I

106TH CONGRESS

1ST SESSION H. R. 1604

To reauthorize, and modify the conditions for, the consent of Congress to

the Northeast Interstate Dairy Compact and to grant the consent of

Congress to the Southern Dairy Compact.

IN THE HOUSE OF REPRESENTATIVES

APRIL 28, 1999

Mr. HUTCHINSON (for himself, Mr. ETHERIDGE, Mr. MCHUGH, Mr.

BALDACCI, Mr. SWEENEY, Mr. BLUNT, Mr. BOEHLERT, Mr. BURR of

North Carolina, Mr. BACHUS, Mr. CALLAHAN, Mr. EVERETT, Mr.

CRAMER, Mr. RILEY, Mr. BERRY, Mr. DICKEY, Mr. SNYDER, Ms.

DELAURO, Mr. GEJDENSON, Mrs. JOHNSON of Connecticut, Mr.

LARSON, Mr. MALONEY of Connecticut, Mr. CASTLE, Ms. BROWN of

Florida, Mr. BOYD, Mr. CANADY of Florida, Mr. FOLEY, Mrs. MEEK of

Florida, Mrs. THURMAN, Mr. BARR of Georgia, Mr. BISHOP, Mr.

CHAMBLISS, Mr. COLLINS, Mr. DEAL of Georgia, Mr. ISAKSON, Mr.

KINGSTON, Mr. LEWIS of Georgia, Ms. MCKINNEY, Mr. NORWOOD, Mr.

FLETCHER, Mr. LEWIS of Kentucky, Mr. LUCAS of Kentucky, Mr.

WHITFIELD, Mr. BAKER, Mr. COOKSEY, Mr. JEFFERSON, Mr. JOHN, Mr.

MCCRERY, Mr. TAUZIN, Mr. CAPUANO, Mr. MCGOVERN, Mr. NEAL of

Massachusetts, Mr. OLVER, Mr. BARTLETT of Maryland, Mr. EHRLICH,

Mr. GILCHREST, Mr. HOYER, Mrs. MORELLA, Mr. WYNN, Mr. ALLEN,

Ms. DANNER, Mrs. EMERSON, Mr. HULSHOF, Ms. MCCARTHY of Missouri, Mr. SKELTON, Mr. TALENT, Mr. PICKERING, Mr. SHOWS, Mr.

TAYLOR of Mississippi, Mr. THOMPSON of Mississippi, Mr. WICKER, Mr.

BALLENGER, Mrs. CLAYTON, Mr. COBLE, Mr. HAYES, Mr. JONES of

North Carolina, Mr. MCINTYRE, Mrs. MYRICK, Mr. PRICE of North Carolina, Mr. TAYLOR of North Carolina, Mr. WATT of North Carolina, Mr.

BASS, Mr. ANDREWS, Mr. FRANKS of New Jersey, Mr. HOLT, Mr.

LOBIONDO, Mrs. ROUKEMA, Mr. SAXTON, Mr. ACKERMAN, Mr. CROWLEY, Mr. ENGEL, Mr. FORBES, Mr. FOSSELLA, Mr. GILMAN, Mr. HINCHEY, Mr. HOUGHTON, Mrs. KELLY, Mr. KING, Mr. LAFALCE, Mr.

LAZIO, Mrs. LOWEY, Mr. MCNULTY, Mr. MEEKS of New York, Mr.

OWENS, Mr. QUINN, Mr. RANGEL, Mr. REYNOLDS, Ms. SLAUGHTER, Mr.

TOWNS, Mr. WALSH, Mr. LATOURETTE, Mr. COBURN, Mr. DOYLE, Mr.

ENGLISH, Mr. GOODLING, Mr. GREENWOOD, Mr. HOEFFEL, Mr.

HOLDEN, Mr. KANJORSKI, Mr. KLINK, Mr. MASCARA, Mr. PETERSON of

Pennsylvania, Mr. PITTS, Mr. SHERWOOD, Mr. SHUSTER, Mr. KENNEDY

of Rhode Island, Mr. WEYGAND, Mr. CLYBURN, Mr. SPRATT, Mr.
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SPENCE, Mr. BRYANT, Mr. GORDON, Mr. HILLEARY, Mr. JENKINS, Mr.

TANNER, Mr. BENTSEN, Mr. GREEN of Texas, Mr. HALL of Texas, Ms.

JACKSON-LEE of Texas, Mr. LAMPSON, Mr. RODRIGUEZ, Mr. SANDLIN,

Mr. STENHOLM, Mr. TURNER, Mr. BATEMAN, Mr. BOUCHER, Mr.

GOODE, Mr. PICKETT, Mr. SISISKY, Mr. WOLF, Mr. BLILEY, Mr. SCOTT,

Mr. SANDERS, Mr. MOLLOHAN, Mr. RAHALL, and Mr. WISE) introduced

the following bill; which was referred to the Committee on the Judiciary

A BILL

To reauthorize, and modify the conditions for, the consent

of Congress to the Northeast Interstate Dairy Compact

and to grant the consent of Congress to the Southern

Dairy Compact.

