105 
cluded in the annual production history of a partici-
pating dairy operation, the premium per hundred-
weight corresponding to each coverage level is as fol-
lows: 
Coverage Level 
Premium per Cwt. 
$4.50 
$0.02
$5.00 
$0.04
$5.50 
$0.10
$6.00 
$0.15
$6.50 
$0.29
$7.00 
$0.62
$7.50 
$0.83
$8.00 
$1.06. 
(4) TIME FOR PAYMENT.—In promulgating the 
rules to initiate the production margin protection 
program, the Secretary shall provide more than 1 
method by which a participating dairy operation that 
purchases supplemental production margin protec-
tion for a calendar year may pay the premium under 
this subsection for that year in any manner that 
maximizes participating dairy operation payment 
flexibility and program integrity. 
(e) PREMIUM OBLIGATIONS.— 
(1) PRO-RATION OF PREMIUM FOR NEW DAIRY 
OPERATIONS.—A participating dairy operation de-
scribed in section 1412(c)(2) that purchases supple-
mental production margin protection for a calendar 
year after the start of the calendar year shall pay 
a pro-rated premium for that calendar year based on 
VerDate Mar 15 2010 
23:29 Jul 08, 2013
Jkt 029200
PO 00000
Frm 00105
Fmt 6652
Sfmt 6201
E:\BILLS\H2498.IH
H2498
sroberts on DSK5SPTVN1PROD with BILLS
106 
the portion of the calendar year for which the par-
ticipating dairy operation purchases the coverage. 
(2) LEGAL OBLIGATION.—A participating dairy 
operation that purchases supplemental production 
margin protection for a calendar year shall be legally 
obligated to pay the applicable premium for that cal-
endar year, except that the Secretary may waive 
that obligation, under terms and conditions deter-
mined by the Secretary, for 1 or more producers in 
any participating dairy operation in the case of 
death, retirement, permanent dissolution of a par-
ticipating dairy operation, or other circumstances as 
the Secretary considers appropriate to ensure the in-
tegrity of the program. 
(f) SUPPLEMENTAL PAYMENT THRESHOLD.—A par-
ticipating dairy operation with supplemental production 
margin protection shall receive a supplemental production 
margin protection payment whenever the average actual 
dairy production margin for a consecutive 2-month period 
is less than the coverage level threshold selected by the 
participating dairy operation under subsection (b). 
(g) SUPPLEMENTAL PRODUCTION MARGIN PROTEC-
TION PAYMENTS.— 
(1) IN
GENERAL.—The supplemental produc-
tion margin protection payment for a participating 
VerDate Mar 15 2010 
23:29 Jul 08, 2013
Jkt 029200
PO 00000
Frm 00106
Fmt 6652
Sfmt 6201
E:\BILLS\H2498.IH
H2498
sroberts on DSK5SPTVN1PROD with BILLS
107 
dairy operation is in addition to the basic production 
margin protection payment. 
(2) AMOUNT OF PAYMENT.—The supplemental 
production margin protection payment for the par-
ticipating dairy operation shall be determined as fol-
lows: 
(A) The Secretary shall calculate the dif-
ference between the coverage level threshold se-
lected by the participating dairy operation 
under subsection (b) and the greater of— 
(i) the average actual dairy production 
margin for the consecutive 2-month period; 
or 
(ii) $4.00. 
(B) The amount determined under sub-
paragraph (A) shall be multiplied by the per-
centage selected by the participating dairy oper-
ation under subsection (c) and by the lesser of 
the following: 
(i) The annual production history of 
the participating dairy operation, divided 
by 6. 
(ii) The actual amount of milk mar-
keted by the participating dairy operation 
during the consecutive 2-month period. 
VerDate Mar 15 2010 
23:29 Jul 08, 2013
Jkt 029200
PO 00000
Frm 00107
Fmt 6652
Sfmt 6201
E:\BILLS\H2498.IH
H2498
sroberts on DSK5SPTVN1PROD with BILLS
108 
SEC. 1416. EFFECT OF FAILURE TO PAY ADMINISTRATION 
FEES OR PREMIUMS. 
(a) LOSS OF BENEFITS.—A participating dairy oper-
ation that fails to pay the required administration fee 
under section 1412 or is in arrears on premium payments 
for supplemental production margin protection under sec-
tion 1415— 
(1) remains legally obligated to pay the admin-
istration fee or premiums, as the case may be; and 
(2) may not receive basic production margin 
protection payments or supplemental production 
margin protection payments until the fees or pre-
miums are fully paid. 
(b) ENFORCEMENT.—The Secretary may take such 
action as necessary to collect administration fees and pre-
mium payments for supplemental production margin pro-
tection. 
Subpart B—Dairy Market Stabilization Program 
SEC. 1431. ESTABLISHMENT OF DAIRY MARKET STABILIZA-
TION PROGRAM. 
(a) PROGRAM REQUIRED; PURPOSE.—Effective not 
later than 120 days after the effective date of this subtitle, 
the Secretary shall establish and administer a dairy mar-
ket stabilization program applicable to participating dairy 
operations for the purpose of assisting in balancing the 
VerDate Mar 15 2010 
23:29 Jul 08, 2013
Jkt 029200
PO 00000
Frm 00108
Fmt 6652
Sfmt 6201
E:\BILLS\H2498.IH
H2498
sroberts on DSK5SPTVN1PROD with BILLS
109 
supply of milk with demand when participating dairy oper-
ations are experiencing low or negative operating margins. 
(b) ELECTION OF STABILIZATION PROGRAM BASE 
CALCULATION METHOD.— 
(1) ELECTION.—When a dairy operation signs 
up under section 1412 to participate in the produc-
tion margin protection program, the dairy operation 
shall inform the Secretary of the method by which 
the stabilization program base for the participating 
dairy operation will be calculated under paragraph 
(3). 
(2) CHANGE
IN
CALCULATION
METHOD.—A 
participating dairy operation may change the sta-
bilization program base calculation method to be 
used for a calendar year by notifying the Secretary 
of the change not later than a date determined by 
the Secretary. 
(3) CALCULATION METHODS.—A participating 
dairy operation may elect either of the following 
methods for calculation of the stabilization program 
base for the participating dairy operation: 
(A) The volume of the average monthly 
milk marketings of the participating dairy oper-
ation for the 3 months immediately preceding 
VerDate Mar 15 2010 
23:29 Jul 08, 2013
Jkt 029200
PO 00000
Frm 00109
Fmt 6652
Sfmt 6201
E:\BILLS\H2498.IH
H2498
sroberts on DSK5SPTVN1PROD with BILLS