Calendar No. 567

103D CONGRESS

2D SESSION S. 2069

[Report No. 103–333]

A BILL

To grant consent of Congress to the Northeast

Interstate Dairy Compact.

AUGUST 12 (legislative day, AUGUST 11), 1994

Reported with an amendment
II

Calendar No. 567

103D CONGRESS

2D SESSION S. 2069

[Report No. 103–333]

To grant consent of Congress to the Northeast Interstate Dairy Compact.

IN THE SENATE OF THE UNITED STATES

MAY 4 (legislative day, MAY 2), 1994

Mr. LEAHY (for himself, Mr. MITCHELL, Mr. KENNEDY, Mr. COHEN, Mr.

JEFFORDS, Mr. DODD, Mr. SMITH, Mr. PELL, Mr. GREGG, Mr. CHAFEE,

Mr. KERRY, and Mr. LIEBERMAN) introduced the following bill; which

was read twice and referred to the Committee on the Judiciary

AUGUST 12 (legislative day, AUGUST 11), 1994

Reported by Mr. BIDEN, with an amendment

[Omit the part struck through and insert the part printed in italic]

A BILL

To grant consent of Congress to the Northeast Interstate

Dairy Compact.

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

3 SECTION 1. CONGRESSIONAL CONSENT.

4 The Congress hereby consents to the Northeast Inter5 state Dairy Compact entered into among the States of
2

•S 2069 RS

1 Vermont, New Hampshire, Maine, Connecticut, Rhode Is2 land, and Massachusetts, which compact is substantially

3 as follows:

4 (a) CONSENT OF CONGRESS.—Congress hereby con5 sents to the Northeast Interstate Diary Compact entered

6 into among the States of Vermont, New Hampshire, Maine,

7 Connecticut, Rhode Island, and Massachusetts, subject to

8 the following conditions:

9 (1) LIMIT TO CLASS I MILK.—The Northeast

10 Interstate Dairy Compact shall regulate only Class I

11 milk. The last sentence of compact section 2(9) and

12 compact section 10(5), except for subsections 10(5)(A)

13 and 10(5)(B), is enforceable only upon subsequent ap14 proval by both Houses of Congress.

15 (2) ADDITIONAL STATES.—Delaware, New Jer16 sey, New York, Pennsylvania, Maryland, and Vir17 ginia are the only additional States that may joint

18 the compact, individually or otherwise, provided upon

19 entry they are contiguous to participating States and

20 only upon subsequent approval by both Houses of

21 Congress.

22 (3) OUT-OF-REGION PRODUCERS.—When a com23 pact over-order price is in effect, the Commission

24 shall pay producers who pool their Class I milk with

25 partially regulated plants an over-order price equal to
3

•S 2069 RS

1 the over-order price received by producers who pool

2 their Class I milk with a pool plant.

3 (4) REMOVING INCENTIVES FOR OVERPRODUC4 TION.—The compact commission shall develop and

5 implement a plan to ensure that the over-order price

6 does not create an incentive for producers to generate

7 additional supplies of milk.

8 (b) COMPACT.—The compact is substantially as fol9 lows:

10 ‘‘ARTICLE I. STATEMENT OF

11 PURPOSE, FINDINGS AND

12 DECLARATION OF POLICY

13 ‘‘§ 1. STATEMENT OF PURPOSE, FINDINGS AND DECLARA14 TION OF POLICY

15 ‘‘The purpose of this compact is to recognize by con16 stitutional prerequisite the interstate character of the

17 northeast dairy industry and to form an interstate com18 mission for the northeast region. The mission of the com19 mission is to take such steps as are necessary to assure

20 the continued viability of dairy farming in the northeast,

21 and to assure consumers of an adequate, local supply of

22 pure and wholesome milk.

23 ‘‘The participating states find and declare that the

24 dairy industry is the paramount agricultural activity of the

25 northeast. Dairy farms, and associated suppliers, market-
4

•S 2069 RS

1 ers, processors and retailers, are an integral component

2 of the region’s economy. Their ability to provide a stable,

3 local supply of pure, wholesome milk is a matter of great

4 importance to the health and welfare of the region.

5 ‘‘The participating states further find that dairy

6 farms are essential to the region’s rural communities and

7 character. The farms preserve open spaces, sculpt the

8 landscape and provide the land base for a diversity of rec9 reational pursuits. In defining the rural character of our

10 communities and landscape, dairy farms also provide a

11 major draw for our tourist industries.

12 ‘‘By entering into this compact, the participating

13 states affirm that their ability to regulate the price which

14 northeast dairy farmers receive for their product is essen15 tial to the public interest. Assurance of a fair and equi16 table price for dairy farmers ensures their ability to pro17 vide milk to the market and the vitality of the northeast

18 dairy industry, with all the associated benefits.

