I

104TH CONGRESS

1ST SESSION H. R. 2597

To modify the price support program for milk; to establish a class IV account

applicable to the products of milk; to modify the dairy export incentive

program; and to consolidate and reform Federal milk marketing orders.

IN THE HOUSE OF REPRESENTATIVES

NOVEMBER 8, 1995

Mr. SOLOMON (for himself, Mr. LIVINGSTON, Mr. PAXON, Mr. BOEHLERT,

Mr. CHAMBLISS, Mr. CLINGER, Mr. DEAL of Georgia, Mr. ENGLISH of

Pennsylvania, Mr. EVERETT, Mr. HOUGHTON, Mr. MCHUGH, Mr. QUILLEN, Mr. QUINN, Mr. TAYLOR of North Carolina, and Mr. WALSH) introduced the following bill; which was referred to the Committee on Agriculture

A BILL

To modify the price support program for milk; to establish

a class IV account applicable to the products of milk;

to modify the dairy export incentive program; and to

consolidate and reform Federal milk marketing orders.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. PRICE SUPPORT PROGRAM FOR MILK.

4 (a) IN GENERAL.—Effective January 1, 1996, sec5 tion 204 of the Agricultural Act of 1949 (7 U.S.C. 1446e)

6 is amended to read as follows:
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1 ‘‘SEC. 204. MILK PRICE SUPPORT PROGRAM FOR CALENDAR

2 YEARS 1996 THROUGH 2002.

3 ‘‘(a) IN GENERAL.—During the period beginning

4 January 1, 1996, and ending December 31, 2002, the

5 price of milk produced in the 48 contiguous States shall

6 be supported as provided in this section.

7 ‘‘(b) SUPPORT PRICE.—

8 ‘‘(1) IN GENERAL.—During each of the cal9 endar years 1996 through 2002, the price of milk

10 used for cheese shall be supported at the rate pro11 vided in paragraph (2). Milk used for nonfat dry

12 milk or butter shall not be supported under this sec13 tion.

14 ‘‘(2) ANNUAL RATE.—For calendar year 1996,

15 the rate of price support for milk used for cheese

16 shall be equal to $10.00 per hundredweight. For

17 each of the calendar years 1997 through 2002, the

18 rate of price support for milk used for cheese shall

19 be reduced by 10 cents per hundredweight from the

20 rate in effect for the preceding calendar year.

21 ‘‘(c) PURCHASES.—

22 ‘‘(1) IN GENERAL.—The price of milk used for

23 cheese shall be supported through the purchase of

24 cheese. Such purchases shall be based on the sup25 port price in effect during the applicable calendar

26 year.
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1 ‘‘(2) SALES THROUGH DEIP.—Sales for export

2 under the dairy export incentive program established

3 under section 153 of the Food Security Act of 1985

4 (15 U.S.C. 713a–14) shall not be considered as

5 Commodity Credit Corporation purchases under sub6 section (d).

7 ‘‘(d) SUPPORT RATE ADJUSTMENTS.—Effective Jan8 uary 1 of each of the calendar years 1996 through 2002,

9 if the level of purchases of milk and the products of milk

10 by the Commodity Credit Corporation under this section

11 (less sales under section 407 for unrestricted use), as esti12 mated by the Secretary by November 20 of the preceding

13 calendar year, will exceed 1,500,000,000 pounds (milk

14 equivalent, total milk solids basis), the Secretary shall de15 crease by 25 cents per hundredweight, in addition to the

16 annual reduction under subsection (b)(2), the rate of price

17 support for milk used for cheese in effect for the calendar

18 year. The support rate adjustment provided under this

19 subsection shall be effective only for the calendar year ap20 plicable to the estimate of the Secretary. After the support

21 rate adjustment terminates, the support price shall be the

22 level provided under subsection (b)(2).

23 ‘‘(e) RESIDUAL AUTHORITY FOR REFUND AND COM24 PENSATORY BUDGET DEFICIT ASSESSMENT.—
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1 ‘‘(1) REFUNDS OF 1995 ASSESSMENTS.—The

2 Secretary shall provide for a refund of the entire re3 duction under subsection (h)(2) of this section, as in

4 effect on December 31, 1995, in the price of milk

5 received by a producer during calendar year 1995, if

6 the producer provides evidence that the producer did

7 not increase marketings in calendar year 1995 when

8 compared to calendar year 1994. A refund under

9 this subsection shall not be considered as any type

10 of price support or payment for purposes of sections

11 1211 and 1221 of the Food Security Act of 1985.

