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.

SECTION 1. PRICE SUPPORT PROGRAM FOR MILK.

    (a) In General.--Effective January 1, 1996, section 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 calendar years 1996 
        through 2002, the price of milk used for cheese shall be 
        supported at the rate provided in paragraph (2). Milk used for 
        nonfat dry milk or butter shall not be supported under this 
        section.
            ``(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 support 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 
        subsection (d).
    ``(d) Support Rate Adjustments.--Effective January 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 
estimated 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 decrease 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 applicable 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 Compensatory Budget Deficit 
Assessment.--
            ``(1) Refunds of 1995 assessments.--The Secretary shall 
        provide for a refund of the entire reduction under subsection 
        (h)(2) of this section, as in effect on December 31, 1995, in 
        the price of milk received by a producer during calendar year 
        1995, if the producer provides evidence that the producer did 
        not increase marketings in calendar year 1995 when compared to 
        calendar year 1994. A refund under this subsection shall not be 
        considered as any type of price support or payment for purposes 
        of sections 1211 and 1221 of the Food Security Act of 1985.
            ``(2) Residual assessment in calendar year 1996.--
                    ``(A) In general.--During the period beginning on 
                May 1, 1996, and ending on December 31, 1996, the 
                Secretary shall provide for a reduction in the price 
                received by producers for all milk produced in the 48 
                contiguous States and marketed by producers for 
                commercial use.
                    ``(B) Amount.--The amount of the reduction under 
                subparagraph (A) shall be an amount determined by the 
                Secretary sufficient to equal, when applied to 
                reductions made on milk marketed, the amount that 
                compensates for refunds made under paragraph (1).
            ``(3) Enforcement.--
                    ``(A) Collection.--Reductions in price required 
                under paragraph (2) shall be collected and remitted to 
                the Commodity Credit Corporation in the manner 
                prescribed by the Secretary.
                    ``(B) Penalties.--If any person fails to collect or 
                remit the reduction required by paragraph (2) or fails 
                to comply with such requirements for recordkeeping or 
                as otherwise are required by the Secretary to carry out 
                this subsection, the person shall be liable to the 
                Secretary for a civil penalty up to an amount 
                determined by multiplying--
                            ``(i) the quantity of milk involved in the 
                        violation expressed in hundredweights; by
                            ``(ii) the support rate for milk in effect 
                        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 Secretary shall carry out 
the program authorized by this section 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 Adjustment.--Section 102 of the 
Food, Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 1446e-
1) is repealed.

SEC. 2. ESTABLISHMENT OF A CLASS IV ACCOUNT.

    (a) Establishment of Class IV Account.--Notwithstanding any other 
provision of law, effective January 1, 1996, the Secretary of 
Agriculture shall establish a special 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 producers for commercial use 
in the 48 contiguous States.
    (b) Class IV Price and Differential; Proration.--
            (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 
        differential 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 produced in the 48 
                contiguous States of the United States and marketed for 
                commercial use in making Class IV final products during 
                the preceding 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 twenty-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 determined by multiplying the quantity of 
        milk handled for the account of such producer during the 
        preceding month by the Class IV differential proration 
        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 producer's own 
        production in the form of milk or dairy products to consumers, 
        either directly or through retail or wholesale outlets, shall 
        remit to the Administrator of the special Class IV account the 
        amount determined by multiplying the quantity of such milk 
        marketed by such producer by the Class IV differential 
        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 preceding 
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 subsections (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 delegate 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 Secretary 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 Secretary for a civil penalty up to an amount 
        determined 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 enforce this section in 
        the courts of the United States.
    (h) Issuance of Class IV Account.--The Secretary shall issue 
regulations to effectuate the Class IV account without regard to the 
notice and comment requirements 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 
sentence: ``Each marketing order issued pursuant to this section 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 ``program''; 
                and
                    (B) inserting ``of Agriculture'' after 
                ``Secretary'' the first time it appears in the 
                subsection;
            (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 subsection:
    ``(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 account established under section 1202 of 
the Agricultural Reconciliation Act of 1995, at the request of the 
Administrator, as provided in this subsection. The Secretary shall have 
the right to accept or reject any per-unit amount requested by the 
Administrator under such criteria as the Secretary deems appropriate.
    ``(2) Under the price equalization program, the Administrator 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 exported from the United States during the preceding quarter. 
The rate of payment per unit of milk equivalent exported 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 inconsistent 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 allocations 
        available for the operations of the programs under this section 
        is given to the export bid program; 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 Marketing 
Agreement Act of 1937 (7 U.S.C. 608c), and conduct 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 producers 
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 Agricultural Marketing Agreement 
Act of 1937, and shall announce the determination through publication 
in the Federal Register by the end of such 90-day period. Such 
consolidation of orders provided for under the Secretary's 
determination shall be implemented within 2 years after the date of the 
enactment of this Act.
    (c) Sense of Congress Regarding Consolidation 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.

Summary: Amends the Agricultural Act of 1949 to establish milk price support provisions for calendar years 1996 through 2002. 
Mandates establishment of a special milk marketing order to equalize returns on all milk used in the 48 contiguous States to produce Class IV final products (butter, nonfat dry milk, and dry whole milk) among all milk marketed by producers for commercial use in those States. 
Amends the Food Security Act of 1985 to extend the termination date of the dairy products export incentive program (renaming it as the exporter bid program).  Establishes a dairy products export incentive program (the price equalization program), requiring it to provide for payments by the Commodity Credit Corporation to the Administrator of the Class IV account established under the Agricultural Reconciliation Act of 1995. 
Mandates inviting proposals and conducting expedited hearings on consolidating and reforming Federal milk marketing orders issued under specified provisions of the Agricultural Marketing Agreement Act of 1937, including considering how all milk shall be regulated under Federal or State order, with manufacturing grade producers receiving pool proceeds from Class III and Class IV sales only.  Declares that it is the sense of the Congress that Federal milk marketing orders in operation under the Agricultural Adjustment Act should be consolidated to between 8 and 14 orders.