I
104TH CONGRESS
1ST SESSION
H. R. 2597
To modify the price support program for milk; to establish a class IV account
applicable to the products of milk; to modify the dairy export incentive
program; and to consolidate and reform Federal milk marketing orders.
IN THE HOUSE OF REPRESENTATIVES
NOVEMBER 8, 1995
Mr. SOLOMON (for himself, Mr. LIVINGSTON, Mr. PAXON, Mr. BOEHLERT,
Mr. CHAMBLISS, Mr. CLINGER, Mr. DEAL of Georgia, Mr. ENGLISH of
Pennsylvania, Mr. EVERETT, Mr. HOUGHTON, Mr. MCHUGH, Mr. QUIL-
LEN, Mr. QUINN, Mr. TAYLOR of North Carolina, and Mr. WALSH) intro-
duced the following bill; which was referred to the Committee on Agri-
culture
A BILL
To modify the price support program for milk; to establish
a class IV account applicable to the products of milk;
to modify the dairy export incentive program; and to
consolidate and reform Federal milk marketing orders.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. PRICE SUPPORT PROGRAM FOR MILK.
(a) IN GENERAL.—Effective January 1, 1996, sec-
tion 204 of the Agricultural Act of 1949 (7 U.S.C. 1446e)
is amended to read as follows:
‘‘SEC. 204. MILK PRICE SUPPORT PROGRAM FOR CALENDAR
YEARS 1996 THROUGH 2002.
‘‘(a) IN GENERAL.—During the period beginning
January 1, 1996, and ending December 31, 2002, the
price of milk produced in the 48 contiguous States shall
be supported as provided in this section.
‘‘(b) SUPPORT PRICE.—
‘‘(1) IN
GENERAL.—During each of the cal-
endar years 1996 through 2002, the price of milk
used for cheese shall be supported at the rate pro-
vided in paragraph (2). Milk used for nonfat dry
milk or butter shall not be supported under this sec-
tion.
‘‘(2) ANNUAL RATE.—For calendar year 1996,
the rate of price support for milk used for cheese
shall be equal to $10.00 per hundredweight. For
each of the calendar years 1997 through 2002, the
rate of price support for milk used for cheese shall
be reduced by 10 cents per hundredweight from the
rate in effect for the preceding calendar year.
‘‘(c) PURCHASES.—
‘‘(1) IN GENERAL.—The price of milk used for
cheese shall be supported through the purchase of
cheese. Such purchases shall be based on the sup-
port price in effect during the applicable calendar
year.
‘‘(2) SALES THROUGH DEIP.—Sales for export
under the dairy export incentive program established
under section 153 of the Food Security Act of 1985
(15 U.S.C. 713a–14) shall not be considered as
Commodity Credit Corporation purchases under sub-
section (d).
‘‘(d) SUPPORT RATE ADJUSTMENTS.—Effective Jan-
uary 1 of each of the calendar years 1996 through 2002,
if the level of purchases of milk and the products of milk
by the Commodity Credit Corporation under this section
(less sales under section 407 for unrestricted use), as esti-
mated by the Secretary by November 20 of the preceding
calendar year, will exceed 1,500,000,000 pounds (milk
equivalent, total milk solids basis), the Secretary shall de-
crease by 25 cents per hundredweight, in addition to the
annual reduction under subsection (b)(2), the rate of price
support for milk used for cheese in effect for the calendar
year. The support rate adjustment provided under this
subsection shall be effective only for the calendar year ap-
plicable to the estimate of the Secretary. After the support
rate adjustment terminates, the support price shall be the
level provided under subsection (b)(2).
‘‘(e) RESIDUAL AUTHORITY FOR REFUND AND COM-
PENSATORY BUDGET DEFICIT ASSESSMENT.—
‘‘(3) ENFORCEMENT.—
‘‘(A) COLLECTION.—Reductions in price
required under paragraph (2) shall be collected
and remitted to the Commodity Credit Corpora-
tion in the manner prescribed by the Secretary.
‘‘(B) PENALTIES.—If any person fails to
collect or remit the reduction required by para-
graph (2) or fails to comply with such require-
ments for recordkeeping or as otherwise are re-
quired by the Secretary to carry out this sub-
section, the person shall be liable to the Sec-
retary for a civil penalty up to an amount de-
termined by multiplying—
‘‘(i) the quantity of milk involved in
the violation expressed in hundredweights;
by
‘‘(ii) the support rate for milk in ef-
fect under this section at the time of the
violation.
‘‘(C) ENFORCEMENT
IN
COURTS.—The
Secretary may enforce this subsection in the
courts of the United States.
‘‘(f) COMMODITY CREDIT CORPORATION.—The Sec-
retary shall carry out the program authorized by this sec-
tion through the Commodity Credit Corporation.
‘‘(g) PERIOD.—This section shall be effective only
during the period beginning January 1, 1996, and ending
December 31, 2002.’’.
(b) MILK MANUFACTURING MARKETING ADJUST-
MENT.—Section 102 of the Food, Agriculture, Conserva-
tion, and Trade Act of 1990 (7 U.S.C. 1446e–1) is re-
pealed.
