1.1                          A bill for an act 
  1.2             relating to agriculture; establishing a milk control 
  1.3             board; providing for minimum pricing of raw milk and 
  1.4             maximum pricing of milk at wholesale and retail; 
  1.5             creating the option for a milk supply quota system; 
  1.6             allowing for pooling of milk payments; authorizing 
  1.7             enforcement; proposing coding for new law as Minnesota 
  1.8             Statutes, chapter 32A. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  [32A.01] [CITATION.] 
  1.11     This chapter may be cited as the "Minnesota Dairy Supply 
  1.12  Management Act." 
  1.13     Sec. 2.  [32A.02] [APPLICATION.] 
  1.14     This chapter does not apply to foreign or interstate 
  1.15  commerce except insofar as it may be effective in compliance 
  1.16  with the United States Constitution and with the laws of the 
  1.17  United States. 
  1.18     Sec. 3.  [32A.03] [DEFINITIONS.] 
  1.19     Subdivision 1.  [SCOPE.] The definitions in this section 
  1.20  apply to this chapter. 
  1.21     Subd. 2.  [ADMINISTRATIVE FUNCTION.] "Administrative 
  1.22  function" means duties and procedures concerning the execution 
  1.23  and enforcement of the laws, rules, orders, directives, duties, 
  1.24  and obligations imposed for the control and government of the 
  1.25  persons or businesses regulated, together with related 
  1.26  investigative activities and procedures inherently 
  1.27  administrative or executive in character. 
  2.1      Subd. 3.  [ADMINISTRATOR.] "Administrator" means the 
  2.2   board's executive arm. 
  2.3      Subd. 4.  [BOARD.] "Board" means the milk control board 
  2.4   created under section 32A.05. 
  2.5      Subd. 5.  [CLASS I; CLASS II; CLASS III; AND CLASS IV 
  2.6   MILK.] "Class I milk," "Class II milk," "Class III milk," and 
  2.7   "Class IV milk" have the meanings given in Code of Federal 
  2.8   Regulations, title 7, part 1000.40, or successor regulations. 
  2.9      Subd. 6.  [DISTRIBUTOR.] "Distributor" means a person 
  2.10  buying milk from a producer and distributing it for consumption 
  2.11  in this state.  The term includes what are commonly known as 
  2.12  jobbers and independent contractors.  The term excludes a person 
  2.13  purchasing milk from a distributor, for resale over the counter 
  2.14  at retail, or for consumption on the premises. 
  2.15     Subd. 7.  [LEGISLATIVE FUNCTION.] "Legislative function" 
  2.16  means the establishment and adoption of all rules, orders, and 
  2.17  directives of general or particular applicability governing the 
  2.18  conduct of the regulated persons or businesses, related 
  2.19  investigative procedures, and all other valid acts and 
  2.20  procedures that are historically or functionally legislative in 
  2.21  character. 
  2.22     Subd. 8.  [PROCESSOR.] "Processor" means a person engaged 
  2.23  in manufacturing or processing dairy products from producers' 
  2.24  milk in the person's own plant for sale. 
  2.25     Subd. 9.  [PRODUCER.] "Producer" means a person who 
  2.26  operates a dairy herd or herds in Minnesota producing milk 
  2.27  commercially and whose milk is sold to, or received or handled 
  2.28  by, a distributor or processor.  
  2.29     Subd. 10.  [PRODUCER PRICE.] "Producer price" means the 
  2.30  price at which milk owned by a producer is sold in bulk to a 
  2.31  distributor or processor. 
  2.32     Sec. 4.  [32A.04] [DUTIES AND POWERS OF ADMINISTRATOR.] 
  2.33     In enforcing this chapter, the administrator and the 
  2.34  administrator's assistants, agents, and employees have the power 
  2.35  and authority granted under sections 31.02 to 31.171.  This 
  2.36  authority must be exercised at the request of and in 
  3.1   coordination with the board. 
