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Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  
    Laws of Minnesota 1993 

                         CHAPTER 65-H.F.No. 661 
           An act relating to agriculture; regulating dairy trade 
          practices and minimum pricing; abolishing the Dairy 
          Industry Unfair Trade Practices Act; changing 
          enforcement procedures; imposing an assessment on 
          certain class I milk; appropriating money; providing 
          penalties; amending Minnesota Statutes 1992, sections 
          13.99, by adding a subdivision; 17.983, subdivision 1; 
          17.984, subdivision 1; and 32.394, subdivisions 8d and 
          9; proposing coding for new law in Minnesota Statutes, 
          chapter 32; repealing Minnesota Statutes 1992, 
          sections 32A.01; 32A.02; 32A.03; 32A.04; 32A.05; 
          32A.07; 32A.071; 32A.08; and 32A.09. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1992, section 13.99, is 
amended by adding a subdivision to read: 
    Subd. 8a.  [DAIRY TRADE PRACTICES.] Certain information 
obtained by the commissioner of agriculture on dairy marketers 
or retailers is classified in section 7. 
    Sec. 2.  Minnesota Statutes 1992, section 17.983, 
subdivision 1, is amended to read: 
    Subdivision 1.  [ADMINISTRATIVE PENALTIES; CITATION.] If a 
person has violated chapter 29, 31, 31A, 32, or 34, the 
commissioner may issue a written citation to the person by 
personal service or by certified mail.  The citation shall 
describe the nature of the violation and the statute or rule 
alleged to have been violated; state the time for correction; 
and the amount of any proposed fine.  The citation must advise 
the person to notify the commissioner in writing within 30 days 
if the person wishes to appeal the citation.  If the person 
fails to appeal the citation, the citation is the final order 
and not subject to further review.  
    Sec. 3.  Minnesota Statutes 1992, section 17.984, 
subdivision 1, is amended to read: 
    Subdivision 1.  [AUTHORITY.] To carry out the 
commissioner's enforcement duties under chapter 29, 31, 31A, 32, 
or 34, the commissioner may, upon presenting appropriate 
credentials, during regular working hours and at other 
reasonable times, inspect premises subject to the commissioner's 
enforcement and licensing authority for reasons related to the 
commissioner's enforcement and licensing authority; request 
information from persons with information relevant to an 
inspection; and inspect relevant papers and records, including 
business records.  The commissioner may issue notices in lieu of 
citations for minor violations if a notice is in the public 
interest.  
    Sec. 4.  Minnesota Statutes 1992, section 32.394, 
subdivision 8d, is amended to read: 
    Subd. 8d.  [PROCESSOR ASSESSMENT.] (a) A manufacturer shall 
pay to the commissioner a fee for fluid milk processed and milk 
used in the manufacture of fluid milk products sold for retail 
sale in Minnesota.  Beginning July May 1, 1991 1993, the fee 
is five six cents per hundredweight.  If the commissioner 
determines that a different fee, not exceeding less than five 
cents and not more than nine cents per hundredweight, when 
combined with general fund appropriations and fees charged under 
sections 31.39 and 32.394, subdivision 8, is needed to provide 
adequate funding for the Grades A and B inspection programs and 
the administration and enforcement of this act, the commissioner 
may, by rule, change the fee on processors within the range 
provided within this subdivision. 
    (b) Processors must report quantities of milk processed 
under paragraph (a) on forms provided by the commissioner.  
Processor fees must be paid monthly.  The commissioner may 
require the production of records as necessary to determine 
compliance with this subdivision. 
    Sec. 5.  Minnesota Statutes 1992, section 32.394, 
subdivision 9, is amended to read: 
    Subd. 9.  [PAYMENTS; REFUNDS; DISPOSITION.] Fees are 
payable by a processor or marketing organization by July 1 of 
each year for Grade A, and by January 1 of each year for 
manufacturing grade, and if not paid within 30 days of the due 
date, the service must be discontinued, and permission to market 
manufacturing grade or Grade A milk or milk products or use the 
Grade A label must be withdrawn.  A processor may terminate 
payment and service without loss of the Grade A label if written 
notice of that intention is given prior to the due date of the 
payment of an assessment and if the continuous inspection of the 
plant is assumed by a city whose milk control ordinance is 
substantially equivalent to Minnesota law and rule and is 
enforced with equal effectiveness.  If a farm discontinues the 
production of milk within six months of the billing date, a 
request for a refund based on inspection services not received 
may be made by the processor or by the marketing organization on 
behalf of its patrons.  This request must be made in writing by 
July 1 for manufacturing grade, or by December 31 for Grade A, 
and on approval by the commissioner refunds must be made to the 
processor or marketing organization.  
