By Turner of Coleman, Telford, Brimer,                H.B. No. 2000
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to the ratification of the Southern Dairy Compact;
 1-3     providing civil penalties.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Subtitle D, Title 6, Agriculture Code, is amended
 1-6     by adding Chapter 182 to read as follows:
 1-7                    CHAPTER 182.  SOUTHERN DAIRY COMPACT
 1-8           Sec. 182.001.  DEFINITIONS.  In this chapter:
 1-9                 (1)  "Compact" means the Southern Dairy Compact.
1-10                 (2)  "Compact commission" means the Southern Dairy
1-11     Compact Commission established by Section 4, Article III, of the
1-12     compact.
1-13                 (3)  "Delegate" means a member of the delegation from
1-14     this state to the Southern Dairy Compact Commission as set forth in
1-15     Section 4, Article III, of the compact.
1-16           Sec. 182.002.  DELEGATES; QUALIFICATIONS.  (a)  The
1-17     commissioner shall appoint one delegate to this state's delegation
1-18     to the compact commission to serve at the pleasure of the
1-19     commissioner.  The commissioner may appoint himself or herself as
1-20     the delegate under this subsection.  If the commissioner appoints a
1-21     person other than the commissioner as a delegate, the
1-22     commissioner's appointee must be an employee of the department,
1-23     preferably an employee with experience with milk marketing and
1-24     stabilization. The delegate serving under this subsection shall
1-25     serve as chair of the delegation from this state.
 2-1           (b)  The governor shall appoint four delegates to this
 2-2     state's delegation to the compact commission as follows:
 2-3                 (1)  two delegates who must be dairy farmers engaged in
 2-4     the production of milk at the time of appointment or reappointment;
 2-5                 (2)  one delegate who must be a dairy processor engaged
 2-6     in the production of milk at the time of appointment or
 2-7     reappointment; and
 2-8                 (3)  one delegate who must be a consumer
 2-9     representative.
2-10           (c)  Each  delegate must be a resident and registered voter
2-11     of this state.
2-12           (d)  A delegate is not an officer of this state by virtue of
2-13     holding the position of delegate.
2-14           Sec. 182.003.  TERMS; REMOVAL; VACANCY.  (a)  Each delegate
2-15     serves a term of four years.
2-16           (b)  Each delegate shall serve from the date of appointment
2-17     until a successor is appointed and qualified.
2-18           (c)  An individual, including the commissioner serving as a
2-19     delegate, may not serve more than three consecutive terms as a
2-20     delegate.
2-21           (d)  A delegate may be removed for cause.
2-22           Sec. 182.004.  EFFECTIVE DATE OF COMPACT; SUNSET PROVISION.
2-23     (a)  The compact shall become effective  when:
2-24                 (1)  the governor has executed the compact on behalf of
2-25     this state and has filed a verified copy of the compact with the
2-26     secretary of state;
2-27                 (2)  the United States Congress has consented to the
 3-1     compact; and
 3-2                 (3)  two or more of the other states named in Section
 3-3     20, Article VIII, of the compact, have ratified the compact in a
 3-4     form substantially similar to that contained in Section 182.005.
 3-5           (b)  The governor shall take such action as may be necessary
 3-6     to complete the exchange of official documents between this state
 3-7     and any other state ratifying the compact.
 3-8           (c)  This state's delegation to the compact commission is
 3-9     subject to Chapter 325, Government Code (Texas Sunset Act). Unless
3-10     continued in existence as provided by that chapter, the state's
3-11     delegation to the commission is abolished and this chapter expires
3-12     September 1, 2003.
3-13           Sec. 182.005.  COMPACT TO BE ENTERED; TEXT.  Subject to
3-14     Section 182.004, the Southern Dairy Compact is hereby entered into
3-15     and enacted into law as follows:
3-16               ARTICLE I.  STATEMENT OF PURPOSE, FINDINGS, AND
3-17                            DECLARATION OF POLICY
3-18           Sec. 1.  STATEMENT OF PURPOSE, FINDINGS, AND DECLARATION OF
3-19     POLICY.  The purpose of this compact is to recognize the interstate
3-20     character of the southern dairy industry and the prerogative of the
3-21     states under the United States Constitution to form an interstate
3-22     commission for the southern region.  The mission of the commission
3-23     is to take such steps as are necessary to assure the continued
3-24     viability of dairy farming in the South, and to assure consumers of
3-25     an adequate, local supply of pure and wholesome milk.
