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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4597 Introduced in House (IH)]

108th CONGRESS
  2d Session
                                H. R. 4597

 To establish regional dairy marketing areas to stabilize the price of 
            milk and support the income of dairy producers.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             June 16, 2004

Mr. Reynolds (for himself, Mr. McHugh, Mr. Sanders, Mr. Etheridge, Mr. 
    Obey, Mr. Simmons, Mr. Boehlert, Mr. McGovern, Mrs. Johnson of 
 Connecticut, Mr. Quinn, Mr. Houghton, Mr. Walsh, Mr. Turner of Texas, 
 Ms. Slaughter, Mr. Olver, Mr. Hinchey, Mr. Sweeney, Mr. McNulty, Mr. 
  LaTourette, Mrs. Kelly, and Mr. Langevin) introduced the following 
        bill; which was referred to the Committee on Agriculture

_______________________________________________________________________

                                 A BILL

 
 To establish regional dairy marketing areas to stabilize the price of 
            milk and support the income of dairy producers.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``National Dairy Equity Act of 2004''.

SEC. 2. REGIONAL DAIRY MARKETING AREAS.

    Subtitle E of title I of the Farm Security and Rural Investment Act 
of 2002 (7 U.S.C. 7981 et seq.) is amended--
            (1) by inserting before section 1501 (7 U.S.C. 7981) the 
        following:

                   ``CHAPTER 1--GENERAL PROVISIONS'';

            (2) by adding at the end the following:

              ``CHAPTER 2--REGIONAL DAIRY MARKETING AREAS

``SEC. 1511. DEFINITIONS.

    ``In this chapter:
            ``(1) Board.--The term `Board' means the Regional Dairy 
        Board established for a Region under section 1514.
            ``(2) Classes of milk.--The terms `Class I milk', `Class II 
        milk', `Class III milk', and `Class IV milk' mean milk 
        (including components of milk) classified as Class I, II, III, 
        or IV milk, respectively, under a Federal milk marketing order.
            ``(3) Covered processor.--The term `covered processor' 
        means a person or entity operating--
                    ``(A) a milk plant located in the regulated area of 
                a Region; or
                    ``(B) a milk plant that, while not located in the 
                regulated area of a Region, distributes Class I milk 
                products in a regulated area.
            ``(4) Eligible producer.--(A) The term `eligible producer' 
        means an individual or entity that the Secretary determines 
        directly or indirectly--
                    ``(i) shares in the risk of producing milk; and
                    ``(ii) makes contributions (including land, labor, 
                management, equipment, or capital) to the dairy farming 
                operation of the individual or entity that are at least 
                commensurate with the share of the individual or entity 
                of the proceeds of the operation.
            ``(B) The term does not include an individual or entity 
        that elects under section 1512(c) to continue to receive 
        national dairy market loss payments pursuant to a contract 
        entered into under section 1502.
            ``(5) Fund.--The term `Fund' means the National Dairy 
        Producers Fund established under section 1518.
            ``(6) Federal milk marketing order.--The term `Federal milk 
        marketing order' means a Federal milk marketing order issued 
        under section 8c of the Agricultural Adjustment Act (7 U.S.C. 
        608c), reenacted with amendments by the Agricultural Marketing 
        Agreement Act of 1937.
            ``(7) Over-order premium.--The term `over-order premium' 
        means the difference between--
                    ``(A) the over-order price established by the Board 
                for the regulated area of a Region; and
                    ``(B) the Class I milk price per hundredweight in 
                Boston under the applicable Federal milk marketing 
                order.
            ``(8) Over-order price.--The term `over-order price' means 
        the minimum price for Class I milk in the regulated area of a 
        Region, as established by the Board by regulation under section 
        1515.
            ``(9) Partially regulated plant.--(A) The term `partially 
        regulated plant' means--
                    ``(i) a milk plant that, while not located in the 
                regulated area of a Region, distributes Class I milk 
                products in a regulated area; or
                    ``(ii) a milk plant that, while located in the 
                regulated area of a Region, distributes Class I milk 
                products in the regulated area of a different Region.
            ``(B) The term does not include a milk plant described in 
        subparagraph (A) that distributes less than a minimum quantity 
        of Class I milk in the regulated area in which such 
        distribution occurs, or derives less than a minimum quantity of 
        receipts from such distribution. The Board for the regulated 
        area in which such distribution occurs shall establish the 
        minimum quantity of milk or receipts for purposes of this 
        exclusion.
            ``(10) Participating state.--The term `participating State' 
        means a State that is designated as a participating State in a 
        Region under section 1512.
            ``(11) Pool plant.--The term `pool plant' means a milk 
        plant located in the regulated area of a Region.
            ``(12) Region.--The term `Region' means a Regional Dairy 
        Marketing Area established under section 1513.
            ``(13) Regulated area.--The term `regulated area' means 
        that portion of a Region consisting of participating States.
            ``(14) Secretary.--The term `Secretary' means the Secretary 
        of Agriculture.