1 Resolved by the Senate and House of Representatives

2 of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Dairy Consumers and

5 Producers Protection Act’’.

6 TITLE I—NORTHEAST

7 INTERSTATE DAIRY COMPACT

8 SEC. 101. NORTHEAST INTERSTATE DAIRY COMPACT.

9 Section 147 of the Agricultural Market Transition

10 Act (7 U.S.C. 7256) is amended—

11 (1) in the matter preceding paragraph (1), by

12 striking ‘‘Massachusetts, New Hampshire,’’ and in13 serting ‘‘Maryland, Massachusetts, New Hampshire,

14 New Jersey, New York,’’;

15 (2) by striking paragraphs (1), (3), and (7);
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1 (3) in paragraph (4), by striking ‘‘Delaware,

2 New Jersey, New York, Pennsylvania, Maryland,

3 and Virginia’’ and inserting ‘‘Delaware, Ohio, and

4 Pennsylvania’’;

5 (4) in paragraph (5), by striking ‘‘the projected

6 rate of increase’’ and all that follows through ‘‘Sec7 retary’’ and inserting ‘‘the operation of the Compact

8 price regulation during the fiscal year, as determined

9 by the Secretary (in consultation with the Commis10 sion) using notice and comment procedures provided

11 in section 553 of title 5, United States Code’’; and

12 (5) by redesignating paragraphs (2), (4), (5),

13 and (6) as paragraphs (1), (2), (3), and (4), respec14 tively.

15 TITLE II—SOUTHERN DAIRY

16 COMPACT

17 SEC. 201. CONGRESSIONAL CONSENT TO SOUTHERN DAIRY

18 COMPACT.

19 (a) IN GENERAL.—Congress consents to the South20 ern Dairy Compact entered into among the States of Ala21 bama, Arkansas, Kentucky, Louisiana, Mississippi, North

22 Carolina, South Carolina, Tennessee, Virginia, and West

23 Virginia, subject to the following conditions:

24 (1) LIMITATION OF MANUFACTURING PRICE

25 REGULATION.—The Southern Dairy Compact Com-
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1 mission may not regulate Class II, Class III, or

2 Class III–A milk used for manufacturing purposes

3 or any other milk, other than Class I, or fluid milk,

4 as defined by a Federal milk marketing order issued

5 under section 8c of the Agricultural Adjustment Act

6 (7 U.S.C. 608c), reenacted with amendments by the

7 Agricultural Marketing Act of 1937 (referred to in

8 this title as ‘‘Federal milk marketing order’’) unless

9 Congress has first consented to and approved such

10 authority by a law enacted after the date of enact11 ment of this joint resolution.

12 (2) ADDITIONAL STATES.—Florida, Georgia,

13 Kansas, Missouri, Oklahoma, and Texas are the only

14 additional States that may join the Southern Dairy

15 Compact, individually or otherwise.

16 (3) COMPENSATION OF COMMODITY CREDIT

17 CORPORATION.—Before the end of each fiscal year

18 in which a Compact price regulation is in effect, the

19 Southern Dairy Compact Commission shall com20 pensate the Commodity Credit Corporation for the

21 cost of any purchases of milk and milk products by

22 the Corporation that result from the operation of the

23 Compact price regulation during the fiscal year, as

24 determined by the Secretary (in consultation with

25 the Commission) using notice and comment proce-
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1 dures provided in section 553 of title 5, United

2 States Code.

3 (4) MILK MARKETING ORDER ADMINIS4 TRATOR.—At the request of the Southern Dairy

5 Compact Commission, the Administrator of the ap6 plicable Federal milk marketing order shall provide

7 technical assistance to the Compact Commission and

8 be compensated for that assistance.

9 (b) COMPACT.—The Southern Dairy Compact is sub10 stantially as follows:

11 ‘‘ARTICLE I. STATEMENT OF

12 PURPOSE, FINDINGS AND

13 DECLARATION OF POLICY

14 ‘‘§ 1. STATEMENT OF PURPOSE, FINDINGS AND DECLARA15 TION OF POLICY

16 ‘‘The purpose of this compact is to recognize the

17 interstate character of the southern dairy industry and the

18 prerogative of the states under the United States Con19 stitution to form an interstate commission for the south20 ern region. The mission of the commission is to take such

21 steps as are necessary to assure the continued viability of

22 dairy farming in the south, and to assure consumers of

23 an adequate, local supply of pure and wholesome milk.

24 ‘‘The participating states find and declare that the

25 dairy industry is an essential agricultural activity of the
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1 south. Dairy farms, and associated suppliers, marketers,

2 processors and retailers are an integral component of the

3 region’s economy. Their ability to provide a stable, local

4 supply of pure, wholesome milk is a matter of great impor5 tance to the health and welfare of the region.

6 ‘‘The participating states further find that dairy

7 farms are essential and they are an integral part of the

8 region’s rural communities. The farms preserve land for

9 agricultural purposes and provide needed economic stimuli

10 for rural communities.