  3.2      Sec. 5.  [32A.05] [MILK CONTROL BOARD.] 
  3.3      Subdivision 1.  [CREATION; MEMBERSHIP; APPOINTMENT.] The 
  3.4   milk control board consists of five members appointed by the 
  3.5   governor under section 15.0575.  Members may serve four 
  3.6   consecutive terms.  The board shall elect a chair from among its 
  3.7   members.  No member may be connected in any way with the 
  3.8   production, processing, distribution, or wholesale or retail 
  3.9   sale of milk or dairy products.  A member may not have held an 
  3.10  elective or appointive public office during the two years 
  3.11  immediately preceding appointment and a member may not hold a 
  3.12  public office, either elective or appointive, during a term on 
  3.13  the board.  Not more than three members may be of the same 
  3.14  political party. 
  3.15     Subd. 2.  [ASSIGNMENT; FISCAL AGENT.] The board is to be 
  3.16  housed in the department of agriculture for administrative 
  3.17  purposes.  The commissioner of agriculture shall serve as fiscal 
  3.18  agent to the board. 
  3.19     Sec. 6.  [32A.06] [FEES AND ASSESSMENTS.] 
  3.20     (a) In addition to license fees and other assessments 
  3.21  imposed under chapters 17 and 32, the board shall, in each year, 
  3.22  before April 1, for the purpose of securing funds to administer 
  3.23  and enforce this chapter, levy an assessment upon producers and 
  3.24  distributors as follows: 
  3.25     (1) a fee per hundredweight on the total volume of all milk 
  3.26  subject to this chapter sold by a producer; and 
  3.27     (2) a fee per hundredweight on the total volume of all milk 
  3.28  subject to this chapter sold by a processor or distributor, 
  3.29  except that which is sold to another processor or distributor. 
  3.30     (b) The board shall adopt rules fixing the amount of each 
  3.31  fee.  The amounts may not exceed levels sufficient to provide 
  3.32  for the administration of this chapter.  
  3.33     (c) The assessments upon producers and distributors must be 
  3.34  paid monthly.  The amount of the assessments must be computed by 
  3.35  applying the fee designated by the board to the volume of milk 
  3.36  sold in the preceding month. 
  4.1      (d) All assessments required by this chapter must be 
  4.2   deposited by the administrator in the milk price control account 
  4.3   in the agricultural fund.  Money in that account is appropriated 
  4.4   to the administrator for administering this chapter, including 
  4.5   the salaries of employees and assistants, per diem and expenses 
  4.6   of board members, and all other disbursements necessary to carry 
  4.7   out the purpose of this chapter. 
  4.8      (e) If costs of administering and enforcing this chapter 
  4.9   can be derived from lower rates, the board may fix the rates at 
  4.10  a lesser amount on or before April 1 in any year. 
  4.11     Sec. 7.  [32A.07] [PRODUCER COMMITTEE.] 
  4.12     A producer committee must be elected by district in 
  4.13  proportion to the number of farms in each district consisting of 
  4.14  not fewer than ten members nor more than 15 members to deal 
  4.15  primarily with producer issues and make recommendations to the 
  4.16  board. 
  4.17     Sec. 8.  [32A.08] [REGULATION OF MILK PRICES.] 
  4.18     Subdivision 1.  [ESTABLISHMENT OF MINIMUM PRICES.] (a) The 
  4.19  board shall fix minimum producer prices for Class I, Class II, 
  4.20  Class III, and Class IV milk by adopting rules pursuant to 
  4.21  chapter 14. 
  4.22     (b) Notwithstanding paragraph (a), the minimum price of 
  4.23  Class I milk must be no lower than $15.50 per hundredweight. 
  4.24     Subd. 2.  [FORMULAS.] (a) Except as provided in subdivision 
  4.25  1, the board shall establish minimum and maximum prices by means 
  4.26  of flexible formulas that must be devised so that they bring 
  4.27  about automatic changes in all minimum prices that are justified 
  4.28  on the basis of changes in production, supply, processing, 
  4.29  distribution, and retailing costs. 