19 ‘‘Recent, dramatic price fluctuations, with a pro20 nounced downward trend, threaten the viability and stabil21 ity of the northeast dairy region. Historically, individual

22 state regulatory action has been an effective emergency

23 remedy available to farmers confronting a distressed mar24 ket. The federal order system, implemented by the Agri25 cultural Marketing Agreement Act of 1937, establishes
5

•S 2069 RS

1 only minimum prices for dairy products, without preempt2 ing the power of states to regulate milk prices above the

3 minimum levels so established. Based on this authority,

4 each state in the region has individually attempted to im5 plement at least one regulatory program in response to

6 the current dairy industry crisis.

7 ‘‘In today’s regional dairy marketplace, cooperative,

8 rather than individual state action may address more ef9 fectively the market disarray. Under our constitutional

10 system, properly authorized, states acting cooperatively

11 may exercise more power to regulate interstate commerce

12 than they may assert individually without such authority.

13 For this reason, the participating states invoke their au14 thority to act in common agreement, with the consent of

15 Congress, under the compact clause of the Constitution.

16 ‘‘In establishing their constitutional regulatory au17 thority over the region’s fluid milk market by this com18 pact, the participating states declare their purpose that

19 this compact neither displace the federal order system nor

20 encourage the merging of federal orders. Specific provi21 sions of the compact itself set forth this basic principle.

22 ‘‘Designed as a flexible mechanism able to adjust to

23 changes in a regulated marketplace, the compact also con24 tains a contingency provision should the federal order sys25 tem be discontinued. In that event, the interstate commis-
6

•S 2069 RS

1 sion is authorized to regulate the marketplace in replace2 ment of the order system. This contingent authority does

3 not anticipate such a change, however, and should not be

4 so construed. It is only provided should developments in

5 the market other than establishment of this compact re6 sult in discontinuance of the order system.

7 ‘‘ARTICLE II. DEFINITIONS AND

8 RULES OF CONSTRUCTION

9 ‘‘§ 2. DEFINITIONS

10 ‘‘For the purposes of this compact, and of any supple11 mental or concurring legislation enacted pursuant thereto,

12 except as may be otherwise required by the context:

13 ‘‘(1) ‘Commission’ means the commission estab14 lished by this compact.

15 ‘‘(2) ‘Compact’ means this interstate compact.

16 ‘‘(3) ‘Region’ means the territorial limits of the

17 states which are or become parties to this compact.

18 ‘‘(4) ‘Participating state’ means a state which

19 has become a party to this compact by the enact20 ment of concurring legislation.

21 ‘‘(5) ‘Regulated area’ means any area within

22 the region governed by and defined in regulations es23 tablishing a compact over-order price or commission

24 marketing order.
7

•S 2069 RS

1 ‘‘(6) ‘Pool plant’ means any milk plant located

2 in a regulated area.

3 ‘‘(7) ‘Partially regulated plant’ means a milk

4 plant not located in a regulated area but having

5 Class I distribution within such area, or receipts

6 from producers located in such area. Commission

7 regulations may exempt plants having such distribu8 tion or receipts in amounts less than the limits de9 fined therein.

10 ‘‘(8) ‘Compact over-order price’ means a mini11 mum price required to be paid to producers for

12 Class I milk established by the commission in regu13 lations adopted pursuant to sections nine and ten of

14 this compact, which is above the price established in

15 federal marketing orders or by state farm price reg16 ulation in the regulated area. Such price may apply

17 throughout the region or in any part or parts there18 of as defined in the regulations of the commission.

19 ‘‘(9) ‘Commission marketing order’ means regu20 lations adopted by the commission pursuant to sec21 tions nine and ten of this compact in place of a ter22 minated federal marketing order or state dairy regu23 lation. Such order may apply throughout the region

24 or in any part or parts thereof as defined in the reg-
8

•S 2069 RS

1 ulations of the commission. Such order may estab2 lish minimum prices for any or all classes of milk.

3 ‘‘(10) ‘Milk’ means the lacteal secretion of cows

4 and includes all skim, butterfat, or other constitu5 ents obtained from separation or any other process.

6 The term is used in its broadest sense and may be

7 further defined by the commission for regulatory

8 purposes.

9 ‘‘(11) ‘Class I milk’ means milk disposed of in

10 fluid form or as a fluid milk product, subject to fur11 ther definition in accordance with the principles ex12 pressed in subdivision (b) of section three.

13 ‘‘(12) ‘State dairy regulation’ means any state

14 regulation of dairy prices, and associated assess15 ments, whether by statute, marketing order or other16 wise.

17 ‘‘§ 3. RULES OF CONSTRUCTION

18 ‘‘(a) This compact shall not be construed to displace

19 existing federal milk marketing orders or state dairy regu20 lation in the region but to supplement them. In the event

21 some or all federal orders in the region are discontinued,

22 the compact shall be construed to provide the commission

23 the option to replace them with one or more commission

24 marketing orders pursuant to this compact.
9

•S 2069 RS

1 ‘‘(b) This compact shall be construed liberally in

2 order to achieve the purposes and intent enunciated in sec3 tion one. It is the intent of this compact to establish a

4 basic structure by which the commission may achieve

5 those purposes through the application, adaptation and

6 development of the regulatory techniques historically asso7 ciated with milk marketing and to afford the commission

8 broad flexibility to devise regulatory mechanisms to

9 achieve the purposes of this compact. In accordance with

10 this intent, the technical terms which are associated with

11 market order regulation and which have acquired com12 monly understood general meanings are not defined herein

13 but the commission may further define the terms used in

14 this compact and develop additional concepts and define

15 additional terms as it may find appropriate to achieve its

16 purposes.