11 ‘‘In establishing their constitutional regulatory au12 thority over the region’s fluid milk market by this com13 pact, the participating states declare their purpose that

14 this compact neither displace the federal order system nor

15 encourage the merging of federal orders. Specific provi16 sions of the compact itself set forth this basic principle.

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

18 changes in a regulated marketplace, the compact also con19 tains a contingency provision should the federal order sys20 tem be discontinued. In that event, the interstate commis21 sion is authorized to regulate the marketplace in replace22 ment of the order system. This contingent authority does

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

24 so construed. It is only provided should developments in
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1 the market other than establishment of this compact re2 sult in discontinuance of the order system.

3 ‘‘By entering into this compact, the participating

4 states affirm that their ability to regulate the price which

5 southern dairy farmers receive for their product is essen6 tial to the public interest. Assurance of a fair and equi7 table price for dairy farmers ensures their ability to pro8 vide milk to the market and the vitality of the southern

9 dairy industry, with all the associated benefits.

10 ‘‘Recent, dramatic price fluctuations, with a pro11 nounced downward trend, threaten the viability and sta12 bility of the southern dairy region. Historically, individual

13 state regulatory action had been an effective emergency

14 remedy available to farmers confronting a distressed mar15 ket. The federal order system, implemented by the Agri16 cultural Marketing Agreement Act of 1937, establishes

17 only minimum prices paid to producers for raw milk, with18 out preempting the power of states to regulate milk prices

19 above the minimum levels so established.

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

21 rather than individual state action is needed to more effec22 tively address the market disarray. Under our constitu23 tional system, properly authorized states acting coopera24 tively may exercise more power to regulate interstate com25 merce than they may assert individually without such au-
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1 thority. For this reason, the participating states invoke

2 their authority to act in common agreement, with the con3 sent of Congress, under the compact clause of the Con4 stitution.

5 ‘‘ARTICLE II. DEFINITIONS AND

6 RULES OF CONSTRUCTION

7 ‘‘§ 2. DEFINITIONS

8 ‘‘For the purposes of this compact, and of any supple9 mental or concurring legislation enacted pursuant thereto,

10 except as may be otherwise required by the context:

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

12 fluid form or as a fluid milk product, subject to fur13 ther definition in accordance with the principles ex14 pressed in subdivision (b) of section three.

15 ‘‘(2) ‘Commission’ means the Southern Dairy

16 Compact Commission established by this compact.

17 ‘‘(3) ‘Commission marketing order’ means regu18 lations adopted by the commission pursuant to sec19 tions nine and ten of this compact in place of a ter20 minated federal marketing order or state dairy regu21 lation. Such order may apply throughout the region

22 or in any part or parts thereof as defined in the reg23 ulations of the commission. Such order may estab24 lish minimum prices for any or all classes of milk.

25 ‘‘(4) ‘Compact’ means this interstate compact.
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1 ‘‘(5) ‘Compact over-order price’ means a min2 imum price required to be paid to producers for

3 Class I milk established by the commission in regu4 lations adopted pursuant to sections nine and ten of

5 this compact, which is above the price established in

6 federal marketing orders or by state farm price reg7 ulations in the regulated area. Such price may apply

8 throughout the region or in any part or parts there9 of as defined in the regulations of the commission.

10 ‘‘(6) ‘Milk’ means the lacteral secretion of cows

11 and includes all skim, butterfat, or other constitu12 ents obtained from separation or any other process.

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

14 further defined by the commission for regulatory

15 purposes.

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

17 plant not located in a regulated area but having

18 Class I distribution within such area. Commission

19 regulations may exempt plants having such distribu20 tion or receipts in amounts less than the limits de21 fined therein.

22 ‘‘(8) ‘Participating state’ means a state which

23 has become a party to this compact by the enact24 ment of concurring legislation.
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1 ‘‘(9) ‘Pool plant’ means any milk plant located

2 in a regulated area.

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

4 the states which are parties to this compact.

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

6 the region governed by and defined in regulations es7 tablishing a compact over-order price or commission

8 marketing order.

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

10 regulation of dairy prices, and associated assess11 ments, whether by statute, marketing order or other12 wise.

13 ‘‘§ 3. RULES OF CONSTRUCTION

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

15 existing federal milk marketing orders or state dairy regu16 lation in the region but to supplement them. In the event

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

18 the compact shall be construed to provide the commission

19 the option to replace them with one or more commission

20 marketing orders pursuant to this compact.

21 ‘‘(b) The compact shall be construed liberally in order

22 to achieve the purposes and intent enunciated in section

23 one. It is the intent of this compact to establish a basic

24 structure by which the commission may achieve those pur25 poses through the application, adaptation and develop-
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1 ment of the regulatory techniques historically associated

2 with milk marketing and to afford the commission broad

3 flexibility to devise regulatory mechanisms to achieve the

4 purposes of this compact. In accordance with this intent,

5 the technical terms which are associated with market

6 order regulation and which have acquired commonly un7 derstood general meanings are not defined herein but the

8 commission may further define the terms used in this com9 pact and develop additional concepts and define additional

10 terms as it may find appropriate to achieve its purposes.