``SEC. 1512. PARTICIPATING STATES.

    ``(a) Designation of Participating States.--For the purpose of this 
chapter, the following States are participating States:
            ``(1) Each State in the Northeast, Southern, and Midwest 
        Regions specified in section 1513.
            ``(2) Each State in a different Region specified in section 
        1513, if that State elects to become a participating State by 
        providing to the Secretary written notice through the Governor 
        of the State in accordance with State law.
    ``(b) Termination of Participation.--
            ``(1) Method of termination.--To terminate the designation 
        of a State as a participating State in a Region, the Governor 
        of the State (with the concurrence of the legislature of the 
        State) shall submit written notice to the Secretary and the 
        applicable Board of the termination.
            ``(2) Effective date of termination.--
                    ``(A) Initial termination authority.--If a State 
                submits the written notice required by paragraph (1) 
                before the end of the 30-day period beginning on the 
                date of enactment of this chapter, the termination of 
                the designation of the State as a participating State 
                shall take effect 30 days after the date on which the 
                notice was submitted.
                    ``(B) Subsequent termination authority.--If a State 
                submits the written notice required by paragraph (1) 
                after the end of the period specified in subparagraph 
                (A), the termination of the designation of the State as 
                a participating State shall take effect 1 year after 
                the date on which notice was submitted.
            ``(3) Resumption of participation.--A State that terminates 
        its designation as a participating State may restore, in the 
        manner provided by State law, the designation of the State as a 
        participating State. The Governor of the State shall provide 
        written notice to the Secretary and the applicable Board of the 
        decision to restore such designation, which shall take effect 
        on the first day of the first month beginning after the 
        Secretary receives the written notice.
    ``(c) Relation to National Dairy Market Loss Payments.--
            ``(1) Election of benefits.--In the case of each eligible 
        producer operating in a participating State that is also a 
        party to a contract entered into under section 1502 to receive 
        national dairy market loss payments, the Secretary shall give 
        the producer a 60-day period within which to elect to terminate 
        the contract and to instead receive payments under this 
        chapter. The 60-day period for eligible producers in a State 
        shall commence on the date on which the State is first 
        designated as a participating State under subsection (a).
            ``(2) Effective date of termination.--If an eligible 
        producer elects to terminate a contract under section 1502, as 
        authorized by paragraph (1), the termination shall take effect 
        on the date on which payments are first made to eligible 
        producers under section 1521 in the participating State in 
        which the producer operates.
            ``(3) Protection during initial state termination period.-- 
        If a State exercises the initial termination authority provided 
        under subsection (b), any election made by an eligible producer 
        in that State under paragraph (1) to terminate a contract under 
        section 1502 shall not take effect.
            ``(4) Effect of election to continue contract.--An eligible 
        producer that does not elect to terminate a contract under 
        section 1502, as authorized by paragraph (1), shall cease to be 
        an eligible producer for the purpose of this chapter at the end 
        of the period specified in such paragraph. The contract of such 
        a producer shall terminate on September 30, 2005, 
        notwithstanding any amendment to section 1502 to extend the 
        duration of such contracts. After that date, the producer shall 
        be ineligible for national dairy market loss payments under 
        section 1502 and ineligible for payments under this chapter.
            ``(5) Effect of subsequent state termination or restoration 
        of participation.--An eligible producer operating in a State 
        that terminates its designation as a participating State under 
        subsection (b)(2)(B) shall be eligible to enter into a contract 
        under section 1502 to receive national dairy market loss 
        payments, but only if--
                    ``(A) the producer is not ineligible to receive 
                such payments under paragraph (4); and
                    ``(B) the producer agrees to terminate the contract 
                under section 1502 if the State in which the producer 
                operates restores its designation as a participating 
                State under subsection (b)(3).

