactment of this Act, on the date on which the notice 
                is provided to the Secretary under paragraph (3); and
                    (B) in the case of written notice provided after 
                such period, on the date that is one year after the 
                date on which the notice is provided to the Secretary 
                under paragraph (3).
            (5) Effect of participation on eligibility for other dairy 
        programs.--Eligible producers operating in a participating 
        State may not receive payments under section 1502 of the Farm 
        Security and Rural Investment Act of 2002 (7 U.S.C. 7982), 
        notwithstanding any contract entered into under subsection (b) 
        of such section before the date of the enactment of this Act. 
        Payments made under such a contract before such date shall not 
        be recovered, but no further payments shall be made under the 
        contract.
    (d) Regional Dairy Districts.--The Secretary shall establish five 
Regional Dairy Districts that are composed of the following 
participating States:
            (1) Northeast district.--A Northeast District consisting of 
        the States of Connecticut, Delaware, Maine, Maryland, 
        Massachusetts, New Hampshire, New Jersey, New York, Ohio, 
        Pennsylvania, Rhode Island, and Vermont.
            (2) Southern district.--A Southern District consisting of 
        the States of Alabama, Arkansas, Florida, Georgia, Kansas, 
        Kentucky, Louisiana, Mississippi, Missouri, Nebraska, New 
        Mexico, North Carolina, Oklahoma, South Carolina, Texas, 
        Tennessee, Virginia, and West Virginia.
            (3) Upper midwest district.--An Upper Midwest District 
        consisting of the States of Illinois, Indiana, Iowa, Michigan, 
        Minnesota, North Dakota, South Dakota, and Wisconsin.
            (4) Intermountain district.--An Intermountain District 
        consisting of the States of Arizona, Colorado, Idaho, Montana, 
        Nevada, Utah, and Wyoming.
            (5) Pacific district.--A Pacific District consisting of the 
        States of California, Oregon, and Washington.
    (e) Regional Dairy Boards.--
            (1) In general.--Each District shall be administered by a 
        Regional Dairy Board.
            (2) Composition.--The Board of a District shall be composed 
        of not less than two, and not more than three, members from 
        each participating State in the District, appointed by the 
        Secretary from nominations submitted by the Governor of the 
        State.
            (3) Nominations.--The Governor of a participating State 
        shall nominate at least five residents of the State to serve on 
        the Board, of which--
                    (A) at least one nominee shall be an eligible 
                producer at the time of nomination; and
                    (B) at least one nominee shall be a consumer 
                representative.
    (f) National Dairy Producers Trust Fund.--
            (1) Establishment and funding.--There is established in the 
        Treasury of the United States a trust fund to be known as the 
        National Dairy Producers Trust Fund, which shall consist of--
                    (A) the payments received by the Secretary and 
                deposited in the Trust Fund under subsection (g); and
                    (B) the payments made by the Secretary to the Trust 
                Fund under subsection (h).
            (2) Expenditures.--Amounts in the Trust Fund shall be 
        available to the Secretary, to the extent provided for in 
        advance in an appropriations Act, to carry out this section.
    (g) Payments From Covered Processors to Trust Fund.--
            (1) Payments required.--During any month for which the 
        Class I mover is less than $14.25, each covered processor that 
        purchases Class I milk during the month that will be sold in a 
        participating State shall pay to the Secretary for deposit in 
        the Trust Fund an amount obtained by multiplying--
                    (A) the difference between $14.25 per hundredweight 
                and the Class I mover; by
                    (B) the quantity of Class I milk purchased from 
                eligible producers during the month.
            (2) Compensatory payments.--The Secretary shall promulgate 
        regulations requiring persons who sell Class I milk into a 
        participating State to make compensatory payments into the 
        Trust Fund with respect to all such milk to the extent 
        necessary to equalize the cost of milk purchased by persons 
        subject to paragraph (1). In no case may a compensatory payment 
        be required on Class I milk on which a payment has been made 
        under paragraph (1).
    (h) Counter-Cyclical Payments From Secretary to Trust Fund.--If the 
average price for Class III milk during a month is less than $13.25 per 
hundredweight, the Secretary shall use the funds, facilities, and 
authorities of the Commodity Credit Corporation (in such amounts as may 
be necessary) to make a payment each month to the Trust Fund in an 
amount determined by multiplying--
            (1) 25 percent of the difference between $13.25 per 
        hundredweight and the weighted average of the price received by 
        producers in each participating State for Class III milk during 
        the month, as determined by the Secretary; by
            (2) the quantity of eligible production of Class II, Class 
        III, and Class IV milk produced in the various participating 
        States during the month, as determined by the Secretary.