3-26           The participating states find and declare that the dairy
3-27     industry is an essential agricultural activity of the South.  Dairy
 4-1     farms, and associated suppliers, marketers, processors, and
 4-2     retailers, are an integral component of the region's economy.
 4-3     Their ability to provide a stable, local supply of pure, wholesome
 4-4     milk is a matter of great importance to the health and welfare of
 4-5     the region.
 4-6           The participating states further find that dairy farms are
 4-7     essential and they are an integral part of the region's rural
 4-8     communities.  The farms preserve land for agricultural purposes and
 4-9     provide needed economic stimuli for rural communities.
4-10           By entering into this compact, the participating states
4-11     affirm that their ability to regulate the price which southern
4-12     dairy farmers receive for their product is essential to the public
4-13     interest.  Assurance of a fair and equitable price for dairy
4-14     farmers ensures their ability to provide milk to the market and the
4-15     vitality of the southern dairy industry, with all the associated
4-16     benefits.
4-17           Recent dramatic price fluctuations, with a pronounced
4-18     downward trend, threaten the viability and stability of the
4-19     southern dairy region.  Historically, individual state regulatory
4-20     action had been an effective emergency remedy available to farmers
4-21     confronting a distressed market.  The federal order system,
4-22     implemented by the Agricultural Marketing Agreement Act of 1937,
4-23     establishes only minimum prices paid to producers for raw milk,
4-24     without preempting the power of states to regulate milk prices
4-25     above the minimum levels so established.
4-26           In today's regional dairy marketplace, cooperative, rather
4-27     than individual state action, is needed to more effectively address
 5-1     the market disarray.  Under our constitutional system, properly
 5-2     authorized states acting cooperatively may exercise more power to
 5-3     regulate interstate commerce than they may assert individually
 5-4     without such authority.  For this reason, the participating states
 5-5     invoke their authority to act in common agreement, with the consent
 5-6     of the United States Congress, under the compact clause of the
 5-7     United States Constitution.
 5-8           In establishing their constitutional regulatory authority
 5-9     over the region's fluid milk market by this compact, the
5-10     participating states declare their purpose that this compact
5-11     neither displace the federal order system nor encourage the merging
5-12     of federal orders.  Specific provisions of the compact itself set
5-13     forth this basic principle.
5-14           Designed as a flexible mechanism able to adjust to changes in
5-15     a regulated marketplace, the compact also contains a contingency
5-16     provision should the federal order system be discontinued.  In that
5-17     event, the interstate commission is authorized to regulate the
5-18     marketplace in replacement of the order system.  This contingent
5-19     authority does not anticipate such a change, however, and should
5-20     not be so construed.  It is only provided should developments in
5-21     the market other than establishment of this compact result in
5-22     discontinuance of the order system.
5-23              ARTICLE II. DEFINITIONS AND RULES OF CONSTRUCTION
5-24           Sec. 2.  DEFINITIONS.  For the purposes of this compact, and
5-25     of any supplemental or concurring legislation enacted pursuant
5-26     thereto, except as may be otherwise required by the context:
5-27                 (1)  "Class I milk" means milk disposed of in fluid
 6-1     form or as a fluid milk product, subject to further definition in
 6-2     accordance with the principles expressed in Section 3(b) of this
 6-3     compact.
 6-4                 (2)  "Commission" means the Southern Dairy Compact
 6-5     Commission established by this compact.
 6-6                 (3)  "Commission marketing order" means regulations
 6-7     adopted by the commission pursuant to Sections 9 and 10 of this
 6-8     compact in place of a terminated federal marketing order or state
 6-9     dairy regulation.  Such order may apply throughout the region or in
6-10     any part or parts thereof as defined in the regulations of the
6-11     commission. Such order may establish minimum prices for any or all
6-12     classes of milk.
6-13                 (4)  "Compact" means this interstate compact.
6-14                 (5)  "Compact over-order price" means a minimum price
6-15     required to be paid to producers for Class I milk established by
6-16     the commission in regulations adopted pursuant to Sections 9 and 10
6-17     of this compact, which is above the price established in federal
6-18     marketing orders or by state farm price regulation in the regulated
6-19     area.  Such price may apply throughout the region or in any part or
6-20     parts thereof as defined in the regulations of the commission.
6-21                 (6)  "Milk" means the lacteal secretion of cows and
6-22     includes all skim, butterfat, or other constituents obtained from
6-23     separation or any other process.  The term is used in its broadest
6-24     sense and may be further defined by the commission for regulatory
6-25     purposes.