``SEC. 1513. DAIRY MARKETING AREAS.

    ``There are established 5 Regional Dairy Marketing Areas to be 
composed of the following States, so long as the States are designated 
as participating States:
            ``(1) Northeast region.--A Northeast Dairy Marketing Area 
        composed of the States of Connecticut, Delaware, Maine, 
        Maryland, Massachusetts, New Hampshire, New Jersey, New York, 
        Pennsylvania, Rhode Island, and Vermont.
            ``(2) Southern region.--A Southern Dairy Marketing Area 
        composed of the States of Alabama, Arkansas, Florida, Georgia, 
        Kentucky, Louisiana, Mississippi, Missouri, North Carolina, 
        Oklahoma, South Carolina, Texas, Tennessee, Virginia, and West 
        Virginia.
            ``(3) Midwest region.--A Midwest Dairy Marketing Area 
        composed of the States of Illinois, Indiana, Iowa, Kansas, 
        Michigan, Minnesota, Nebraska, North Dakota, Ohio, South 
        Dakota, and Wisconsin.
            ``(4) Intermountain region.--An Intermountain Dairy 
        Marketing Area composed of the States of Arizona, Colorado, 
        Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming.
            ``(5) Pacific region.--A Pacific Dairy Marketing Area 
        composed of the States of Alaska, California, Hawaii, Oregon, 
        and Washington.

``SEC. 1514. REGIONAL DAIRY BOARDS.

    ``(a) In General.--Each Region shall be administered by a Regional 
Dairy Board.
    ``(b) Composition.--
            ``(1) Number and appointment.--The Board for a Region shall 
        be composed of 3 members from each participating State in the 
        Region, appointed by the Secretary from nominations submitted 
        as provided in paragraph (2).
            ``(2) Nomination process.--The members of the Board from a 
        participating State shall be selected from at least 9 
        individuals nominated by the Governor of the State, except 
        that, if the commissioner of the department of agriculture of 
        the State is an elected position, the nominations for the State 
        shall be made by the commissioner. The nominations shall be 
        made in consultation with eligible producers and the dairy 
        industry in the participating State.
            ``(3) Representation.--Of the members of the Board 
        nominated and appointed to represent a participating State--
                    ``(A) at least 1 member shall be an eligible 
                producer in the State at the time of nomination and 
                appointment; and
                    ``(B) at least 1 member shall be a consumer 
                representative.
    ``(c) Terms.--
            ``(1) In general.--Except as provided in paragraph (2), 
        each member of the Board shall serve for a term of 3 years.
            ``(2) Initial appointments.--Of the members first appointed 
        to the Board from a participating State, the Secretary shall 
        appoint--
                    ``(A) 1 member to serve a term of 1 year;
                    ``(B) 1 member to a term of 2 years; and
                    ``(C) 1 member to a term of 3 years.
    ``(d) Voting.--The members of the Board representing a 
participating State shall be entitled to cast only 1 vote on behalf of 
the participating State in any vote taken by members of the Board.
    ``(e) Powers.--In carrying out this chapter in a Region, the Board 
for the Region is authorized--
            ``(1) to investigate, or provide for investigations or 
        research projects designed to review, the laws of participating 
        States in the Region--
                    ``(A) to measure the impact of the laws on--
                            ``(i) the production and marketing of milk; 
                        and
                            ``(ii) the shipment of milk and milk 
                        products in the Region; and
                    ``(B) to review the administration and costs of the 
                laws;
            ``(2) to study and recommend to participating States of the 
        Region joint or cooperative programs for the administration of 
        dairy marketing laws and to prepare estimates of cost savings 
        and benefits of such programs;
            ``(3) to encourage harmonious relationships between the 
        various elements of the dairy industry in the Region for the 
        solution of material problems, including conducting symposia or 
        conferences designed to improve dairy-industry relations; or 
        resolve problems of the dairy industry;
            ``(4) to submit to participating States in the Region 
        periodic reports on activities and programs of the Board;
            ``(5) to review the processing and marketing system for 
        milk and milk products in the regulated area of the Region and 
        to recommend changes in the system used for the production and 
        distribution of milk to assist, improve, or promote more 
        efficient production and distribution of milk;
            ``(6) to investigate costs and charges in the regulated 
        area of the Region for producing, hauling, handling, 
        processing, distributing, selling, and conducting all other 
        services performed with respect to milk;
            ``(7) to examine--
                    ``(A) economic forces affecting eligible producers 
                in the Region;
                    ``(B) probable trends in production and consumption 
                of milk and milk products in the Region;
                    ``(C) the level of dairy farm prices in relation to 
                costs in the Region;
                    ``(D) the financial condition of eligible producers 
                in the Region; and
                    ``(E) the need for an emergency order to relieve 
                critical conditions on dairy farms in the regulated 
                area;
            ``(8) to take such actions as may be necessary to manage 
        any overproduction of milk in the regulated area of the Region, 
        including the authority to develop and implement an incentive-
        based supply management program in addition to other actions to 
        manage such overproduction; and
            ``(9) to issue such orders, promulgate such regulations, 
        and take such other actions as are necessary to carry out this 
        chapter in the regulated area of the Region.
    ``(f) Use of Other Agencies.--The Board for a Region shall, to the 
maximum extent practicable, enter into agreements with Federal or State 
agencies for the exchange of information or services for the purpose of 
reducing regulatory burden and cost of administering this chapter. The 
Board may reimburse other agencies for the reasonable cost of providing 
the services.
    ``(g) Technical Assistance.--At the request of the Board, the 
administrator of a Federal milk marketing order shall provide technical 
assistance to the Board. The Board shall reimburse the administrator 
for the reasonable cost of providing the technical assistance.