SEC. 2. ESTABLISHMENT OF A CLASS IV ACCOUNT.
(a) ESTABLISHMENT OF CLASS IV ACCOUNT.—Not-
withstanding any other provision of law, effective January
1, 1996, the Secretary of Agriculture shall establish a spe-
cial milk marketing order to equalize returns on all milk
used in the 48 contiguous States of the United States to
produce Class IV final products (butter, nonfat dry milk,
and dry whole milk) among all milk marketed by produc-
ers for commercial use in the 48 contiguous States.
(b) CLASS IV PRICE AND DIFFERENTIAL; PRORA-
TION.—
(1) PRICE.—The Secretary shall determine a
milk equivalent value per hundredweight for Class
IV final products each month based on the average
wholesale market prices during the month for Class
IV final products. Such milk equivalent value at
3.67 percent milkfat shall be the per hundredweight
Class IV price under the special Class IV account
established under subsection (a).
(2) DIFFERENTIAL.—The Administrator of the
special Class IV account shall announce, on the first
business day of each month, the per hundredweight
Class IV differential applicable under the order to
the preceding month. Such monthly Class IV dif-
ferential shall be the amount, if any, by which the
support rate for milk in effect under section 204 of
the Agricultural Act of 1949 exceeds the Class IV
price established pursuant to paragraph (1).
(3) PRORATION.—On or before the twentieth
day after the end of each month, the Administrator
of the special Class IV account shall—
(A) determine the amount of milk pro-
duced in the 48 contiguous States of the United
States and marketed for commercial use in
making Class IV final products during the pre-
ceding month;
(B) calculate the amount equal to the
number of hundredweights of milk used for
Class IV final products during the preceding
month (as determined under subparagraph (A))
multiplied by the Class IV differential for the
month established under paragraph (2), and
add to that amount the cost of administering
the special Class IV account during the current
month; and
(C) prorate the amount established under
subparagraph (B) among the total amount, in
hundredweights, of milk produced in the 48
contiguous States and marketed for commercial
use during such preceding month.
(c) ACCOUNT OBLIGATIONS.—On or before the twen-
ty-fifth day after the end of each month—
(1) each person making payment to a producer
for milk produced in any of the 48 contiguous States
of the United States and marketed for commercial
use shall collect from each producer the amount de-
termined by multiplying the quantity of milk han-
dled for the account of such producer during the
preceding month by the Class IV differential prora-
tion established pursuant to subsection (b)(3)(C).
Such amount shall be remitted to the Administrator
of the special Class IV account; and
(2) any producer marketing milk of that pro-
ducer’s own production in the form of milk or dairy
products to consumers, either directly or through re-
tail or wholesale outlets, shall remit to the Adminis-
trator of the special Class IV account the amount
determined by multiplying the quantity of such milk
marketed by such producer by the Class IV differen-
tial proration established under subsection (b)(3)(C).
(d) DISTRIBUTION OF ACCOUNT PROCEEDS.—On or
before the thirtieth day after the end of each month, the
Administrator of the special Class IV account shall pay
to each person that used skim milk and butterfat to
produce Class IV final products during the preceding
month a proportionate share of the total special Class IV
account proceeds for such month. The proportion of the
total proceeds payable to each person shall be the same
proportion that the skim milk and butterfat used by such
person to product Class IV final products during the pre-
ceding month is of the total skim milk and butterfat used
by all persons during the preceding month to product
Class IV final products.
(e) EFFECT
ON BLEND PRICES.—Producer blend
prices under a milk marketing order shall be adjusted to
account for revenue distributions required under sub-
sections (c) and (d).
(f) ADMINISTRATION OF CLASS IV ACCOUNT.—The
Secretary of Agriculture shall appoint a person to serve
as Administrator of the Class IV account and shall dele-
gate to that person such powers as are needed to fulfill
the duties of Administrator.
(g) ENFORCEMENT.—
(1) COLLECTION.—The amounts specified in
subsection (c) shall be collected and remitted to the
Administrator in the manner prescribed by the Sec-
retary of Agriculture.
(2) PENALTIES.—If any person fails to remit
the amounts required in subsection (c) or fails to
comply with such requirements for recordkeeping or
otherwise as are required by the Secretary to carry
out this section, the person shall be liable to the Sec-
retary for a civil penalty up to an amount deter-
mined by multiplying—
(A) the quantity of milk involved in the
violation; by
(B) the support rate for milk in effect
under section 204 of the Agricultural Act of
1949 for the applicable calendar year.
(3) ENFORCEMENT.—The Secretary may en-
force this section in the courts of the United States.
(h) ISSUANCE OF CLASS IV ACCOUNT.—The Sec-
retary shall issue regulations to effectuate the Class IV
account without regard to the notice and comment re-
quirements in section 553 of title 5, United States Code.
(i) DEFINITION OF MILK MARKETING ORDER.—For
purposes of this section, the term ‘‘milk marketing order’’
means a milk marketing order issued pursuant to section
8c of the Agricultural Adjustment Act, as reenacted with
amendments by the Agricultural Marketing Agreement
Act of 1937 (7 U.S.C. 608c), and any comparable State
milk marketing order or system.