    The fees for services performed by the activities of this 
section must be deposited in the state treasury and constitute a 
separate account to be known as the milk inspection service 
dairy services account, which is hereby created, set aside, and 
appropriated as a revolving fund to be used to help to defray 
the cost of administration, refunds and expenses of the 
preliminary and continuous milk inspection services and is in 
addition to and not in substitution for the sums appropriated or 
otherwise made available for this purpose to the department of 
agriculture. 
    Sec. 6.  [32.70] [DEFINITIONS.] 
    Subdivision 1.  [APPLICATION.] The definitions in this 
section apply to sections 32.70 to 32.74. 
    Subd. 2.  [BASIC COST.] (a) "Basic cost" for a processor 
means the actual cost of the raw milk plus 75 percent of the 
actual processing and handling costs for a selected class I or 
class II dairy product. 
    (b) "Basic cost" for a wholesaler means the actual cost of 
the selected class I or class II dairy product purchased from 
the processor or another wholesaler. 
    (c) "Basic cost" for a retailer means the actual cost of 
the selected class I or class II dairy product purchased from a 
processor or wholesaler. 
    Subd. 3.  [BONA FIDE CHARITY.] "Bona fide charity" means a 
corporation, trust, fund, or foundation organized and operated 
exclusively for religious, charitable, scientific, literary, or 
educational purposes.  
    Subd. 4.  [PROCESSOR.] "Processor" means a person engaged 
in manufacturing or processing selected class I or class II 
dairy products in the person's own plant for sale in Minnesota. 
    Subd. 5.  [PRODUCER.] "Producer" means a person who 
operates a dairy herd or herds in Minnesota producing milk or 
cream commercially and whose milk or cream is sold to, or 
received or handled by, a distributor or processor.  "Producer" 
does not include an incorporated or unincorporated association 
of producers. 
    Subd. 6.  [RESPONSIBLE PERSON.] "Responsible person" means 
the business entity that makes payment to an individual Grade A 
or Grade B milk producer. 
    Subd. 7.  [SELECTED CLASS I DAIRY PRODUCTS.] "Selected 
class I dairy products" means milk for human consumption in 
fluid form and all other class I dairy products as defined by 
the Upper Midwest Milk Marketing Order, Code of Federal 
Regulations, title 7, part 1068.40, or successor orders. 
    Subd. 8.  [SELECTED CLASS II DAIRY PRODUCTS.] "Selected 
class II dairy products" means milk for human consumption 
processed into fluid cream, eggnog, yogurt, and all other class 
II dairy products as defined by the Upper Midwest Milk Marketing 
Order, Code of Federal Regulations, title 7, part 1068.40, or 
successor orders. 
    Subd. 9.  [SELL AT RETAIL; SALE AT RETAIL; RETAIL 
SALES.] "Sell at retail," "sale at retail," and "retail sales" 
mean a retail sale or offer for retail sale of a selected class 
I or class II dairy product for ultimate consumption or use. 
    Subd. 10.  [SELL AT WHOLESALE; SALE AT WHOLESALE; WHOLESALE 
SALES.] "Sell at wholesale," "sale at wholesale," and "wholesale 
sales" mean sale or offer for sale of a selected class I dairy 
product for purposes of resale or further processing or 
manufacturing, but does not include a producer selling or 
delivering milk to a processor.  A delivery of selected class I 
dairy products to a retailer in Minnesota is a "sale at 
wholesale" if an assessment required under section 32.73 has not 
been paid. 
    Subd. 11.  [WHOLESALER.] "Wholesaler" means a person 
including a distributor in the business of making sales of 
selected class I or class II dairy products, at wholesale in 
Minnesota.  In the case of a person making sales at both retail 
and wholesale, "wholesaler" applies only to the sales at 
wholesale. 