17 ‘‘ARTICLE III. COMMISSION

18 ESTABLISHED

19 ‘‘§ 4. COMMISSION ESTABLISHED

20 ‘‘There is hereby created a commission to administer

21 the compact, composed of delegations from each state in

22 the region. A delegation shall include not less than three

23 nor more than five persons. Each delegation shall include

24 at least one dairy farmer who is engaged in the production

25 of milk at the time of appointment or reappointment, and
10

•S 2069 RS

1 one consumer representative. Delegation members shall be

2 residents and voters of, and subject to such confirmation

3 process as is provided for in, the appointing state. Delega4 tion members shall serve no more than three consecutive

5 terms with no single term of more than four years, and

6 be subject to removal for cause. In all other respects, dele7 gation members shall serve in accordance with the laws

8 of the state represented. The compensation, if any, of the

9 members of a state delegation shall be determined and

10 paid by each state, but their expenses shall be paid by

11 the commission. Each state delegation shall be entitled to

12 one vote in the conduct of the commission’s affairs.

13 ‘‘§ 5. VOTING REQUIREMENTS

14 ‘‘All actions taken by the commission, except for the

15 establishment or termination of an over-order price or

16 commission marketing order, and the adoption, amend17 ment or rescission of the commission’s bylaws, shall be by

18 majority vote of the delegations present. Establishment or

19 termination of an over-order price or commission market20 ing order shall require at least a two-thirds vote of the

21 delegations present. The establishment of a regulated area

22 which covers all or part of a participating state shall re23 quire also the affirmative vote of that state’s delegation.

24 A majority of the delegations from the participating states
11

•S 2069 RS

1 shall constitute a quorum for the conduct of the commis2 sion’s business.

3 ‘‘§ 6. ADMINISTRATION AND MANAGEMENT

4 ‘‘(a) The commission shall elect annually from among

5 the members of the participating state delegations a chair6 person, a vice-chairperson, and a treasurer. The commis7 sion shall appoint an executive director and fix his or her

8 duties and compensation. The executive director shall

9 serve at the pleasure of the commission, and, together with

10 the treasurer, shall be bonded in an amount determined

11 by the commission. The commission may establish through

12 its by-laws an executive committee composed of one mem13 ber elected by each delegation.

14 ‘‘(b) The commission shall adopt by-laws for the con15 duct of its business by a two-thirds vote, and shall have

16 the power by the same vote to amend and rescind these

17 by-laws. The commission shall publish its by-laws in con18 venient form with the appropriate agency or officer in each

19 of the participating states. The by-laws shall provide for

20 appropriate notice to the delegations of all commission

21 meetings and hearings and of the business to be trans22 acted at such meetings or hearings. Notice also shall be

23 given to other agencies or officers of participating states

24 as provided by the laws of those states.
12

•S 2069 RS

1 ‘‘(c) The commission shall file an annual report with

2 the Secretary of Agriculture of the United States, and

3 with each of the participating states by submitting copies

4 to the governor, both houses of the legislature, and the

5 head of the state department having responsibilities for

6 agriculture.

7 ‘‘(d) In addition to the powers and duties elsewhere

8 prescribed in this compact, the commission shall have the

9 power—

10 ‘‘(1) to sue and be sued in any state or federal

11 court;

12 ‘‘(2) to have a seal and alter the same at pleas13 ure;

14 ‘‘(3) to acquire, hold, and dispose of real and

15 personal property by gift, purchase, lease, license, or

16 other similar manner, for its corporate purposes;

17 ‘‘(4) to borrow money and to issue notes, to

18 provide for the rights of the holders thereof and to

19 pledge the revenue of the commission as security

20 therefor, subject to the provisions of section eighteen

21 of this compact;

22 ‘‘(5) to appoint such officers, agents, and em23 ployees as it may deem necessary, prescribe their

24 powers, duties, and qualifications; and
13

•S 2069 RS

1 ‘‘(6) to create and abolish such offices, employ2 ments, and positions as it deems necessary for the

3 purposes of the compact and provide for the re4 moval, term, tenure, compensation, fringe benefits,

5 pension, and retirement rights of its officers and em6 ployees. The commission may also retain personal

7 services on a contract basis.

8 ‘‘§ 7. RULEMAKING POWER

9 ‘‘In addition to the power to promulgate a compact

10 over-order price or commission marketing orders as pro11 vided by this compact, the commission is further empow12 ered to make and enforce such additional rules and regula13 tions as it deems necessary to implement any provisions

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

15 purposes of this compact.