(j) CLASS IV DESIGNATION.—Effective January 1,
1996, section 8c(5)(A) of the Agricultural Adjustment
Act, as reenacted with amendments by the Agricultural
Marketing Agreement Act of 1937 (7 U.S.C. 608c(5)(A)),
is amended by adding at the end the following new sen-
tence: ‘‘Each marketing order issued pursuant to this sec-
tion for milk and its products shall include all skim milk
and butterfat used to produce butter, nonfat dry milk, and
dry whole milk as a Class IV classification.’’.
SEC. 3. DAIRY EXPORT INCENTIVE PROGRAM.
(a) IN GENERAL.—Section 153 of the Food Security
Act of 1985 (15 U.S.C. 713a–14) is amended—
(1) in subsection (a), by—
(A) striking ‘‘2001’’ and inserting ‘‘2002’’;
and
(B) striking ‘‘an export incentive program’’
and inserting ‘‘export incentive programs (the
export bid program and the price equalization
program)’’;
(2) in subsection (b), by—
(A) inserting ‘‘exporter bid’’ before ‘‘pro-
gram’’; and
(B) inserting ‘‘of Agriculture’’ after ‘‘Sec-
retary’’ the first time it appears in the sub-
section;
(3) in subsection (c), by inserting ‘‘exporter
bid’’ before ‘‘program’’ the first time it appears in
the subsection;
(4) in subsection (d), by inserting ‘‘exporter
bid’’ before ‘‘program’’ the first time it appears in
the subsection;
(5) in subsection (e), by inserting ‘‘exporter
bid’’ before ‘‘program’’; and
(6) by adding at the end the following new sub-
section:
‘‘(f)(1) The price equalization program established
under this section shall provide for the Corporation to
make payments to the Administrator of the Class IV ac-
count established under section 1202 of the Agricultural
Reconciliation Act of 1995, at the request of the Adminis-
trator, as provided in this subsection. The Secretary shall
have the right to accept or reject any per-unit amount re-
quested by the Administrator under such criteria as the
Secretary deems appropriate.
‘‘(2) Under the price equalization program, the Ad-
ministrator may request, on a quarterly basis, price
equalization payments on the milk equivalent, total milk
solids basis, of amounts of solids not fat and butterfat ex-
ported from the United States during the preceding quar-
ter. The rate of payment per unit of milk equivalent ex-
ported shall be an amount equal to the difference between
the support rate for milk in effect under section 204 of
the Agricultural Act of 1949 for the applicable quarter
and the average Class IV price during such quarter, as
determined under criteria established by the Secretary.
‘‘(3) The Corporation may not make any payments
under the price equalization program during the 12-month
period beginning on July 1 of each year that will be incon-
sistent with the obligations of the United States under any
trade agreement to which it is a party. For purposes of
this paragraph, any unit of milk equivalent on which a
payment is made under the export bid program authorized
by this section shall only be counted one time to determine
consistency with any quantitative trade obligation of the
United States.
‘‘(4) The price equalization program shall be operated
under such rules and regulations issued by the Secretary
as the Secretary deems necessary to ensure that—
‘‘(A) first priority in funds and tonnage alloca-
tions available for the operations of the programs
under this section is given to the export bid pro-
gram; and
‘‘(B) sufficient documentation is provided of the
export of the amounts of milk equivalent on which
payments are made.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall become effective January 1, 1996.
SEC. 4. CONSOLIDATION AND REFORM OF FEDERAL MILK
MARKETING ORDERS.
(a) HEARING BY THE SECRETARY AND FOLLOW-UP
ACTION.—As soon as practicable after the enactment of
this Act, the Secretary of Agriculture shall invite proposals
to consolidate and reform Federal milk marketing orders
issued under section 8c of the Agricultural Adjustment
Act, reenacted with amendments by the Agricultural Mar-
keting Agreement Act of 1937 (7 U.S.C. 608c), and con-
duct one or more hearings to consider such proposals. Any
such hearing also shall consider how all milk, including
manufacturing grade milk, shall be regulated under either
a Federal or State order (with manufacturing grade pro-
ducers receiving pool proceeds from Class III and Class
IV sales only).
(b) EXPEDITED PROCESS.—The hearing provided for
in subsection (a) shall be conducted under administrative
hearing procedures, except that the Secretary shall have
90 days after the public hearing to determine, based on
the hearing record, whether the consolidation of the orders
will tend to accomplish the purposes of the Agricultural
Adjustment Act, reenacted with amendments by the Agri-
cultural Marketing Agreement Act of 1937, and shall an-
nounce the determination through publication in the Fed-
eral Register by the end of such 90-day period. Such con-
solidation of orders provided for under the Secretary’s de-
termination shall be implemented within 2 years after the
date of the enactment of this Act.
(c) SENSE OF CONGRESS REGARDING CONSOLIDA-
TION OF FEDERAL ORDERS.—It is the sense of Congress
that Federal milk marketing orders in operation under the
Agricultural Adjustment Act, reenacted with amendments
by the Agricultural Marketing Agreement Act of 1937
should be consolidated to between 8 and 14 orders.
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