11 ‘‘ARTICLE III. COMMISSION

12 ESTABLISHED

13 ‘‘§ 4. COMMISSION ESTABLISHED

14 ‘‘There is hereby created a commission to administer

15 the compact, composed of delegations from each state in

16 the region. The commission shall be known as the South17 ern Dairy Compact Commission. A delegation shall include

18 not less than three nor more than five persons. Each dele19 gation shall include at least one dairy farmer who is en20 gaged in the production of milk at the time of appointment

21 or reappointment, and one consumer representative. Dele22 gation members shall be residents and voters of, and sub23 ject to such confirmation process as is provided for in the

24 appointing state. Delegation members shall serve no more

25 than three consecutive terms with no single term of more
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1 than four years, and be subject to removal for cause. In

2 all other respects, delegation members shall serve in ac3 cordance with the laws of the state represented. The com4 pensation, if any, of the members of a state delegation

5 shall be determined and paid by each state, but their ex6 penses shall be paid by the commission.

7 ‘‘§ 5. VOTING REQUIREMENTS

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

9 establishment or termination of an over-order price or

10 commission marketing order, and the adoption, amend11 ment or rescission of the commission’s by-laws, shall be

12 by majority vote of the delegations present. Each state del13 egation shall be entitled to one vote in the conduct of the

14 commission’s affairs. Establishment or termination of an

15 over-order price or commission marketing order shall re16 quire at least a two-thirds vote of the delegations present.

17 The establishment of a regulated area which covers all or

18 part of a participating state shall require also the affirma19 tive vote of that state’s delegation. A majority of the dele20 gations from the participating states shall constitute a

21 quorum for the conduct of the commission’s business.

22 ‘‘§ 6. ADMINISTRATION AND MANAGEMENT

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

24 the members of the participating state delegations a chair25 person, a vice-chairperson, and a treasurer. The commis-
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1 sion shall appoint an executive director and fix his or her

2 duties and compensation. The executive director shall

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

4 the treasurer, shall be bonded in an amount determined

5 by the commission. The commission may establish through

6 its by-laws an executive committee composed of one mem7 ber elected by each delegation.

8 ‘‘(b) The commission shall adopt by-laws for the con9 duct of its business by a two-thirds vote, and shall have

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

11 by-laws. The commission shall publish its by-laws in con12 venient form with the appropriate agency or officer in each

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

14 appropriate notice to the delegations of all commission

15 meetings and hearings and of the business to be trans16 acted at such meetings or hearings. Notice also shall be

17 given to other agencies or officers of participating states

18 as provided by the laws of those states.

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

20 the Secretary of Agriculture of the United States, and

21 with each of the participating states by submitting copies

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

23 head of the state department having responsibilities for

24 agriculture.
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1 ‘‘(d) In addition to the powers and duties elsewhere

2 prescribed in this compact, the commission shall have the

3 power:

4 ‘‘(1) To sue and be sued in any state or federal

5 court;

6 ‘‘(2) To have a seal and alter the same at pleas7 ure;

8 ‘‘(3) To acquire, hold, and dispose of real and

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

10 other similar manner, for its corporate purposes;

11 ‘‘(4) To borrow money and issue notes, to pro12 vide for the rights of the holders thereof and to

13 pledge the revenue of the commission as security

14 therefor, subject to the provisions of section eighteen

15 of this compact;

16 ‘‘(5) To appoint such officers, agents, and em17 ployees as it may deem necessary, prescribe their

18 powers, duties and qualifications; and

19 ‘‘(6) To create and abolish such offices, employ20 ments and positions as it deems necessary for the

21 purposes of the compact and provide for the re22 moval, term, tenure, compensation, fringe benefits,

23 pension, and retirement rights of its officers and em24 ployees. The commission may also retain personal

25 services on a contract basis.
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1 ‘‘§ 7. RULEMAKING POWER

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

3 over-order price or commission marketing orders as pro4 vided by this compact, the commission is further empow5 ered to make and enforce such additional rules and regula6 tions as it deems necessary to implement any provisions

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

8 purposes of this compact.

9 ‘‘ARTICLE IV. POWERS OF THE

10 COMMISSION

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

12 SIMPLICITY, AND INTERSTATE COOPERATION

13 ‘‘The commission is hereby empowered to:

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

15 research projects designed to review the existing

16 laws and regulations of the participating states, to

17 consider their administration and costs, to measure

18 their impact on the production and marketing of

19 milk and their effects on the shipment of milk and

20 milk products within the region.

21 ‘‘(2) Study and recommend to the participating

22 states joint or cooperative programs for the adminis23 tration of the dairy marketing laws and regulations

24 and to prepare estimates of cost savings and benefits

25 of such programs.
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1 ‘‘(3) Encourage the harmonious relationships

2 between the various elements in the industry for the

3 solution of their material problems. Conduct

4 symposia or conferences designed to improve indus5 try relations, or a better understanding of problems.