16 ‘‘ARTICLE IV. POWERS OF THE

17 COMMISSION

18 ‘‘§ 8. POWERS TO PROMOTE REGULATORY UNIFORMITY,

19 SIMPLICITY, AND INTERSTATE COOPERATION

20 ‘‘The commission is hereby empowered to:

21 ‘‘(1) Investigate or provide for investigations or

22 research projects designed to review the existing

23 laws and regulations of the participating states, to

24 consider their administration and costs, to measure

25 their impact on the production and marketing of
14

•S 2069 RS

1 milk and their effects on the shipment of milk and

2 milk products within the region.

3 ‘‘(2) Prepare and transmit to the participating

4 states model dairy laws and regulations dealing with

5 the inspection of farms and plants, sanitary codes,

6 labels for dairy products and their imitations, stand7 ards for dairy products, license standards, producer

8 security programs, and fair trade laws.

9 ‘‘(3) Study and recommend to the participating

10 states joint or cooperative programs for the adminis11 tration of the dairy laws and regulations and to pre12 pare estimates of cost savings and benefits of such

13 programs.

14 ‘‘(4) Encourage the harmonious relationships

15 between the various elements in the industry for the

16 solution of their material problems. Conduct sympo17 siums or conferences designed to improve industry

18 relations, or a better understanding of problems.

19 ‘‘(5) Prepare and release periodic reports on ac20 tivities and results of the commission’s efforts to the

21 participating states.

22 ‘‘(6) Review the existing marketing system for

23 milk and milk products and recommend changes in

24 the existing structure for assembly and distribution
15

•S 2069 RS

1 of milk which may assist, improve, or promote more

2 efficient assembly and distribution of milk.

3 ‘‘(7) Investigate costs and charges for produc4 ing, hauling, handling, processing, distributing, sell5 ing and for all other services performed with respect

6 to milk.

7 ‘‘(8) Examine current economic forces affecting

8 producers, probable trends in production and con9 sumption, the level of dairy farm prices in relation

10 to costs, the financial conditions of dairy farmers,

11 and the need for an emergency order to relieve criti12 cal conditions on dairy farms.

13 ‘‘§ 9. EQUITABLE FARM PRICES

14 ‘‘(a) The powers granted in this section and section

15 ten shall apply only to the establishment of a compact

16 over-order price, so long as federal milk marketing orders

17 remain in effect in the region. In the event that any or

18 all such orders are terminated, this article shall authorize

19 the commission to establish one or more commission mar20 keting orders, as herein provided, in the region or parts

21 thereof as defined in the order.

22 ‘‘(b) A compact over-order price established pursuant

23 to this section shall apply only to Class I milk. Such over24 order price shall not exceed one dollar fifty cents per gal25 lon. Beginning in nineteen hundred ninety, and using that
16

•S 2069 RS

1 year as a base, the foregoing one dollar fifty cents per

2 gallon maximum shall be adjusted annually by the rate

3 of change in the Consumer Price Index as reported by the

4 Bureau of Labor Statistics of the United States Depart5 ment of Labor. For purposes of the pooling and equali6 zation of an over-order price, the value of milk used in

7 other use classifications shall be calculated at the appro8 priate class price established pursuant to the applicable

9 federal order or state dairy regulation and the value of

10 unregulated milk shall be calculated in relation to the

11 nearest prevailing class price in accordance with and sub12 ject to such adjustments as the commission may prescribe

13 in regulations.

14 ‘‘(c) A commission marketing order shall apply to all

15 classes and uses of milk.

16 ‘‘(d) The commission is hereby empowered to estab17 lish the minimum price for milk to be paid by pool plants,

18 partially regulated plants and all other handlers receiving

19 milk from producers located in a regulated area. This

20 price shall be established either as a compact over-order

21 price or by one or more commission marketing orders.

22 Whenever such a price has been established by either type

23 of regulation, the legal obligation to pay such price shall

24 be determined solely by the terms and purpose of the regu25 lation without regard to the situs of the transfer of title,
17

•S 2069 RS

1 possession or any other factors not related to the purposes

2 of the regulation and this compact. Producer-handlers as

3 defined in an applicable federal market order shall not be

4 subject to a compact over-order price. The commission

5 shall provide for similar treatment of producer-handlers

6 under commission marketing orders.

7 ‘‘(e) In determining the price, the commission shall

8 consider the balance between production and consumption

9 of milk and milk products in the regulated area, the costs

10 of production including, but not limited to the price of

11 feed, the cost of labor including the reasonable value of

12 the producer’s own labor and management, machinery ex13 pense, and interest expense, the prevailing price for milk

14 outside the regulated area, the purchasing power of the

15 public and the price necessary to yield a reasonable return

16 to the producer and distributor.

17 ‘‘(f) When establishing a compact over-order price,

18 the commission shall take such action as necessary and

19 feasible to ensure that the over-order price does not create

20 an incentive for producers to generate additional supplies

21 of milk.