``SEC. 1515. ESTABLISHMENT OF OVER-ORDER PRICE FOR SALE OF CLASS I 
              MILK.

    ``(a) Authority to Establish Over-Order Price.--Subject to 
subsection (b), the Board for a Region may establish, by regulation, an 
over-order price for the sale of Class I milk in the regulated area of 
a Region that--
            ``(1) is higher than the price for Class I milk established 
        under Federal milk marketing orders operating in the regulated 
        area; and
            ``(2) is higher than the price for fluid milk otherwise 
        applicable in any portion of the regulated area not covered by 
        a Federal milk marketing order.
    ``(b) Maximum Authorized Over-Order Price.--During the beginning on 
the date of the enactment of this chapter and ending on December 31, 
2005, an over-order price established under subsection (a) may not 
exceed $17.50 per hundredweight. For each subsequent calendar year, the 
maximum over-order price applicable during the preceding year shall be 
adjusted by the Secretary to reflect changes for the 12-month period 
ending the preceding November 30 in the Consumer Price Index for All 
Urban Consumers published by the Bureau of Labor Statistics of the 
Department of Labor.
    ``(c) Application of Over-Order Price and Premium.--
            ``(1) Uniform prices.--In the regulations establishing an 
        over-order price, the Board shall provide for--
                    ``(A) the payment of uniform prices to all eligible 
                producers and associations of eligible producers 
                delivering milk to all covered processors for all milk 
                so delivered, irrespective of the uses made of the milk 
                by an individual covered processor; or
                    ``(B) the payment of uniform prices to all eligible 
                producers and associations of eligible producers 
                delivering milk to the same covered processor for all 
                milk delivered by the eligible producers and 
                associations to that covered processor.
            ``(2) Payment by covered processors.--As provided in 
        section 1516, the over-order premium applicable to the 
        regulated area of a Region, determined on the basis of the 
        over-order price established under subsection (a) for the 
        regulated area, shall be paid by pool plants, partially 
        regulated plants, and all other covered processors receiving 
        milk from eligible producers located in a regulated area.
            ``(3) Legal obligation to pay price.--The legal obligation 
        to pay the over-order price shall be determined solely by the 
        terms and purpose of the regulation establishing the price, 
        without regard to the location of the transfer of title, 
        possession, or any other factors not related to the purposes of 
        the regulation and this chapter.
            ``(4) Producer-handlers.--A producer-handler (as defined in 
        the applicable Federal milk marketing order) that sells not 
        more 150,000 pounds of milk per month shall not be subject to 
        an over-order price under this subsection or the payment of the 
        resulting over-order premium.
    ``(d) Equalization Pools.--
            ``(1) Over-order prices.--In the case of regulations 
        establishing an over-order price, the Board may establish 1 or 
        more equalization pools within the regulated area for the sole 
        purpose of equalizing returns to eligible producers throughout 
        the regulated area.
            ``(2) Pooling and equalization of over-order prices.--For 
        purposes of the pooling and equalization of an over-order 
        price--
                    ``(A) the value of milk used in other use 
                classifications shall be calculated at the appropriate 
                class price established pursuant to the applicable 
                Federal milk marketing order; and
                    ``(B) the value of milk not covered by a Federal 
                milk marketing order shall be calculated in relation to 
                the nearest prevailing class price in accordance with 
                and subject to such adjustments as the Board may 
                prescribe by regulation.
    ``(e) Factors.--In determining the amount of an over-order price to 
be established under this section, the Board shall consider--
            ``(1) the balance between production and consumption of 
        milk and milk products in the regulated area;
            ``(2) the costs of milk production in the regulated area, 
        including--
                    ``(A) the price of feed, including the cost of hay, 
                silage, pasture, and other forage;
                    ``(B) the cost of labor, including the reasonable 
                value of the eligible producer's own labor and 
                management;
                    ``(C) machinery expenses;
                    ``(D) interest expenses; and
                    ``(E) other cash expenses, including the cost of 
                hauling, veterinary services and medicine, bedding and 
                litter, marketing, custom services and supplies, fuel, 
                lubrication, electricity, machinery and building 
                repairs, labor, association fees, and assessments;
            ``(3) the prevailing price for milk outside the regulated 
        area;
            ``(4) the purchasing power of the public; and
            ``(5) the price necessary to yield a reasonable return to 
        the eligible producer.
    ``(f) Producer Settlement Funds.--The regulations shall require 
that the account of any person regulated under the over-order price 
shall be adjusted for any payments made to or received by the person 
with respect to a producer settlement fund of any Federal milk 
marketing order within the regulated area.

