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 amend-
ed—
(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 Re-
gional 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 ‘eli-
gible 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 pur-
suant to a contract entered into under section 1502. 
‘‘(5) FUND.—The term ‘Fund’ means the Na-
tional Dairy Producers Fund established under sec-
tion 1518. 
‘‘(6) FEDERAL MILK MARKETING ORDER.—The 
term ‘Federal milk marketing order’ means a Fed-
eral 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 hundred-
weight 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 estab-
lished 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 dif-
ferent 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 reg-
ulated area in which such distribution occurs, or de-
rives 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 ‘par-
ticipating 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 par-
ticipating State by providing to the Secretary writ-
ten notice through the Governor of the State in ac-
cordance 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 appli-
cable 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 no-
tice was submitted. 
‘‘(B) SUBSEQUENT TERMINATION AUTHOR-
ITY.—If a State submits the written notice re-
quired by paragraph (1) after the end of the pe-
riod specified in subparagraph (A), the termi-
nation of the designation of the State as a par-
ticipating 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 partici-
pating State may restore, in the manner provided by 
State law, the designation of the State as a partici-
pating State. The Governor of the State shall pro-
vide written notice to the Secretary and the applica-
ble Board of the decision to restore such designa-
tion, 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 pro-
ducers 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 TER-
MINATION 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 CON-
TRACT.—An eligible producer that does not elect to 
terminate a contract under section 1502, as author-
ized 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 con-
tract of such a producer shall terminate on Sep-
tember 30, 2005, notwithstanding any amendment 
to section 1502 to extend the duration of such con-
tracts. After that date, the producer shall be ineli-
gible for national dairy market loss payments under 
section 1502 and ineligible for payments under this 
chapter. 
‘‘(5) EFFECT OF SUBSEQUENT STATE TERMI-
NATION OR RESTORATION OF PARTICIPATION.—An 
eligible producer operating in a State that termi-
nates 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 re-
ceive 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 des-
ignation as a participating State under sub-
section (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 Con-
necticut, Delaware, Maine, Maryland, Massachu-
setts, 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, Ne-
braska, North Dakota, Ohio, South Dakota, and 
Wisconsin. 
‘‘(4) 
INTERMOUNTAIN
REGION.—An 
Inter-
mountain Dairy Marketing Area composed of the 
States of Arizona, Colorado, Idaho, Montana, Ne-
vada, New Mexico, Utah, and Wyoming.
‘‘(5) PACIFIC REGION.—A Pacific Dairy Mar-
keting Area composed of the States of Alaska, Cali-
fornia, Hawaii, Oregon, and Washington. 
‘‘SEC. 1514. REGIONAL DAIRY BOARDS. 
‘‘(a) IN GENERAL.—Each Region shall be adminis-
tered 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 pro-
vided in paragraph (2). 
‘‘(2) NOMINATION PROCESS.—The members of 
the Board from a participating State shall be se-
lected from at least 9 individuals nominated by the 
Governor of the State, except that, if the commis-
sioner 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 con-
sumer representative. 
‘‘(c) TERMS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (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 
States, 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 rep-
resenting 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 Re-
gion, 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 be-
tween the various elements of the dairy industry in 
the Region for the solution of material problems, in-
cluding conducting symposia or conferences designed 
to improve dairy-industry relations; or resolve prob-
lems 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 reg-
ulated area of the Region for producing, hauling, 
handling, processing, distributing, selling, and con-
ducting all other services performed with respect to 
milk; 
‘‘(7) to examine—
‘‘(A) economic forces affecting eligible pro-
ducers 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 rela-
tion to costs in the Region; 
‘‘(D) the financial condition of eligible pro-
ducers 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 regu-
lated 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 reg-
ulations, and take such other actions as are nec-
essary 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 ex-
change of information or services for the purpose of reduc-
ing regulatory burden and cost of administering this chap-
ter. The Board may reimburse other agencies for the rea-
sonable 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 reason-
able 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 op-
erating in the regulated area; and 
‘‘(2) is higher than the price for fluid milk oth-
erwise 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 No-
vember 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 PRE-
MIUM.—
‘‘(1) UNIFORM PRICES.—In the regulations es-
tablishing an over-order price, the Board shall pro-
vide for—
‘‘(A) the payment of uniform prices to all 
eligible producers and associations of eligible 
producers delivering milk to all covered proc-
essors for all milk so delivered, irrespective of 
the uses made of the milk by an individual cov-
ered 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 proc-
essor. 