22 ‘‘(g) The commission shall whenever possible enter

23 into agreements with state or federal agencies for ex24 change of information or services for the purpose of reduc25 ing regulatory burden and cost of administering the com-
18

•S 2069 RS

1 pact. The commission may reimburse other agencies for

2 the reasonable cost of providing these services.

3 ‘‘§ 10. OPTIONAL PROVISIONS FOR PRICING ORDER

4 ‘‘Regulations establishing a compact over-order price

5 or a commission marketing order may contain, but shall

6 not be limited to, any of the following:

7 ‘‘(1) Provisions classifying milk in accordance

8 with the form in which or purpose for which it is

9 used, or creating a flat pricing program.

10 ‘‘(2) With respect to a commission marketing

11 order only, provisions establishing or providing a

12 method for establishing separate minimum prices for

13 each use classification prescribed by the commission,

14 or a single minimum price for milk purchased from

15 producers or associations of producers.

16 ‘‘(3) With respect to an over-order minimum

17 price, provisions establishing or providing a method

18 for establishing such minimum price for Class I

19 milk.

20 ‘‘(4) Provisions for establishing either an over21 order price or a commission marketing order may

22 make use of any reasonable method for establishing

23 such price or prices including flat pricing and for24 mula pricing. Provision may also be made for loca25 tion adjustments, zone differentials and for competi-
19

•S 2069 RS

1 tive credits with respect to regulated handlers who

2 market outside the regulated area.

3 ‘‘(5) Provisions for the payment to all produc4 ers and associations of producers delivering milk to

5 all handlers of uniform prices for all milk so deliv6 ered, irrespective of the uses made of such milk by

7 the individual handler to whom it is delivered, or for

8 the payment of producers delivering milk to the

9 same handler of uniform prices for all milk delivered

10 by them.

11 ‘‘(A) With respect to regulations establish12 ing a compact over-order price, the commission

13 may establish one equalization pool within the

14 regulated area for the sole purpose of equalizing

15 returns to producers throughout the regulated

16 area.

17 ‘‘(B) With respect to any commission mar18 keting order, as defined in section two, subdivi19 sion nine, which replaces one or more termi20 nated federal orders or state dairy regulation,

21 the marketing area of now separate state or

22 federal orders shall not be merged without the

23 affirmative consent of each state, voting

24 through its delegation, which is partly or wholly

25 included within any such new marketing area.
20

•S 2069 RS

1 ‘‘(6) Provisions requiring persons who bring

2 Class I milk into the regulated area to make com3 pensatory payments with respect to all such milk to

4 the extent necessary to equalize the cost of milk pur5 chased by handlers subject to a compact over-order

6 price or commission marketing order. No such provi7 sions shall discriminate against milk producers out8 side the regulated area. The provisions for compen9 satory payments may require payment of the dif10 ference between the Class I price required to be paid

11 for such milk in the state of production by a federal

12 milk marketing order or state dairy regulation and

13 the Class I price established by the compact over14 order price or commission marketing order.

15 ‘‘(7) Provisions specially governing the pricing

16 and pooling of milk handled by partially regulated

17 plants.

18 ‘‘(8) Provisions requiring that the account of

19 any person regulated under a compact over-order

20 price shall be adjusted for any payments made to or

21 received by such persons with respect to a producer

22 settlement fund of any federal or state milk market23 ing order or other state dairy regulation within the

24 regulated area.
21

•S 2069 RS

1 ‘‘(9) Provisions requiring the payment by han2 dlers of an assessment to cover the costs of the ad3 ministration and enforcement of such order pursu4 ant to Article VII, Section 18(a).

5 ‘‘(10) Provisions for reimbursement to partici6 pants of the Women, Infants and Children Special

7 Supplemental Food Program of the United States

8 Child Nutrition Act of 1966.

9 ‘‘(11) Other provisions and requirements as the

10 commission may find are necessary or appropriate to

11 effectuate the purposes of this compact and to pro12 vide for the payment of fair and equitable minimum

13 prices to producers.

14 ‘‘ARTICLE V. RULEMAKING

15 PROCEDURE

16 ‘‘§ 11. RULEMAKING PROCEDURE

17 ‘‘Before promulgation of any regulations establishing

18 a compact over-order price or commission marketing

19 order, including any provision with respect to milk supply

20 under subsection 9(f), or amendment thereof, as provided

21 in Article IV, the commission shall conduct an informal

22 rulemaking proceeding to provide interested persons with

23 an opportunity to present data and views. Such rule24 making proceeding shall be governed by section four of

25 the Federal Administrative Procedure Act, as amended (5
22

•S 2069 RS

1 U.S.C. § 553). In addition, the commission shall, to the

2 extent practicable, publish notice of rulemaking proceed3 ings in the official register of each participating state. Be4 fore the initial adoption of regulations establishing a com5 pact over-order price or a commission marketing order and

6 thereafter before any amendment with regard to prices or

7 assessments, the commission shall hold a public hearing.

8 The commission may commence a rulemaking proceeding

9 on its own initiative or may in its sole discretion act upon

10 the petition of any person including individual milk pro11 ducers, any organization of milk producers or handlers,

12 general farm organizations, consumer or public interest

13 groups, and local, state or federal officials.