6 ‘‘(4) Prepare and release periodic reports on ac7 tivities and results of the commission’s efforts to the

8 participating states.

9 ‘‘(5) Review the existing marketing system for

10 milk and milk products and recommend changes in

11 the existing structure for assembly and distribution

12 of milk which may assist, improve or promote more

13 efficient assembly and distribution of milk.

14 ‘‘(6) Investigate costs and charges for pro15 ducing, hauling, handling, processing, distributing,

16 selling and for all other services performed with re17 spect to milk.

18 ‘‘(7) Examine current economic forces affecting

19 producers, probable trends in production and con20 sumption, the level of dairy farm prices in relation

21 to costs, the financial conditions of dairy farmers,

22 and the need for an emergency order to relieve crit23 ical conditions on dairy farms.
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1 ‘‘§ 9. EQUITABLE FARM PRICES

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

3 ten shall apply only to the establishment of a compact

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

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

6 all such orders are terminated, this article shall authorize

7 the commission to establish one or more commission mar8 keting orders, as herein provided, in the region or parts

9 thereof as defined in the order.

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

11 to this section shall apply only to Class I milk. Such com12 pact over-order price shall not exceed one dollar and fifty

13 cents per gallon at Atlanta, Ga., however, this compact

14 over-order price shall be adjusted upward or downward at

15 other locations in the region to reflect differences in min16 imum federal order prices. Beginning in nineteen hundred

17 ninety, and using that year as a base, the foregoing one

18 dollar fifty cents per gallon maximum shall be adjusted

19 annually by the rate of change in the Consumer Price

20 Index as reported by the Bureau of Labor Statistics of

21 the United States Department of Labor. For purposes of

22 the pooling and equalization of an over-order price, the

23 value of milk used in other use classifications shall be cal24 culated at the appropriate class price established pursuant

25 to the applicable federal order or state dairy regulation

26 and the value of unregulated milk shall be calculated in
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1 relation to the nearest prevailing class price in accordance

2 with and subject to such adjustments as the commission

3 may prescribe in regulations.

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

5 classes and uses of milk.

6 ‘‘(d) The commission is hereby empowered to estab7 lish a compact over-order price for milk to be paid by pool

8 plants and partially regulated plants. The commission is

9 also empowered to establish a compact over-order price to

10 be paid by all other handlers receiving milk from pro11 ducers located in a regulated area. This price shall be es12 tablished either as a compact over-order price or by one

13 or more commission marketing orders. Whenever such a

14 price has been established by either type of regulation, the

15 legal obligation to pay such price shall be determined sole16 ly by the terms and purpose of the regulation without re17 gard to the situs of the transfer of title, possession or any

18 other factors not related to the purposes of the regulation

19 and this compact. Producer-handlers as defined in an ap20 plicable federal market order shall not be subject to a com21 pact over-order price. The commission shall provide for

22 similar treatment of producer-handlers under commission

23 marketing orders.

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

25 consider the balance between production and consumption
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1 of milk and milk products in the regulated area, the costs

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

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

4 the producer’s own labor and management, machinery ex5 pense, and interest expense, the prevailing price for milk

6 outside the regulated area, the purchasing power of the

7 public and the price necessary to yield a reasonable return

8 to the producer and distributor.

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

10 the commission shall take such other action as is necessary

11 and feasible to help ensure that the over-order price does

12 not cause or compensate producers so as to generate local

13 production of milk in excess of those quantities necessary

14 to assure consumers of an adequate supply for fluid pur15 poses.

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

17 into agreements with state or federal agencies for ex18 change of information or services for the purpose of reduc19 ing regulatory burden and cost of administering the com20 pact. The commission may reimburse other agencies for

21 the reasonable cost of providing these services.

22 ‘‘§ 10. OPTIONAL PROVISIONS FOR PRICING ORDER

23 ‘‘Regulations establishing a compact over-order price

24 or a commission marketing order may contain, but shall

25 not be limited to any of the following:
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1 ‘‘(1) Provisions classifying milk in accordance

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

3 used, or creating a flat pricing program.

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

5 order only, provisions establishing or providing a

6 method for establishing separate minimum prices for

7 each use classification prescribed by the commission,

8 or a single minimum price for milk purchased from

9 producers or associations of producers.

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

11 price, provisions establishing or providing a method

12 for establishing such minimum price for Class I

13 milk.

14 ‘‘(4) Provisions for establishing either an over15 order price or a commission marketing order may

16 make use of any reasonable method for establishing

17 such price or prices including flat pricing and for18 mula pricing. Provision may also be made for loca19 tion adjustments, zone differentials and for competi20 tive credits with respect to regulated handlers who

21 market outside the regulated area.

22 ‘‘(5) Provisions for the payment to all pro23 ducers and associations of producers delivering milk

24 to all handlers of uniform prices for all milk so deliv25 ered, irrespective of the uses made of such milk by
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1 the individual handler to whom it is delivered, or for

2 the payment of producers delivering milk to the

3 same handler of uniform prices for all milk delivered

4 by them.