``SEC. 1516. PAYMENTS FROM COVERED PROCESSORS.

    ``(a) Payments Required.--Subject to subsection (b), each covered 
processor that purchases Class I milk during a month that will be sold 
in the regulated area of a Region shall pay to the Secretary an amount 
equal to the product obtained by multiplying--
            ``(1) the over-order premium in effect for the regulated 
        area for the month; by
            ``(2) the quantity of Class I milk so purchased from 
        eligible producers during the month.
    ``(b) Reduction for Any Applicable Equalization Payments.--The 
product obtained under subsection (a) for a covered processor for a 
month shall be reduced by any applicable equalization payments made for 
the same month by the covered processor pursuant to regulations issued 
under section 1517(a).
    ``(c) Deposit of Payments in Fund.--The Secretary shall deposit 
amounts received under this section in the Fund.

``SEC. 1517. OPTIONAL PROVISIONS FOR PRICING ORDERS.

    ``(a) Equalization Payments.--
            ``(1) In general.--In issuing regulations establishing an 
        over-order price, the Board for a Region may include a 
        provision to require persons that bring Class I milk into the 
        regulated area of the Region to make equalization payments with 
        respect to all such milk to the extent necessary to equalize 
        the cost of milk purchased by covered processors subject to the 
        over-order price.
            ``(2) Discrimination.--The regulations shall not 
        discriminate against milk producers outside the regulated area.
            ``(3) Amount.--The regulations for equalization payments 
        may require payment of the difference between--
                    ``(A) the applicable over-order price; and
                    ``(B) the Class I price required to be paid for the 
                milk in the State of production by a Federal milk 
                marketing order.
    ``(b) Partially Regulated Plants.--The regulations issued by the 
Board for a Region may provide special provisions governing the pricing 
and pooling of milk handled by partially regulated plants.
    ``(c) Other Provisions.--The regulations issued by the Board for a 
Region may contain such other provisions and requirements as the Board 
determines are necessary or appropriate--
            ``(1) to effectuate the purposes of this chapter; and
            ``(2) to provide for the payment of fair and equitable 
        minimum prices for milk sold by eligible producers.

``SEC. 1518. NATIONAL DAIRY PRODUCERS FUND.