    Sec. 7.  [32.71] [DUTIES AND POWERS OF THE COMMISSIONER; 
DATA PRIVACY.] 
    Subdivision 1.  [DUTIES; RULES.] The commissioner shall 
adopt emergency and permanent rules to implement and administer 
sections 32.70 to 32.74 as necessary. 
    Subd. 2.  [DATA PRIVACY.] Financial and production 
information received by the commissioner on processors, 
wholesalers, or retailers including, but not limited to, 
financial statements, fee reports, price schedules, cost 
documentation, books, papers, records, or other documentation 
for the purpose of administration and enforcement of this 
chapter shall be classified private data or nonpublic data 
pursuant to chapter 13.  That classification shall not limit the 
use of the information in the preparation, institution, or 
conduct of a legal proceeding by the commissioner in enforcing 
this chapter.  
    Sec. 8.  [32.72] [SALES BELOW COST PROHIBITED; EXCEPTIONS.] 
    Subdivision 1.  [POLICY; PROCESSORS; WHOLESALERS; 
RETAILERS.] (a) It is the intent of the legislature to 
accomplish partial deregulation of milk marketing with a minimum 
negative impact upon small volume retailers. 
    (b) A processor or wholesaler may not sell or offer for 
sale selected class I or class II dairy products at a price 
lower than the processor's or wholesaler's basic cost. 
    (c) A retailer may not sell or offer for sale selected 
class I or class II dairy products at a retail price lower than 
107.5 percent of the retailer's basic cost.  A retailer may not 
use any method or device in the sale or offer for sale of a 
selected dairy product that results in a violation of this 
section.  
    Subd. 2.  [EXCEPTIONS.] The minimum processor, wholesaler, 
and retailer prices of subdivision 1 do not apply:  
    (i) to a sale complying with section 325D.06, clauses (1) 
to (4); 
    (ii) to a retailer giving away selected class I and class 
II dairy products free if the customer is not required to make a 
purchase; 
    (iii) to a processor, wholesaler, or retailer giving away 
selected class I and class II dairy products free or at a 
reduced cost to a bona fide charity; or 
    (iv) to a retailer during the month of June, 1994, and June 
of each year thereafter. 
    Sec. 9.  [32.73] [MILK OVER-ORDER PREMIUM; PURPOSE; 
IMPLEMENTATION; ASSESSMENT FORMULA; EXEMPTIONS; DISCLOSURE; 
REPORT.] 
    Subdivision 1.  [PURPOSE.] The legislature hereby 
establishes an over-order premium for milk to benefit the 
incomes of all Minnesota dairy producers and stabilize the 
economy in rural communities. 
    Subd. 2.  [IMPLEMENTATION.] If the price for class I milk, 
as announced for each month by the federal milk marketing order 
that includes Minnesota, falls below $13.20 per hundred pounds, 
the provisions of this section are effective and the 
commissioner shall implement the over-order premium program. 
    Subd. 3.  [ASSESSMENT FORMULA.] For each cent the announced 
price per hundred pounds of milk falls below $13.20, the 
commissioner shall collect from the wholesaler that makes the 
first wholesale sale of selected class I dairy products for 
retail sale in Minnesota an assessment of $0.0225.  The 
commissioner shall deposit the assessments in the Minnesota milk 
over-order premium account which account is hereby created. 
    Subd. 4.  [EXEMPTIONS.] Selected class I dairy products 
sold as home delivery retail sales and sales to public or 
nonpublic schools are exempt from assessment under this section. 
    Subd. 5.  [EQUALIZATION POOL.] Money in the Minnesota milk 
over-order premium account is appropriated to the commissioner 
to pool and redistribute payments at a uniform rate to Minnesota 
Grade A and B milk producers.  The commissioner may make 
payments to a responsible person who, in turn, must pay Grade A 
and Grade B milk producers at the uniform distribution rate. 
    Subd. 6.  [DISCLOSURE.] Payments of the over-order premium 
to a producer must be accompanied by a statement specifying the 
over-order premium rate, the dates of delivery to which the 
premium applies, the total hundredweight of milk to which the 
over-order premium applies, and the over-order premium amount 
paid to the producer. 