12 ‘‘(2) RESIDUAL ASSESSMENT IN CALENDAR

13 YEAR 1996.—

14 ‘‘(A) IN GENERAL.—During the period be15 ginning on May 1, 1996, and ending on Decem16 ber 31, 1996, the Secretary shall provide for a

17 reduction in the price received by producers for

18 all milk produced in the 48 contiguous States

19 and marketed by producers for commercial use.

20 ‘‘(B) AMOUNT.—The amount of the reduc21 tion under subparagraph (A) shall be an

22 amount determined by the Secretary sufficient

23 to equal, when applied to reductions made on

24 milk marketed, the amount that compensates

25 for refunds made under paragraph (1).
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1 ‘‘(3) ENFORCEMENT.—

2 ‘‘(A) COLLECTION.—Reductions in price

3 required under paragraph (2) shall be collected

4 and remitted to the Commodity Credit Corpora5 tion in the manner prescribed by the Secretary.

6 ‘‘(B) PENALTIES.—If any person fails to

7 collect or remit the reduction required by para8 graph (2) or fails to comply with such require9 ments for recordkeeping or as otherwise are re10 quired by the Secretary to carry out this sub11 section, the person shall be liable to the Sec12 retary for a civil penalty up to an amount de13 termined by multiplying—

14 ‘‘(i) the quantity of milk involved in

15 the violation expressed in hundredweights;

16 by

17 ‘‘(ii) the support rate for milk in ef18 fect under this section at the time of the

19 violation.

20 ‘‘(C) ENFORCEMENT IN COURTS.—The

21 Secretary may enforce this subsection in the

22 courts of the United States.

23 ‘‘(f) COMMODITY CREDIT CORPORATION.—The Sec24 retary shall carry out the program authorized by this sec25 tion through the Commodity Credit Corporation.
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1 ‘‘(g) PERIOD.—This section shall be effective only

2 during the period beginning January 1, 1996, and ending

3 December 31, 2002.’’.

4 (b) MILK MANUFACTURING MARKETING ADJUST5 MENT.—Section 102 of the Food, Agriculture, Conserva6 tion, and Trade Act of 1990 (7 U.S.C. 1446e–1) is re7 pealed.

8 SEC. 2. ESTABLISHMENT OF A CLASS IV ACCOUNT.

9 (a) ESTABLISHMENT OF CLASS IV ACCOUNT.—Not10 withstanding any other provision of law, effective January

11 1, 1996, the Secretary of Agriculture shall establish a spe12 cial milk marketing order to equalize returns on all milk

13 used in the 48 contiguous States of the United States to

14 produce Class IV final products (butter, nonfat dry milk,

15 and dry whole milk) among all milk marketed by produc16 ers for commercial use in the 48 contiguous States.

17 (b) CLASS IV PRICE AND DIFFERENTIAL; PRORA18 TION.—

19 (1) PRICE.—The Secretary shall determine a

20 milk equivalent value per hundredweight for Class

21 IV final products each month based on the average

22 wholesale market prices during the month for Class

23 IV final products. Such milk equivalent value at

24 3.67 percent milkfat shall be the per hundredweight
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1 Class IV price under the special Class IV account

2 established under subsection (a).

3 (2) DIFFERENTIAL.—The Administrator of the

4 special Class IV account shall announce, on the first

5 business day of each month, the per hundredweight

6 Class IV differential applicable under the order to

7 the preceding month. Such monthly Class IV dif8 ferential shall be the amount, if any, by which the

9 support rate for milk in effect under section 204 of

10 the Agricultural Act of 1949 exceeds the Class IV

11 price established pursuant to paragraph (1).

12 (3) PRORATION.—On or before the twentieth

13 day after the end of each month, the Administrator

14 of the special Class IV account shall—

15 (A) determine the amount of milk pro16 duced in the 48 contiguous States of the United

17 States and marketed for commercial use in

18 making Class IV final products during the pre19 ceding month;

20 (B) calculate the amount equal to the

21 number of hundredweights of milk used for

22 Class IV final products during the preceding

23 month (as determined under subparagraph (A))

24 multiplied by the Class IV differential for the

25 month established under paragraph (2), and
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1 add to that amount the cost of administering

2 the special Class IV account during the current

3 month; and

4 (C) prorate the amount established under

5 subparagraph (B) among the total amount, in

6 hundredweights, of milk produced in the 48

7 contiguous States and marketed for commercial

8 use during such preceding month.