‘‘(2) PAYMENT BY COVERED PROCESSORS.—As 
provided in section 1516, the over-order premium 
applicable to the regulated area of a Region, deter-
mined on the basis of the over-order price estab-
lished 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-han-
dler (as defined in the applicable Federal milk mar-
keting 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 re-
sulting over-order premium. 
‘‘(d) EQUALIZATION POOLS.—
‘‘(1) OVER-ORDER PRICES.—In the case of reg-
ulations 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 regu-
lated 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 appro-
priate 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 cal-
culated 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 con-
sumption of milk and milk products in the regulated 
area; 
‘‘(2) the costs of milk production in the regu-
lated area, including—
‘‘(A) the price of feed, including the cost of 
hay, silage, pasture, and other forage; 
‘‘(B) the cost of labor, including the rea-
sonable 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 medi-
cine, bedding and litter, marketing, custom 
services and supplies, fuel, lubrication, elec-
tricity, 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 regula-
tions shall require that the account of any person regu-
lated 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 mar-
keting 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 EQUALI-
ZATION PAYMENTS.—The product obtained under sub-
section (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 reg-
ulations issued under section 1517(a).
‘‘(c) DEPOSIT OF PAYMENTS IN FUND.—The Sec-
retary 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 es-
tablishing an over-order price, the Board for a Re-
gion may include a provision to require persons that 
bring Class I milk into the regulated area of the Re-
gion 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 equali-
zation payments may require payment of the dif-
ference 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 regula-
tions issued by the Board for a Region may provide special
provisions governing the pricing and pooling of milk han-
dled 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 eq-
uitable minimum prices for milk sold by eligible pro-
ducers. 
‘‘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 Sec-
retary 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 Sec-
retary 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), obliga-
tions may be acquired—
‘‘(A) on original issue at the issue price; or 
‘‘(B) by purchase of outstanding obliga-
tions 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 IN-
CREASED 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 oper-
ating 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 im-
posed 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 nu-
trition program for women, infants, and children estab-
lished by section 17 of the Child Nutrition Act of 1966 
(42 U.S.C. 1786) that results from carrying out this chap-
ter. 
‘‘(d) COMPENSATION OF COMMODITY CREDIT COR-
PORATION FOR INCREASED MILK PURCHASES.—At the 
end of each month for which an over-order price is in ef-
fect for a Region, the Board of the Region shall com-
pensate the Commodity Credit Corporation for the cost 
of any purchases of milk and milk products by the Cor-
poration 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 na-
tional 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 Sec-
retary 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 pur-
chases of Class I milk that will be sold in the regu-
lated 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 termi-
nation 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 ref-
erendum 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 de-
scribed by the Board in the ballot used in the ref-
erendum. 
‘‘(2) ACTIONS.—The nature, content, or extent 
of the description shall not be used a basis for at-
tacking the legality of the order or any action relat-
ing to the order. 
‘‘(d) APPROVAL.—An order or amendment shall be 
considered approved by eligible producers if the Board de-
termines 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 inter-
ests of eligible producers, as the approval or dis-
approval of the eligible producers who are members 
or stockholders in, or under contract with, the coop-
erative association of eligible producers. 
‘‘(2) COMMON MARKETING AGENCY.—No coop-
erative that has been formed to act as a common 
marketing agency for both the cooperative and indi-
vidual eligible producers shall be qualified to block 
vote for the cooperative or individual eligible pro-
ducers. 
‘‘(3) NOTIFICATION BY COOPERATIVE.—
‘‘(A) IN GENERAL.—Any cooperative that 
is qualified to block vote shall, before submit-
ting the approval or disapproval of the coopera-
tive 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 pro-
posed order and the eligible producer casts a 
ballot that is contrary to the intent of the coop-
erative—
‘‘(i) the eligible producer shall notify 
the Board as to the name of the coopera-
tive of which the eligible producer is a 
member; and 
‘‘(ii) the Board shall—
‘‘(I) remove the name of the eli-
gible producer from the list certified 
by the cooperative of corporate vote of 
the cooperative; and
‘‘(II) provide the eligible pro-
ducer 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 re-
garding 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 pro-
ducer 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 equi-
table relief brought in the name of the Board in 
Federal or State court of competent jurisdiction; 
‘‘(2) referral to the State agency for enforce-
ment by judicial or administrative remedy with the 
agreement of the appropriate State agency of a par-
ticipating State; or
‘‘(3) bringing an action for an injunction to en-
force 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 Invest-
ment 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’’.
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