  4.30     (b) The board shall consider the balance between production 
  4.31  and consumption of milk, the costs of production and 
  4.32  distribution, and prices in adjacent and neighboring areas and 
  4.33  states so that prices result that are fair and equitable to 
  4.34  producers and consumers. 
  4.35     (c) The board shall, when publishing notice of proposed 
  4.36  rulemaking under authority of this section, specify the factors 
  5.1   that must be taken into consideration in establishing the 
  5.2   formulas and, in particular, in determining costs of production 
  5.3   and of the actual financial costs of production that preliminary 
  5.4   studies and investigations of auditors or accountants in its 
  5.5   employment indicate will or should be shown at the hearing so 
  5.6   that all interested parties will have opportunity to be heard 
  5.7   and to question or rebut the considerations as a matter of 
  5.8   record. 
  5.9      (d) Specific factors may include, but are not limited to: 
  5.10     (1) current and prospective supplies of milk in relation to 
  5.11  current and prospective demands for milk for all purposes; and 
  5.12     (2) the cost factors in producing milk, including the 
  5.13  prices paid by farmers generally, as used in parity calculations 
  5.14  of the United States Department of Agriculture, prices paid by 
  5.15  farmers for dairy feed in particular, and farm wage rates in 
  5.16  this state. 
  5.17     (e) The board, after consideration of the evidence 
  5.18  produced, shall make written findings and conclusions and set by 
  5.19  rule the formula under which minimum producer prices for milk in 
  5.20  classes I, II, III, and IV must be computed.  Generally the 
  5.21  minimum price for Class I milk must be no lower than the federal 
  5.22  milk market order price for the order covering the majority of 
  5.23  Minnesota's dairy industry.  In no case may the minimum price 
  5.24  for Class I milk be lower than $15.50 per hundredweight. 
  5.25     (f) This section may not be construed as requiring the 
  5.26  board to promulgate a specific number of formulas, but it must 
  5.27  be construed liberally so that the board may adopt a reasonable 
  5.28  method of expression to accomplish the objectives of this 
  5.29  chapter.  
  5.30     (g) Each rule establishing or revising milk pricing 
  5.31  formulas must classify milk by forms, classes, grades, or uses 
  5.32  that the board considers advisable and must specify the minimum 
  5.33  prices for the forms, classes, grades, and uses. 
  5.34     (h) All milk purchased by a distributor must be purchased 
  5.35  on a uniform basis established by the board after the producers 
  5.36  and the distributors have been consulted. 
  6.1      Subd. 3.  [QUOTA PLAN.] Upon petition of a processor or 
  6.2   distributor or a majority of a processor's or distributor's 
  6.3   producers, the board shall hold a hearing to receive and 
  6.4   consider evidence regarding the advisability and need for a 
  6.5   quota plan.  If the board finds that the evidence presented at 
  6.6   the hearing warrants the establishment of a quota plan, the 
  6.7   board shall proceed to establish the quota plan. 
  6.8      Subd. 4.  [PAYMENT POOLING PLAN.] (a) Upon petition by ten 
  6.9   percent of the dairy producers in Minnesota, or upon petition by 
  6.10  a processor or distributor, the board shall hold a hearing to 
  6.11  receive and consider evidence regarding the advisability and 
  6.12  need for a statewide pooling arrangement as a method of payment 
  6.13  of producer prices.  At the hearing, the board shall, among 
  6.14  other things, specifically receive and consider evidence 
  6.15  concerning production and marketing practices that have 
  6.16  historically prevailed statewide.  If the board finds that the 
  6.17  evidence presented at the hearing warrants the establishment of 
  6.18  a statewide pooling arrangement, the board shall proceed to 
  6.19  establish the arrangement.  An order is not effective until it 
  6.20  is approved in a referendum conducted by individually mailed 
  6.21  ballots to affected producers.  The order must be approved by a 
  6.22  simple majority of the producers who vote in the referendum.  If 
  6.23  the board finds it necessary, the board may conduct more than 
  6.24  one referendum on any order. 