9 (c) ACCOUNT OBLIGATIONS.—On or before the twen10 ty-fifth day after the end of each month—

11 (1) each person making payment to a producer

12 for milk produced in any of the 48 contiguous States

13 of the United States and marketed for commercial

14 use shall collect from each producer the amount de15 termined by multiplying the quantity of milk han16 dled for the account of such producer during the

17 preceding month by the Class IV differential prora18 tion established pursuant to subsection (b)(3)(C).

19 Such amount shall be remitted to the Administrator

20 of the special Class IV account; and

21 (2) any producer marketing milk of that pro22 ducer’s own production in the form of milk or dairy

23 products to consumers, either directly or through re24 tail or wholesale outlets, shall remit to the Adminis25 trator of the special Class IV account the amount
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1 determined by multiplying the quantity of such milk

2 marketed by such producer by the Class IV differen3 tial proration established under subsection (b)(3)(C).

4 (d) DISTRIBUTION OF ACCOUNT PROCEEDS.—On or

5 before the thirtieth day after the end of each month, the

6 Administrator of the special Class IV account shall pay

7 to each person that used skim milk and butterfat to

8 produce Class IV final products during the preceding

9 month a proportionate share of the total special Class IV

10 account proceeds for such month. The proportion of the

11 total proceeds payable to each person shall be the same

12 proportion that the skim milk and butterfat used by such

13 person to product Class IV final products during the pre14 ceding month is of the total skim milk and butterfat used

15 by all persons during the preceding month to product

16 Class IV final products.

17 (e) EFFECT ON BLEND PRICES.—Producer blend

18 prices under a milk marketing order shall be adjusted to

19 account for revenue distributions required under sub20 sections (c) and (d).

21 (f) ADMINISTRATION OF CLASS IV ACCOUNT.—The

22 Secretary of Agriculture shall appoint a person to serve

23 as Administrator of the Class IV account and shall dele24 gate to that person such powers as are needed to fulfill

25 the duties of Administrator.
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1 (g) ENFORCEMENT.—

2 (1) COLLECTION.—The amounts specified in

3 subsection (c) shall be collected and remitted to the

4 Administrator in the manner prescribed by the Sec5 retary of Agriculture.

6 (2) PENALTIES.—If any person fails to remit

7 the amounts required in subsection (c) or fails to

8 comply with such requirements for recordkeeping or

9 otherwise as are required by the Secretary to carry

10 out this section, the person shall be liable to the Sec11 retary for a civil penalty up to an amount deter12 mined by multiplying—

13 (A) the quantity of milk involved in the

14 violation; by

15 (B) the support rate for milk in effect

16 under section 204 of the Agricultural Act of

17 1949 for the applicable calendar year.

18 (3) ENFORCEMENT.—The Secretary may en19 force this section in the courts of the United States.

20 (h) ISSUANCE OF CLASS IV ACCOUNT.—The Sec21 retary shall issue regulations to effectuate the Class IV

22 account without regard to the notice and comment re23 quirements in section 553 of title 5, United States Code.

24 (i) DEFINITION OF MILK MARKETING ORDER.—For

25 purposes of this section, the term ‘‘milk marketing order’’
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1 means a milk marketing order issued pursuant to section

2 8c of the Agricultural Adjustment Act, as reenacted with

3 amendments by the Agricultural Marketing Agreement

4 Act of 1937 (7 U.S.C. 608c), and any comparable State

5 milk marketing order or system.

6 (j) CLASS IV DESIGNATION.—Effective January 1,

7 1996, section 8c(5)(A) of the Agricultural Adjustment

8 Act, as reenacted with amendments by the Agricultural

9 Marketing Agreement Act of 1937 (7 U.S.C. 608c(5)(A)),

10 is amended by adding at the end the following new sen11 tence: ‘‘Each marketing order issued pursuant to this sec12 tion for milk and its products shall include all skim milk

13 and butterfat used to produce butter, nonfat dry milk, and

14 dry whole milk as a Class IV classification.’’.