5 ‘‘(A) With respect to regulations estab6 lishing a compact over-order price, the commis7 sion may establish one equalization pool within

8 the regulated area for the sole purpose of equal9 izing returns to producers throughout the regu10 lated area.

11 ‘‘(B) With respect to any commission mar12 keting order, as defined in section two, subdivi13 sion three, which replaces one or more termi14 nated federal orders or state dairy regulations,

15 the marketing area of now separate state or

16 federal orders shall not be merged without the

17 affirmative consent of each state, voting

18 through its delegation, which is partly or wholly

19 included within any such new marketing area.

20 ‘‘(6) Provisions requiring persons who bring

21 Class I milk into the regulated area to make com22 pensatory payments with respect to all such milk to

23 the extent necessary to equalize the cost of milk pur24 chased by handlers subject to a compact over-order

25 price or commission marketing order. No such provi-
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1 sions shall discriminate against milk producers out2 side the regulated area. The provisions for compen3 satory payments may require payment of the dif4 ference between the Class I price required to be paid

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

6 milk marketing order or state dairy regulation and

7 the Class I price established by the compact over8 order price or commission marketing order.

9 ‘‘(7) Provisions specially governing the pricing

10 and pooling of milk handled by partially regulated

11 plants.

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

13 any person regulated under the compact over-order

14 price shall be adjusted for any payments made to or

15 received by such persons with respect to a producer

16 settlement fund of any federal or state milk mar17 keting order or other state dairy regulation within

18 the regulated area.

19 ‘‘(9) Provision requiring the payment by han20 dlers of an assessment to cover the costs of the ad21 ministration and enforcement of such order pursu22 ant to Article VII, Section 18(a).

23 ‘‘(10) Provisions for reimbursement to partici24 pants of the Women, Infants and Children Special
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1 Supplemental Food Program of the United States

2 Child Nutrition Act of 1966.

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

4 commission may find are necessary or appropriate to

5 effectuate the purposes of this compact and to pro6 vide for the payment of fair and equitable minimum

7 prices to producers.

8 ‘‘ARTICLE V. RULEMAKING

9 PROCEDURE

10 ‘‘§ 11. RULEMAKING PROCEDURE

11 ‘‘Before promulgation of any regulations establishing

12 a compact over-order price or commission marketing

13 order, including any provision with respect to milk supply

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

15 in Article IV, the commission shall conduct an informal

16 rulemaking proceeding to provide interested persons with

17 an opportunity to present data and views. Such rule18 making proceeding shall be governed by section four of

19 the Federal Administrative Procedure Act, as amended (5

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

21 extent practicable, publish notice of rulemaking pro22 ceedings in the official register of each participating state.

23 Before the initial adoption of regulations establishing a

24 compact over-order price or a commission marketing order

25 and thereafter before any amendment with regard to
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1 prices or assessments, the commission shall hold a public

2 hearing. The commission may commence a rulemaking

3 proceeding on its own initiative or may in its sole discre4 tion act upon the petition of any person including indi5 vidual milk producers, any organization of milk producers

6 or handlers, general farm organizations, consumer or pub7 lic interest groups, and local, state or federal officials.

8 ‘‘§ 12. FINDINGS AND REFERENDUM

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

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

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

12 § 553(c)), the commission shall make findings of fact with

13 respect to:

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

15 by the establishment of minimum milk prices to

16 dairy farmers under Article IV.

17 ‘‘(2) What level of prices will assure that pro18 ducers receive a price sufficient to cover their costs

19 of production and will elicit an adequate supply of

20 milk for the inhabitants of the regulated area and

21 for manufacturing purposes.

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

23 other than those fixing minimum milk prices, are in

24 the public interest and are reasonably designed to

25 achieve the purposes of the order.
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1 ‘‘(4) Whether the terms of the proposed re2 gional order or amendment are approved by pro3 ducers as provided in section thirteen.

4 ‘‘§ 13. PRODUCER REFERENDUM

5 ‘‘(a) For the purpose of ascertaining whether the

6 issuance or amendment of regulations establishing a com7 pact over-order price or a commission marketing order,

8 including any provision with respect to milk supply under

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

10 shall conduct a referendum among producers. The ref11 erendum shall be held in a timely manner, as determined

12 by regulation of the commission. The terms and conditions

13 of the proposed order or amendment shall be described

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

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

16 description shall not be a basis for attacking the legality

17 of the order or any action relating thereto.

18 ‘‘(b) An order or amendment shall be deemed ap19 proved by producers if the commission determines that it

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

21 who, during a representative period determined by the

22 commission, have been engaged in the production of milk

23 the price of which would be regulated under the proposed

24 order or amendment.
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1 ‘‘(c) For purposes of any referendum, the commission

2 shall consider the approval or disapproval by any coopera3 tive association of producers, qualified under the provi4 sions of the Act of Congress of February 18, 1922, as

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

6 engaged in marketing milk, or in rendering services for

7 or advancing the interests of producers of such com8 modity, as the approval or disapproval of the producers

9 who are members or stockholders in, or under contract

10 with, such cooperative association of producers, except as

11 provided in subdivision (1) hereof and subject to the provi12 sions of subdivision (2) through (5) hereof.