    (i) Compensation From Trust Fund for Administrative and Increased 
Food Assistance Costs.--The Secretary shall use amounts in the Trust 
Fund to provide compensation--
            (1) to the Secretary for administrative costs incurred by 
        the Secretary and Boards in carrying out this section;
            (2) to the Secretary to cover the increased cost of any 
        milk and milk products provided under any food assistance 
        program administered by the Secretary that results from 
        carrying out this section; and
            (3) to each State for the increased costs incurred by the 
        State of any milk or milk products provided under the Special 
        Supplemental Nutrition Program for Women, Infants, and Children 
        established by section 17 of the Child Nutrition Act of 1966 
        (42 U.S.C. 1786) that results from carrying out this section
    (j) Payments From Trust Fund to Boards.--
            (1) In general.--The Secretary shall use any amounts in the 
        Trust Fund that remain after providing the compensation 
        required under subsection (i) to make monthly payments to 
        Boards.
            (2) Amount.--The amount of a payment made to a Board of a 
        District for a month under paragraph (1) shall bear the same 
        ratio to payments made to all Boards for the month as the 
        eligible production in the District during the month bears to 
        eligible production sold in all Districts.
    (k) Payments by Boards to Producers.--
            (1) In general.--With the approval of the Secretary, a 
        Board of a District shall use payments received under 
        subsection (j) to make payments to eligible producers for 
        eligible production of milk that is produced in a participating 
        State in the District.
            (2) Limitation.--An eligible producer may not receive 
        payments under this subsection on production in excess of 
        500,000 pounds of milk per month
            (3) Supply management.--In carrying out paragraph (1), a 
        Board of a District may--
                    (A) use a portion of the payments described in 
                paragraph (1) to provide bonuses or other incentives to 
                eligible producers for eligible production to manage 
                the supply of milk produced in the District; and
                    (B) request the Secretary to review a proposed 
                action under subparagraph (A).
            (4) Reimbursement of commodity credit corporation.--
                    (A) In general.--If the Secretary determines that 
                the Commodity Credit Corporation has incurred 
                additional costs in a fiscal year to carry out section 
                1501 of the Farm Security and Rural Investment Act of 
                2002 (7 U.S.C. 7981) as a result of overproduction of 
                milk in a District due solely to the operation of this 
                section in that District, the Secretary shall require 
                the Board of that District to reimburse the Commodity 
                Credit Corporation for the additional costs. The amount 
                of any reimbursement by a Board under this subparagraph 
                is limited to the amount that would otherwise be 
                available to the Board to make payments to producers 
                under subsection (j).
                    (B) Board assessment.--The Board of the District 
                may impose an assessment on producers within 
                participating States in the District to compensate the 
                Commodity Credit Corporation for the additional costs.

Summary: Family Dairy Farmer Preservation Act of 2003 - Directs the Secretary of Agriculture to carry out counter-cyclical income support programs for dairy producers in participating States through September 30, 2011. Limits individual or entity payments to 550,000 pounds of milk per month. Sets forth the following participating States: (1) Alabama, (2) Arkansas, (3) Connecticut, (4) Delaware, (5) Georgia, (6) Kansas, (7) Kentucky, (8) Louisiana, (9) Maine, (10) Maryland, (11) Massachusetts, (12) Mississippi, (13) Missouri, (14) New Hampshire, (15) New Jersey, (16) New York, (17) North Carolina, (18) Oklahoma, (19) Pennsylvania, (20) Rhode Island, (21) South Carolina, (22) Tennessee, (23) Vermont, (24) Virginia. And (25) West Virginia. Provides that the Governor of another State may designate the State as a participating State by notifying the Secretary. Makes participating producers ineligible for national dairy market loss payments. Directs the Secretary to establish five Regional Dairy Districts, each of which to be administered by a Regional Dairy Board. Establishes in the Treasury a National Dairy Producers Trust Fund, to be funded by specified processor payments and counter-cyclical payments from the Secretary. States that if the Secretary determines that the Commodity Credit Corporation has incurred additional milk price support costs as a result of overproduction in a District due solely to the operation of the counter-cyclical income support program, the Board of that District shall reimburse the Commodity Credit Corporation for such costs.