    Subd. 7.  [ANNUAL REPORT.] Not later than February 1 of 
1994 and each year thereafter, the commissioner, after 
consultation with representatives of the dairy production, 
processing, and marketing industries, shall report to the chairs 
of the agriculture committees of the senate and the house of 
representatives on the impacts and benefits to dairy farmers of 
the over-order premium and dairy marketing partial deregulation 
provisions of this act and the level of over-order premiums 
provided by common marketing agencies in the upper midwest 
during the previous calendar year.  In addition, the February 1, 
1994 report must provide recommendations concerning the 
desirability of exempting from the over-market premium 
assessment selected class I dairy products sold to certain 
not-for-profit customers, including hospitals, nursing homes, 
licensed day care providers, and residential care facilities and 
institutions.  The report provided by the commissioner on 
February 1, 1995, must include an assessment of the impact of 
the removal of retail price controls during the month of June, 
1994. 
    Sec. 10.  [32.74] [REDRESS FOR INJURY OR THREATENED 
INJURY.] 
    A person injured by a violation of sections 32.70 to 32.74 
may commence a legal action based on the violation in a court of 
competent jurisdiction and may recover economic damages and the 
costs of the action, including reasonable attorneys' fees.  A 
person injured or who is threatened with injury or loss by 
reason of violation of sections 32.70 to 32.74 may commence a 
legal action based on the violation and obtain injunctive relief 
in a court of competent jurisdiction against persons involved in 
a violation or threatened violation of sections 32.70 to 32.74 
to prevent and restrain violations or threatened violations of 
sections 32.70 to 32.74 without alleging or proving actual 
damages or that an adequate remedy at law does not exist, so 
that injunctive relief can be obtained promptly and without 
awaiting evidence of injury or actual damage.  This injunctive 
relief does not abridge and is not in lieu of any other civil 
remedy provided in sections 32.70 to 32.74. 
    Sec. 11.  [RETURN OF CERTAIN ASSESSMENTS.] 
    Any balance that may exist in the Minnesota class I premium 
equalization fund on the effective date of this act must be 
returned to processors in proportion to their contributions to 
the balance. 
    Sec. 12.  [SEVERABILITY.] 
    If any provision of Minnesota Statutes, section 32.73, is 
held to be unconstitutional, then all of Minnesota Statutes, 
section 32.73, is inoperative and of no effect.  
     Sec. 13.  [COMMISSIONER'S TASK FORCE; FEDERAL MILK 
MARKETING ORDERS.] 
    The commissioner of agriculture may appoint and convene a 
task force consisting of three dairy producers, two of whom must 
be members of the Minnesota milk producers association, one 
dairy processor, one retail grocer, one consumer, the director 
of the dairy and livestock division of the department of 
agriculture, and the chairs of the agriculture committees of the 
senate and the house of representatives to determine the 
appropriate administrative and legislative actions which can be 
taken to reform the federal Milk Marketing Order System's class 
I pricing provisions that discriminate against upper midwest 
dairy producers.  The chairs of the agriculture committees of 
the senate and the house of representatives may each appoint one 
additional member to the task force from the members of their 
respective agriculture committees.  The commissioner shall 
report the findings and recommendations of the task force to the 
agriculture committees of the senate and the house of 
representatives. 
     Sec. 14.  [TRANSITION RULES; ACCOUNTS.] 
    Emergency and permanent rules adopted by the commissioner 
of agriculture during 1992 and 1993 under Minnesota Statutes, 
section 32A.071, remain in effect until modified by the 
commissioner to conform to provisions of this act.  The 
Minnesota Class I Premium Equalization Fund shall be renamed the 
Minnesota Milk Over-order Premium Account. 
    Sec. 15.  [REPEALER.] 
    Minnesota Statutes 1992, sections 32A.01; 32A.02; 32A.03; 
32A.04; 32A.05; 32A.07; 32A.071; 32A.08; and 32A.09, are 
repealed. 
    Sec. 16.  [EFFECTIVE DATE.] 
    This act is effective the day following final enactment 
except that the repeal of Minnesota Statutes, section 32A.071, 
in section 15 is effective retroactive to April 1, 1993, and the 
provision for assessments in section 9 is effective on the first 
day of the month following final enactment. 
    Presented to the governor April 29, 1993 
    Signed by the governor April 30, 1993, 3:03 p.m.