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

14 act as a common marketing agency for both coopera15 tives and individual producers shall be qualified to

16 block vote for either.

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

18 vote shall, before submitting its approval or dis19 approval in any referendum, give prior written notice

20 to each of its members as to whether and how it in21 tends to cast its vote. The notice shall be given in

22 a timely manner as established, and in the form pre23 scribed, by the commission.
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1 ‘‘(3) Any producer may obtain a ballot from the

2 commission in order to register approval or dis3 approval of the proposed order.

4 ‘‘(4) A producer who is a member of a coopera5 tive which has provided notice of its intent to ap6 prove or not to approve a proposed order, and who

7 obtains a ballot and with such ballot expresses his

8 approval or disapproval of the proposed order, shall

9 notify the commission as to the name of the coopera10 tive of which he or she is a member, and the com11 mission shall remove such producer’s name from the

12 list certified by such cooperative with its corporate

13 vote.

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

15 are informed regarding the proposed order, the com16 mission shall notify all milk producers that an order

17 is being considered and that each producer may reg18 ister his approval or disapproval with the commis19 sion either directly or through his or her cooperative.

20 ‘‘§ 14. TERMINATION OF OVER-ORDER PRICE OR MAR21 KETING ORDER

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

23 establishing an over-order price or commission marketing

24 order issued under this article whenever it finds that such
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1 order or price obstructs or does not tend to effectuate the

2 declared policy of this compact.

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

4 establishing an over-order price or a commission mar5 keting order issued under this article whenever it finds

6 that such termination is favored by a majority of the pro7 ducers who, during a representative period determined by

8 the commission, have been engaged in the production of

9 milk the price of which is regulated by such order; but

10 such termination shall be effective only if announced on

11 or before such date as may be specified in such marketing

12 agreement or order.

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

14 provision thereof, shall not be considered an order within

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

16 but shall comply with the requirements for informal rule17 making prescribed by section four of the Federal Adminis18 trative Procedure Act, as amended (5 U.S.C. § 553).

19 ‘‘ARTICLE VI. ENFORCEMENT

20 ‘‘§ 15. RECORDS; REPORTS; ACCESS TO PREMISES

21 ‘‘(a) The commission may by rule and regulation pre22 scribe record keeping and reporting requirements for all

23 regulated persons. For purposes of the administration and

24 enforcement of this compact, the commission is authorized

25 to examine the books and records of any regulated person
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1 relating to his or her milk business and for that purpose,

2 the commission’s properly designated officers, employees,

3 or agents shall have full access during normal business

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

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

6 commission officers, employees, or its agents pursuant to

7 this section shall be confidential and not subject to disclo8 sure except to the extent that the commission deems dis9 closure to be necessary in any administrative or judicial

10 proceeding involving the administration or enforcement of

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

12 order, or other regulations of the commission. The com13 mission may promulgate regulations further defining the

14 confidentiality of information pursuant to this section.

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

16 issuance of general statements based upon the reports of

17 a number of handlers, which do not identify the informa18 tion furnished by any person, or (ii) the publication by

19 direction of the commission of the name of any person vio20 lating any regulation of the commission, together with a

21 statement of the particular provisions violated by such

22 person.

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

24 shall intentionally disclose information, by inference or

25 otherwise, which is made confidential pursuant to this sec-
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1 tion. Any person violating the provisions of this section

2 shall, upon conviction, be subject to a fine of not more

3 than one thousand dollars or to imprisonment for not

4 more than one year, or to both, and shall be removed from

5 office. The commission shall refer any allegation of a viola6 tion of this section to the appropriate state enforcement

7 authority or United States Attorney.

8 ‘‘§ 16. SUBPOENA; HEARINGS AND JUDICIAL REVIEW

9 ‘‘(a) The commission is hereby authorized and em10 powered by its members and its properly designated offi11 cers to administer oaths and issue subpoenas throughout

12 all signatory states to compel the attendance of witnesses

13 and the giving of testimony and the production of other

14 evidence.

15 ‘‘(b) Any handler subject to an order may file a writ16 ten petition with the commission stating that any such

17 order or any provision of any such order or any obligation

18 imposed in connection therewith is not in accordance with

19 law and praying for a modification thereof or to be ex20 empted therefrom. He shall thereupon be given an oppor21 tunity for a hearing upon such petition, in accordance with

22 regulations made by the commission. After such hearing,

23 the commission shall make a ruling upon the prayer of

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

25 law.
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1 ‘‘(c) The district courts of the United States in any

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

3 principal place of business, are hereby vested with jurisdic4 tion to review such ruling, provided a complaint for that

5 purpose is filed within thirty days from the date of the

6 entry of such ruling. Service of process in such pro7 ceedings may be had upon the commission by delivering

8 to it a copy of the complaint. If the court determines that

9 such ruling is not in accordance with law, it shall remand

10 such proceedings to the commission with directions either

11 (1) to make such ruling as the court shall determine to

12 be in accordance with law, or (2) to take such further pro13 ceedings as, in its opinion, the law requires. The pendency

14 of proceedings instituted pursuant to this subdivision shall

15 not impede, hinder, or delay the commission from obtain16 ing relief pursuant to section seventeen. Any proceedings

17 brought pursuant to section seventeen, except where

18 brought by way of counterclaim in proceedings instituted

19 pursuant to this section, shall abate whenever a final de20 cree has been rendered in proceedings between the same

21 parties, and covering the same subject matter, instituted

22 pursuant to this section.