14 ‘‘§ 12. FINDINGS AND REFERENDUM

15 ‘‘(a) In addition to the concise general statement of

16 basis and purpose required by section 4(b) of the Federal

17 Administrative Procedure Act, as amended (5 U.S.C.

18 § 553(c)), the commission shall make findings of fact with

19 respect to:

20 ‘‘(1) Whether the public interest will be served

21 by the establishment of minimum milk prices to

22 dairy farmers under Article IV.

23 ‘‘(2) What level of prices will assure that pro24 ducers receive a price sufficient to cover their costs

25 of production and will elicit an adequate supply of
23

•S 2069 RS

1 milk for the inhabitants of the regulated area and

2 for manufacturing purposes.

3 ‘‘(3) Whether the major provisions of the order,

4 other than those fixing minimum milk prices, are in

5 the public interest and are reasonably designed to

6 achieve the purposes of the order.

7 ‘‘(4) Whether the terms of the proposed re8 gional order or amendment are approved by produc9 ers as provided in section thirteen.

10 ‘‘§ 13. PRODUCER REFERENDUM

11 ‘‘(a) For the purpose of ascertaining whether the is12 suance or amendment of regulations establishing a com13 pact over-order price or a commission marketing order,

14 including any provision with respect to milk supply under

15 subsection 9(f), is approved by producers, the commission

16 shall conduct a referendum among producers. The referen17 dum shall be held in a timely manner, as determined by

18 regulation of the commission. The terms and conditions

19 of the proposed order or amendment shall be described

20 by the commission in the ballot used in the conduct of

21 the referendum, but the nature, content, or extent of such

22 description shall not be a basis for attacking the legality

23 of the order or any action relating thereto.

24 ‘‘(b) An order or amendment shall be deemed ap25 proved by producers if the commission determines that it
24

•S 2069 RS

1 is approved by at least two-thirds of the voting producers

2 who, during a representative period determined by the

3 commission, have been engaged in the production of milk

4 the price of which would be regulated under the proposed

5 order or amendment.

6 ‘‘(c) For purposes of any referendum, the commission

7 shall consider the approval or disapproval by any coopera8 tive association of producers, qualified under the provi9 sions of the Act of Congress of February 18, 1922, as

10 amended, known as the Capper-Volstead Act, bona fide

11 engaged in marketing milk, or in rendering services for

12 or advancing the interests of producers of such commod13 ity, as the approval or disapproval of the producers who

14 are members or stockholders in, or under contract with,

15 such cooperative association of producers, except as pro16 vided in subdivision (1) hereof and subject to the provi17 sions of subdivisions (2) through (5) hereof.

18 ‘‘(1) No cooperative which has been formed to

19 act as a common marketing agency for both coopera20 tives and individual producers shall be qualified to

21 block vote for either.

22 ‘‘(2) Any cooperative which is qualified to block

23 vote shall, before submitting its approval or dis24 approval in any referendum, give prior written notice

25 to each of its members as to whether and how it in-
25

•S 2069 RS

1 tends to cast its vote. The notice shall be given in

2 a timely manner as established, and in the form pre3 scribed, by the commission.

4 ‘‘(3) Any producer may obtain a ballot from the

5 commission in order to register approval or dis6 approval of the proposed order.

7 ‘‘(4) A producer who is a member of a coopera8 tive which has provided notice of its intent to ap9 prove or not to approve a proposed order, and who

10 obtains a ballot and with such ballot expresses his

11 approval or disapproval of the proposed order, shall

12 notify the commission as to the name of the coopera13 tive of which he or she is a member, and the com14 mission shall remove such producer’s name from the

15 list certified by such cooperative with its corporate

16 vote.

17 ‘‘(5) In order to insure that all milk producers

18 are informed regarding a proposed order, the com19 mission shall notify all milk producers that an order

20 is being considered and that each producer may reg21 ister his approval or disapproval with the commis22 sion either directly or through his or her cooperative.
26

•S 2069 RS

1 ‘‘§ 14. TERMINATION OF OVER-ORDER PRICE OR MARKET2 ING ORDER

3 ‘‘(a) The commission shall terminate any regulations

4 establishing an over-order price or commission marketing

5 order issued under this article whenever it finds that such

6 order or price obstructs or does not tend to effectuate the

7 declared policy of this compact.

8 ‘‘(b) The commission shall terminate any regulations

9 establishing an over-order price or a commission market10 ing order issued under this article whenever it finds that

11 such termination is favored by a majority of the producers

12 who, during a representative period determined by the

13 commission, have been engaged in the production of milk

14 the price of which is regulated by such order; but such

15 termination shall be effective only if announced on or be16 fore such date as may be specified in such marketing

17 agreement or order.