15 SEC. 3. DAIRY EXPORT INCENTIVE PROGRAM.

16 (a) IN GENERAL.—Section 153 of the Food Security

17 Act of 1985 (15 U.S.C. 713a–14) is amended—

18 (1) in subsection (a), by—

19 (A) striking ‘‘2001’’ and inserting ‘‘2002’’;

20 and

21 (B) striking ‘‘an export incentive program’’

22 and inserting ‘‘export incentive programs (the

23 export bid program and the price equalization

24 program)’’;

25 (2) in subsection (b), by—
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1 (A) inserting ‘‘exporter bid’’ before ‘‘pro2 gram’’; and

3 (B) inserting ‘‘of Agriculture’’ after ‘‘Sec4 retary’’ the first time it appears in the sub5 section;

6 (3) in subsection (c), by inserting ‘‘exporter

7 bid’’ before ‘‘program’’ the first time it appears in

8 the subsection;

9 (4) in subsection (d), by inserting ‘‘exporter

10 bid’’ before ‘‘program’’ the first time it appears in

11 the subsection;

12 (5) in subsection (e), by inserting ‘‘exporter

13 bid’’ before ‘‘program’’; and

14 (6) by adding at the end the following new sub15 section:

16 ‘‘(f)(1) The price equalization program established

17 under this section shall provide for the Corporation to

18 make payments to the Administrator of the Class IV ac19 count established under section 1202 of the Agricultural

20 Reconciliation Act of 1995, at the request of the Adminis21 trator, as provided in this subsection. The Secretary shall

22 have the right to accept or reject any per-unit amount re23 quested by the Administrator under such criteria as the

24 Secretary deems appropriate.
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1 ‘‘(2) Under the price equalization program, the Ad2 ministrator may request, on a quarterly basis, price

3 equalization payments on the milk equivalent, total milk

4 solids basis, of amounts of solids not fat and butterfat ex5 ported from the United States during the preceding quar6 ter. The rate of payment per unit of milk equivalent ex7 ported shall be an amount equal to the difference between

8 the support rate for milk in effect under section 204 of

9 the Agricultural Act of 1949 for the applicable quarter

10 and the average Class IV price during such quarter, as

11 determined under criteria established by the Secretary.

12 ‘‘(3) The Corporation may not make any payments

13 under the price equalization program during the 12-month

14 period beginning on July 1 of each year that will be incon15 sistent with the obligations of the United States under any

16 trade agreement to which it is a party. For purposes of

17 this paragraph, any unit of milk equivalent on which a

18 payment is made under the export bid program authorized

19 by this section shall only be counted one time to determine

20 consistency with any quantitative trade obligation of the

21 United States.

22 ‘‘(4) The price equalization program shall be operated

23 under such rules and regulations issued by the Secretary

24 as the Secretary deems necessary to ensure that—
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1 ‘‘(A) first priority in funds and tonnage alloca2 tions available for the operations of the programs

3 under this section is given to the export bid pro4 gram; and

5 ‘‘(B) sufficient documentation is provided of the

6 export of the amounts of milk equivalent on which

7 payments are made.’’.

8 (b) EFFECTIVE DATE.—The amendments made by

9 subsection (a) shall become effective January 1, 1996.

10 SEC. 4. CONSOLIDATION AND REFORM OF FEDERAL MILK

11 MARKETING ORDERS.

12 (a) HEARING BY THE SECRETARY AND FOLLOW-UP

13 ACTION.—As soon as practicable after the enactment of

14 this Act, the Secretary of Agriculture shall invite proposals

15 to consolidate and reform Federal milk marketing orders

16 issued under section 8c of the Agricultural Adjustment

17 Act, reenacted with amendments by the Agricultural Mar18 keting Agreement Act of 1937 (7 U.S.C. 608c), and con19 duct one or more hearings to consider such proposals. Any

20 such hearing also shall consider how all milk, including

21 manufacturing grade milk, shall be regulated under either

22 a Federal or State order (with manufacturing grade pro23 ducers receiving pool proceeds from Class III and Class

24 IV sales only).
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1 (b) EXPEDITED PROCESS.—The hearing provided for

2 in subsection (a) shall be conducted under administrative

3 hearing procedures, except that the Secretary shall have

4 90 days after the public hearing to determine, based on

5 the hearing record, whether the consolidation of the orders

6 will tend to accomplish the purposes of the Agricultural

7 Adjustment Act, reenacted with amendments by the Agri8 cultural Marketing Agreement Act of 1937, and shall an9 nounce the determination through publication in the Fed10 eral Register by the end of such 90-day period. Such con11 solidation of orders provided for under the Secretary’s de12 termination shall be implemented within 2 years after the

13 date of the enactment of this Act.

14 (c) SENSE OF CONGRESS REGARDING CONSOLIDA15 TION OF FEDERAL ORDERS.—It is the sense of Congress

16 that Federal milk marketing orders in operation under the

17 Agricultural Adjustment Act, reenacted with amendments

18 by the Agricultural Marketing Agreement Act of 1937

19 should be consolidated to between 8 and 14 orders.

Æ