23 ‘‘§ 17. ENFORCEMENT WITH RESPECT TO HANDLERS

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

25 regulations establishing an over-order price or a commis-
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1 sion marketing order, or other regulations adopted pursu2 ant to this compact shall:

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

4 of the signatory states. Such violation shall render

5 the violator subject to a civil penalty in an amount

6 as may be prescribed by the laws of each of the par7 ticipating states, recoverable in any state or federal

8 court of competent jurisdiction. Each day such viola9 tion continues shall constitute a separate violation.

10 ‘‘(2) Constitute grounds for the revocation of li11 cense or permit to engage in the milk business under

12 the applicable laws of the participating states.

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

14 enforce the provisions of this compact, regulations estab15 lishing an over-order price, a commission marketing order

16 or other regulations adopted hereunder by:

17 ‘‘(1) Commencing an action for legal or equi18 table relief brought in the name of the commission

19 of any state or federal court of competent jurisdic20 tion; or

21 ‘‘(2) Referral to the state agency for enforce22 ment by judicial or administrative remedy with the

23 agreement of the appropriate state agency of a par24 ticipating state.
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1 ‘‘(c) With respect to handlers, the commission may

2 bring an action for injunction to enforce the provisions

3 of this compact or the order or regulations adopted there4 under without being compelled to allege or prove that an

5 adequate remedy of law does not exist.

6 ‘‘ARTICLE VII. FINANCE

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

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

9 may borrow money pursuant to its general power under

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

11 finance the costs of administration and enforcement of

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

13 commission is hereby empowered to collect an assessment

14 from each handler who purchases milk from producers

15 within the region. If imposed, this assessment shall be col16 lected on a monthly basis for up to one year from the date

17 the commission convenes, in an amount not to exceed

18 $.015 per hundredweight of milk purchased from pro19 ducers during the period of the assessment. The initial as20 sessment may apply to the projected purchases of handlers

21 for the two-month period following the date the commis22 sion convenes. In addition, if regulations establishing an

23 over-order price or a compact marketing order are adopt24 ed, they may include an assessment for the specific pur25 pose of their administration. These regulations shall pro-
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1 vide for establishment of a reserve for the commission’s

2 ongoing operating expenses.

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

4 any participating state or of the United States. Notes

5 issued by the commission and all other financial obliga6 tions incurred by it, shall be its sole responsibility and no

7 participating state or the United States shall be liable

8 therefor.

9 ‘‘§ 19. AUDIT AND ACCOUNTS

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

11 all receipts and disbursements, which shall be subject to

12 the audit and accounting procedures established under its

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

14 handled by the commission shall be audited yearly by a

15 qualified public accountant and the report of the audit

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

17 of the commission.

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

19 at any reasonable time for inspection by duly constituted

20 officers of the participating states and by any persons au21 thorized by the commission.

22 ‘‘(c) Nothing contained in this article shall be con23 strued to prevent commission compliance with laws relat24 ing to audit or inspection of accounts by or on behalf of

25 any participating state or of the United States.
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1 ‘‘ARTICLE VIII. ENTRY INTO

2 FORCE; ADDITIONAL MEM3 BERS AND WITHDRAWAL

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

5 ‘‘The compact shall enter into force effective when

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

7 composed of Alabama, Arkansas, Florida, Georgia, Ken8 tucky, Louisiana, Maryland, Mississippi, North Carolina,

9 Oklahoma, South Carolina, Tennessee, Texas, Virginia

10 and West Virginia and when the consent of Congress has

11 been obtained.

12 ‘‘§ 21. WITHDRAWAL FROM COMPACT

13 ‘‘Any participating state may withdraw from this

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

15 such withdrawal shall take effect until one year after no16 tice in writing of the withdrawal is given to the commis17 sion and the governors of all other participating states.

18 No withdrawal shall affect any liability already incurred

19 by or chargeable to a participating state prior to the time

20 of such withdrawal.

21 ‘‘§ 22. SEVERABILITY

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

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

24 its operation to the part or provision directly involved in

25 the controversy in which such judgment shall have been
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1 rendered and shall not affect or impair the validity of the

2 remainder of this compact. In the event Congress consents

3 to this compact subject to conditions, said conditions shall

4 not impair the validity of this compact when said condi5 tions are accepted by three or more compacting states. A

6 compacting state may accept the conditions of Congress

7 by implementation of this compact.’’.

8 SEC. 202. RESERVATION OF RIGHTS.

9 The right to alter, amend, or repeal this title is re10 served.

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