  6.25     (b) The order of the board establishing the statewide 
  6.26  pooling arrangement may include other provisions that the board 
  6.27  considers necessary for the proper and efficient operation of 
  6.28  the pool.  These provisions may include, but are not limited to: 
  6.29     (1) a statewide base or quota plan; 
  6.30     (2) the establishment of a pool settlement fund to be 
  6.31  administered by the board for the purpose of receiving payments 
  6.32  from pool distributors or making payments to them as necessary 
  6.33  in order to operate and administer the statewide pool; and 
  6.34     (3) the establishment of a pool expense fund for the 
  6.35  purpose of offsetting the costs to the board of administering 
  6.36  the pool, funded by a levy assessed against each pool producer. 
  7.1      (c) An order of the board establishing a statewide pooling 
  7.2   arrangement that has been approved in a referendum may be 
  7.3   rescinded in the same manner as provided for approval of the 
  7.4   order.  The order may be amended without a referendum if, prior 
  7.5   to amending the order, the board gives written notice of its 
  7.6   intended action and holds a public hearing. 
  7.7      Sec. 9.  [32A.09] [ENFORCEMENT.] 
  7.8      Subdivision 1.  [REPORTS OF DEALERS; ACCOUNTING SYSTEM; 
  7.9   RECORDS.] (a) The board may require producers, processors, and 
  7.10  distributors to file, either under oath or otherwise, reports 
  7.11  showing the person's production, sale, or distribution of milk 
  7.12  and any information considered necessary by the board that 
  7.13  pertains to the production, sale, or distribution of milk.  
  7.14     (b) The board shall adopt a uniform system of accounting to 
  7.15  be used by distributors to account for the usage of all milk 
  7.16  received by each distributor. 
  7.17     (c) A distributor must keep a record of: 
  7.18     (1) milk, cream, or dairy products received, detailed as to 
  7.19  location, names and addresses of suppliers, prices paid, 
  7.20  deductions or charges made, and the use to which the milk or 
  7.21  cream was put; 
  7.22     (2) the quantity of each kind of milk or dairy product 
  7.23  manufactured and the quantity and price of milk or dairy 
  7.24  products sold; 
  7.25     (3) milk, cream, or dairy products sold, classified as to 
  7.26  kind and grade, showing where sold, and the amount received in 
  7.27  payment; 
  7.28     (4) the waste or loss of milk or dairy products; 
  7.29     (5) the items of handling expense; 
  7.30     (6) refrigeration facilities sold for storage purposes to 
  7.31  any person, showing types, sizes, and location of the facilities 
  7.32  and the original or duplicate original of all agreements 
  7.33  covering sales for them; and 
  7.34     (7) other items the board considers necessary for the 
  7.35  proper enforcement of this chapter. 
  7.36     Subd. 2.  [COOPERATION WITH OTHER GOVERNMENTAL 
  8.1   AGENCIES.] In order to secure a uniform system of milk price 
  8.2   control, the board shall confer and cooperate with the proper 
  8.3   authorities of other states and of the United States, including 
  8.4   the Secretary of Agriculture of the United States, and for those 
  8.5   purposes, the board may conduct joint hearings, issue joint or 
  8.6   concurrent orders, and exercise all its powers under this 
  8.7   chapter. 
  8.8      Sec. 10.  [32A.10] [REPORT.] 
  8.9      Before beginning to adopt any necessary rules or prescribe 
  8.10  fees authorized by sections 32A.01 to 32A.09, the board must 
  8.11  report the proposed rules or fees to the legislature.  Proposed 
  8.12  rules or fees may not take effect until specifically authorized 
  8.13  by law.