18 ‘‘(c) The termination or suspension of any order or

19 provision thereof, shall not be considered an order within

20 the meaning of this article and shall require no hearing,

21 but shall comply with the requirements for informal rule22 making prescribed by section four of the Federal Adminis23 trative Procedure Act, as amended (5 U.S.C. § 553).
27

•S 2069 RS

1 ‘‘ARTICLE VI. ENFORCEMENT

2 ‘‘§ 15. RECORDS, REPORTS, ACCESS TO PREMISES

3 ‘‘(a) The commission may by rule and regulation pre4 scribe record keeping and reporting requirements for all

5 regulated persons. For purposes of the administration and

6 enforcement of this compact, the commission is authorized

7 to examine the books and records of any regulated person

8 relating to his or her milk business and for that purpose,

9 the commission’s properly designated officers, employees,

10 or agents shall have full access during normal business

11 hours to the premises and records of all regulated persons.

12 ‘‘(b) Information furnished to or acquired by the

13 commission officers, employees, or its agents pursuant to

14 this section shall be confidential and not subject to disclo15 sure except to the extent that the commission deems dis16 closure to be necessary in any administrative or judicial

17 proceeding involving the administration or enforcement of

18 this compact, an over-order price, a compact marketing

19 order, or other regulations of the commission. The com20 mission may promulgate regulations further defining the

21 confidentiality of information pursuant to this section.

22 Nothing in this section shall be deemed to prohibit (i) the

23 issuance of general statements based upon the reports of

24 a number of handlers, which do not identify the informa25 tion furnished by any person, or (ii) the publication by
28

•S 2069 RS

1 direction of the commission of the name of any person vio2 lating any regulation of the commission, together with a

3 statement of the particular provisions violated by such

4 person.

5 ‘‘(c) No officer, employee, or agent of the commission

6 shall intentionally disclose information, by inference or

7 otherwise, which is made confidential pursuant to this sec8 tion. Any person violating the provisions of this section

9 shall upon conviction be subject to a fine of not more than

10 $1,000 or to imprisonment for not more than one year,

11 or to both, and shall be removed from office. The commis12 sion shall refer any allegation of a violation of this section

13 to the appropriate state enforcement authority or United

14 States Attorney.

15 ‘‘§ 16. SUBPOENA, HEARINGS AND JUDICIAL REVIEW

16 ‘‘(a) The commission is hereby authorized and em17 powered by its members and its properly designated offi18 cers to administer oaths and issue subpoenas throughout

19 all signatory states to compel the attendance of witnesses

20 and the giving of testimony and the production of other

21 evidence.

22 ‘‘(b) Any handler subject to an order may file a writ23 ten petition with the commission stating that any such

24 order or any provision of any such order or any obligation

25 imposed in connection therewith is not in accordance with
29

•S 2069 RS

1 law and praying for a modification thereof or to be ex2 empted therefrom. He shall thereupon be given an oppor3 tunity for a hearing upon such petition, in accordance with

4 regulations made by the commission. After such hearing,

5 the commission shall make a ruling upon the prayer of

6 such petition which shall be final, if in accordance with

7 law.

8 ‘‘(c) The district courts of the United States in any

9 district in which such handler is an inhabitant, or has his

10 principal place of business, are hereby vested with jurisdic11 tion in equity to review such ruling, provided a bill in eq12 uity for that purpose is filed within thirty days from the

13 date of the entry of such ruling. Service of process in such

14 proceedings may be had upon the commission by deliver15 ing to it a copy of the bill of complaint. If the court deter16 mines that such ruling is not in accordance with law, it

17 shall remand such proceedings to the commission with di18 rections either (1) to make such ruling as the court shall

19 determine to be in accordance with law, or (2) to take

20 such further proceedings as, in its opinion, the law re21 quires. The pendency of proceedings instituted pursuant

22 to this subdivision shall not impede, hinder, or delay the

23 commission from obtaining relief pursuant to section sev24 enteen. Any proceedings brought pursuant to section sev25 enteen (except where brought by way of counterclaim in
30

•S 2069 RS

1 proceedings instituted pursuant to this section) shall abate

2 whenever a final decree has been rendered in proceedings

3 between the same parties, and covering the same subject

4 matter, instituted pursuant to this section.

5 ‘‘§ 17. ENFORCEMENT WITH RESPECT TO HANDLERS

6 ‘‘(a) Any violation by a handler of the provisions of

7 regulations establishing an over-order price or a commis8 sion marketing order, or other regulations adopted pursu9 ant to this compact shall:

10 ‘‘(1) Constitute a violation of the laws of each

11 of the signatory states. Such violation shall render

12 the violator subject to a civil penalty in an amount

13 as may be prescribed by the laws of each of the par14 ticipating states, recoverable in any state or federal

15 court of competent jurisdiction. Each day such viola16 tion continues shall constitute a separate violation.

17 ‘‘(2) Constitute grounds for the revocation of li18 cense or permit to engage in the milk business under

19 the applicable laws of the participating states.