    ``(a) Establishment.--There is established in the Treasury of the 
United States a revolving fund to be known as the `National Dairy 
Producers Fund'. The fund shall consist of the following:
            ``(1) Payments by covered processors required to be 
        deposited in the Fund under section 1516(c).
            ``(2) The interest on, and the proceeds from the sale or 
        redemption of, any obligations held in the Fund under 
        subsection (d).
            ``(3) To the extent that amounts referred to in the 
        preceding paragraphs are insufficient to carry out this 
        chapter, funds of the Commodity Credit Corporation, which shall 
        be transferred by the Secretary to the Fund to make up the 
        short-fall.
    ``(b) Expenditures From Fund.--On request by the Secretary, the 
Secretary of the Treasury shall transfer from the Fund to the Secretary 
such amounts as the Secretary determines are necessary to carry out 
this chapter.
    ``(c) Investment of Amounts.--
            ``(1) In general.--The Secretary of the Treasury shall 
        invest such portion of the Fund as is not, in the judgment of 
        the Secretary, required to meet current operating requirements.
            ``(2) Investments.--Investments may be made only in 
        interest-bearing obligations of the United States.
            ``(3) Acquisition of obligations.--For the purpose of 
        investments under paragraph (1), obligations may be acquired--
                    ``(A) on original issue at the issue price; or
                    ``(B) by purchase of outstanding obligations at the 
                market price.
            ``(4) Sale of obligations.--Any obligation acquired by the 
        Fund may be sold by the Secretary of the Treasury at the market 
        price.

``SEC. 1519. COMPENSATION FOR ADMINISTRATIVE AND INCREASED FOOD 
              ASSISTANCE COSTS.

    ``(a) Administrative Costs.--
            ``(1) Board assessment for administrative costs.--The Board 
        for a Region may impose and collect an assessment on covered 
        processors operating in the regulated area of the Region to 
        cover administrative costs incurred by the Board to carry out 
        its duties under this chapter. The assessment amount may not 
        exceed $0.03 per hundredweight.
            ``(2) Use of fund.--The Secretary shall use amounts in the 
        Fund to cover--
                    ``(A) administrative costs incurred by the 
                Secretary to carry out this chapter; and
                    ``(B) any administrative costs incurred by the 
                Boards not covered by the assessments imposed under 
                paragraph (1).
    ``(b) Increased Federal Food Assistance Costs.--The Secretary shall 
use amounts in the Fund to cover the increased cost of any milk and 
milk products that results from carrying out this chapter--
            ``(1) child nutrition programs (as defined in section 25(b) 
        of the Richard B. Russell National School Lunch Act (42 U.S.C. 
        1769f(b)); and
            ``(2) nutrition services provided through projects carried 
        out under part C of title IV of the Older Americans Act of 1965 
        (42 U.S.C. 3030e et seq.).
    ``(c) Increased State Food Assistance Costs.--The Secretary shall 
use amounts in the Fund to make payments to each participating State 
for the increased costs incurred by the participating State of any milk 
or milk products provided under the special supplemental nutrition 
program for women, infants, and children established by section 17 of 
the Child Nutrition Act of 1966 (42 U.S.C. 1786) that results from 
carrying out this chapter.
    ``(d) Compensation of Commodity Credit Corporation for Increased 
Milk Purchases.--At the end of each month for which an over-order price 
is in effect for a Region, the Board of the Region shall compensate the 
Commodity Credit Corporation for the cost of any purchases of milk and 
milk products by the Corporation in the regulated area of the Region 
for that month resulting from a rate of increase in milk production for 
the month in the regulated area in excess of the national average rate 
of the increase in milk production over the 3-year period ending at the 
end of the preceding month, as determined by the Secretary.

``SEC. 1520. USE OF FUND TO ASSIST ELIGIBLE PRODUCERS.

    ``(a) Provision of Funds to Boards.--The Secretary shall use 
amounts in the Fund to make monthly payments to the Boards.
    ``(b) Amount.--The amount of a payment made to a Board for a Region 
for the most recent month for which data are available shall be the 
greater of--
            ``(1) the amount of payments made by covered processors to 
        the Fund under section 1516 for purchases of Class I milk that 
        will be sold in the regulated area of the Region during the 
        month; or
            ``(2) the amount obtained by multiplying--
                    ``(A) a payment quantity equal to the total 
                quantity of all milk produced in the regulated area of 
                the Region during the month;
                    ``(B) a payment rate equal to the over-order 
                premium in effect for the regulated area for the month; 
                and
                    ``(C) 50 percent.
    ``(c) Payments to Producers.--The Board for a Region shall use 
amounts received under this section to make payments to eligible 
producers for all classes of milk that is produced in the regulated 
area of the Region.

``SEC. 1521. PRODUCER REFERENDUM.