20 ‘‘(b) With respect to handlers, the commission shall

21 enforce the provisions of this compact, regulations estab22 lishing an over-order price, a commission marketing order

23 or other regulations adopted hereunder by:

24 ‘‘(1) Commencing an action for legal or equi25 table relief brought in the name of the commission
31

•S 2069 RS

1 in any state or federal court of competent jurisdic2 tion; or

3 ‘‘(2) With the agreement of the appropriate

4 state agency of a participating state, by referral to

5 the state agency for enforcement by judicial or ad6 ministrative remedy.

7 ‘‘(c) With respect to handlers, the commission may

8 bring an action for injunction to enforce the provisions

9 of this compact or the order or regulations adopted there10 under without being compelled to allege or prove that an

11 adequate remedy of law does not exist.

12 ‘‘ARTICLE VII. FINANCE

13 ‘‘§ 18. FINANCE OF START-UP AND REGULAR COSTS

14 ‘‘(a) To provide for its start-up costs, the commission

15 may borrow money pursuant to its general power under

16 section six, subdivision (d), paragraph four. In order to

17 finance the costs of administration and enforcement of

18 this compact, including payback of start-up costs, the

19 commission is hereby empowered to collect an assessment

20 from each handler who purchases milk from producers

21 within the region. If imposed, this assessment shall be col22 lected on a monthly basis for up to one year from the date

23 the commission convenes, in an amount not to exceed one24 tenth of one percent of the applicable federal market order

25 blend price per hundredweight of milk purchased from
32

•S 2069 RS

1 producers during the period of the assessment. The initial

2 assessment may apply to the projected purchases of han3 dlers for the two-month period following the date the com4 mission convenes. In addition, if regulations establishing

5 an over-order price or a compact marketing order are

6 adopted, they may include an assessment for the specific

7 purpose of their administration. These regulations shall

8 provide for establishment of a reserve for the commission’s

9 ongoing operating expenses.

10 ‘‘(b) The commission shall not pledge the credit of

11 any participating state or of the United States. Notes is12 sued by the commission and all other financial obligations

13 incurred by it, shall be its sole responsibility and no par14 ticipating state or the United States shall be liable there15 for.

16 ‘‘§ 19. AUDIT AND ACCOUNTS

17 ‘‘(a) The commission shall keep accurate accounts of

18 all receipts and disbursements, which shall be subject to

19 the audit and accounting procedures established under its

20 rules. In addition, all receipts and disbursements of funds

21 handled by the commission shall be audited yearly by a

22 qualified public accountant and the report of the audit

23 shall be included in and become part of the annual report

24 of the commission.
33

•S 2069 RS

1 ‘‘(b) The accounts of the commission shall be open

2 at any reasonable time for inspection by duly constituted

3 officers of the participating states and by any persons au4 thorized by the commission.

5 ‘‘(c) Nothing contained in this article shall be con6 strued to prevent commission compliance with laws relat7 ing to audit or inspection of accounts by or on behalf of

8 any participating state or of the United States.

9 ‘‘ARTICLE VIII. ENTRY INTO

10 FORCE; ADDITIONAL MEM11 BERS AND WITHDRAWAL

12 ‘‘§ 20. ENTRY INTO FORCE; ADDITIONAL MEMBERS

13 ‘‘The compact shall enter into force effective when

14 enacted into law by any three states of the group of states

15 composed of Connecticut, Delaware, Maine, Maryland,

16 Massachusetts, New Hampshire, New Jersey, New York,

17 Pennsylvania, Rhode Island, Vermont, and Virginia, and

18 when the consent of Congress has been obtained. This

19 compact shall also be open to states which are contiguous

20 to any of the named states and open to states which are

21 contiguous to participating states.

22 ‘‘§ 21. WITHDRAWAL FROM COMPACT

23 ‘‘Any participating state may withdraw from this

24 compact by enacting a statute repealing the same, but no

25 such withdrawal shall take effect until one year after no-
34

•S 2069 RS

1 tice in writing of the withdrawal is given to the commis2 sion and the governors of all other participating states.

3 No withdrawal shall affect any liability already incurred

4 by or chargeable to a party state prior to the time of such

5 withdrawal.

6 ‘‘§ 22. SEVERABILITY

7 ‘‘If any part or provision of this compact is adjudged

8 invalid by any court, such judgment shall be confined in

9 its operation to the part or provision directly involved in

10 the controversy in which such judgment shall have been

11 rendered and shall not affect or impair the validity of the

12 remainder of this compact.

13 ‘‘Congress reserves the right to amend or rescind this

14 interstate compact at any time.’’.

15 SEC. 2. RESERVATION OF RIGHTS.

16 (a) IN GENERAL.—The right to alter, amend, or re17 peal this Act is expressly reserved.

18 (b) COMPENSATION REQUIREMENT.—When an over19 order price is in effect, the Commission established in this

20 compact shall compensate the Commodity Credit Corpora21 tion before the end of the fiscal year for the cost of any

22 increased Commodity Credit Corporation dairy purchases

23 which result from projected increased fluid milk produc24 tion for that fiscal year within the Compact region in ex25 cess of the national average rate of increase.
35

•S 2069 RS

S 2069 RS——2