    ``(a) Referendum Required.--For the purpose of ascertaining whether 
the issuance, amendment, or termination of regulations establishing an 
over-order price is approved by eligible producers in the regulated 
area of a Region, the Board for the Region shall conduct a referendum 
among such eligible producers.
    ``(b) Timing.--The referendum shall be held in a timely manner, as 
determined by regulation of the Board.
    ``(c) Ballot Content.--
            ``(1) In general.--The terms and conditions of the proposed 
        order or amendment shall be described by the Board in the 
        ballot used in the referendum.
            ``(2) Actions.--The nature, content, or extent of the 
        description shall not be used a basis for attacking the 
        legality of the order or any action relating to the order.
    ``(d) Approval.--An order or amendment shall be considered approved 
by eligible producers if the Board determines that the order or 
amendment is approved by a majority of the voting eligible producers 
who, during a representative period determined by the Board, have been 
engaged in the production of milk the price of which would be regulated 
under the proposed order or amendment.
    ``(e) Cooperatives.--
            ``(1) In general.--Subject to paragraphs (2) through (6), 
        for the purpose of a referendum, the Board shall consider the 
        approval or disapproval by any cooperative association of 
        eligible producers qualified under the Act entitled `An Act to 
        authorize association of producers of agricultural products' 
        (commonly known as the `Capper-Volstead Act') (7 U.S.C. 291 et 
        seq.) and engaged in marketing milk, or in rendering services 
        for or advancing the interests of eligible producers, as the 
        approval or disapproval of the eligible producers who are 
        members or stockholders in, or under contract with, the 
        cooperative association of eligible producers.
            ``(2) Common marketing agency.--No cooperative that has 
        been formed to act as a common marketing agency for both the 
        cooperative and individual eligible producers shall be 
        qualified to block vote for the cooperative or individual 
        eligible producers.
            ``(3) Notification by cooperative.--
                    ``(A) In general.--Any cooperative that is 
                qualified to block vote shall, before submitting the 
                approval or disapproval of the cooperative in any 
                referendum, give prior written notice to each of the 
                members of the cooperative as to whether and how the 
                cooperative intends to cast the vote of the 
                cooperative.
                    ``(B) Administration.--The notice shall be given in 
                a timely manner as established, and in the form 
                prescribed, by the Board.
            ``(4) Producer ballots.--
                    ``(A) In general.--Any eligible producer may obtain 
                a ballot from the Board in order to register approval 
                or disapproval of the proposed order.
                    ``(B) Ballots.--If a cooperative provides notice to 
                an eligible producer of the intent of the cooperative 
                to approve or not approve a proposed order and the 
                eligible producer casts a ballot that is contrary to 
                the intent of the cooperative--
                            ``(i) the eligible producer shall notify 
                        the Board as to the name of the cooperative of 
                        which the eligible producer is a member; and
                            ``(ii) the Board shall--
                                    ``(I) remove the name of the 
                                eligible producer from the list 
                                certified by the cooperative of 
                                corporate vote of the cooperative; and
                                    ``(II) provide the eligible 
                                producer with an independent ballot 
                                that may be cast in the referendum.
            ``(5) Notification by board.--In order to ensure that all 
        eligible producers are informed regarding the proposed order, 
        the Board shall notify all eligible producers that--
                    ``(A) an order is being considered; and
                    ``(B) each eligible producer may register the 
                approval or disapproval of the eligible producer with 
                the Board directly or through the cooperative of the 
                eligible producer.

``SEC. 1522. ENFORCEMENT WITH RESPECT TO COVERED PROCESSORS.

    ``In the case of covered processors, the Board may enforce this 
chapter (including regulations establishing an over-order price and 
other regulations issued under this chapter) by--
            ``(1) commencing an action for legal or equitable relief 
        brought in the name of the Board in Federal or State court of 
        competent jurisdiction;
            ``(2) referral to the State agency for enforcement by 
        judicial or administrative remedy with the agreement of the 
        appropriate State agency of a participating State; or
            ``(3) bringing an action for an injunction to enforce this 
        chapter, without being compelled to allege or prove that an 
        adequate remedy of law does not exist.''.

SEC. 3. NATIONAL DAIRY MARKET LOSS PAYMENTS.

    Section 1502 of the Farm Security and Rural Investment Act of 2002 
(7 U.S.C. 7982) is amended by striking ``2005'' each place it appears 
in subsections (f) and (g)(1) and inserting ``2007''.
                                 <all>
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