6-26                 (7)  "Partially regulated plant" means a milk plant not
6-27     located in a regulated area but having Class I distribution within
 7-1     such area.  Commission regulations may exempt plants having such
 7-2     distribution or receipts in amounts less than the limits defined
 7-3     therein.
 7-4                 (8)  "Participating state" means a state which has
 7-5     become a party to this compact by the enactment of concurring
 7-6     legislation.
 7-7                 (9)  "Pool plant" means any milk plant located in a
 7-8     regulated area.
 7-9                 (10)  "Region" means the territorial limits of the
7-10     states which are parties to this compact.
7-11                 (11)  "Regulated area" means any area within the region
7-12     governed by and defined in regulations establishing a compact
7-13     over-order price or commission marketing order.
7-14                 (12)  "State dairy regulation" means any state
7-15     regulation of dairy prices, and associated assessments, whether by
7-16     statute, marketing order, or otherwise.
7-17           Sec. 3.  RULES OF CONSTRUCTION.  (a)  This compact shall not
7-18     be construed to displace existing federal milk marketing orders or
7-19     state dairy regulation in the region but to supplement them.  In
7-20     the event some or all federal orders in the region are
7-21     discontinued, the compact shall be construed to provide the
7-22     commission the option to replace them with one or more commission
7-23     marketing orders pursuant to this compact.
7-24           (b)  This compact shall be construed liberally in order to
7-25     achieve the purposes and intent enunciated in Section 1 of this
7-26     compact.  It is the intent of this compact to establish a basic
7-27     structure by which the commission may achieve those purposes
 8-1     through the application, adaptation, and development of the
 8-2     regulatory techniques historically associated with milk marketing
 8-3     and to afford the commission broad flexibility to devise regulatory
 8-4     mechanisms to achieve the purposes of this compact.  In accordance
 8-5     with this intent, the technical terms which are associated with
 8-6     market order regulation and which have acquired commonly understood
 8-7     general meanings are not defined herein, but the commission may
 8-8     further define the terms used in this compact and develop
 8-9     additional concepts and define additional terms as it may find
8-10     appropriate to achieve its purposes.
8-11                    ARTICLE III.  COMMISSION ESTABLISHED
8-12           Sec. 4.  COMMISSION ESTABLISHED.  There is hereby created a
8-13     commission to administer the compact, composed of delegations from
8-14     each state in the region.  The commission shall be known as the
8-15     Southern Dairy Compact Commission.  A delegation shall include not
8-16     less than three nor more than five persons.  Each delegation shall
8-17     include at least one dairy farmer who is engaged in the production
8-18     of milk at the time of appointment or reappointment, and one
8-19     consumer representative.  Delegation members shall be residents and
8-20     voters of, and subject to such confirmation process as is provided
8-21     for in, the appointing state.  Delegation members shall serve no
8-22     more than three consecutive terms with no single term of more than
8-23     four years and be subject to removal for cause.  In all other
8-24     respects, delegation members shall serve in accordance with the
8-25     laws of the state represented.  The compensation, if any, of the
8-26     members of a state delegation shall be determined and paid by each
8-27     state, but their expenses shall be paid by the commission.
 9-1           Sec. 5.  VOTING REQUIREMENTS.  All actions taken by the
 9-2     commission, except for the establishment or termination of an
 9-3     over-order price or commission marketing order, and the adoption,
 9-4     amendment, or rescission of the commission's bylaws shall be by
 9-5     majority vote of the delegations present.  Each state delegation
 9-6     shall be entitled to one vote in the conduct of the commission's
 9-7     affairs.  Establishment or termination of an over-order price or
 9-8     commission marketing order shall require at least a two-thirds vote
 9-9     of the delegations present.  The establishment of a regulated area
9-10     which covers all or part of a participating state shall require
9-11     also the affirmative vote of that state's delegation.  A majority
9-12     of the delegations from the participating states shall constitute a
9-13     quorum for the conduct of the commission's business.
9-14           Sec. 6.  ADMINISTRATION AND MANAGEMENT.  (a)  The commission
9-15     shall elect annually from among the members of the participating
9-16     state delegations a chairperson, a vice-chairperson, and a
9-17     treasurer.  The commission shall appoint an executive director and
9-18     fix his or her duties and compensation.  The executive director
9-19     shall serve at the pleasure of the commission, and, together with
9-20     the treasurer, shall be bonded in an amount determined by the
9-21     commission.  The commission may establish through its bylaws an
9-22     executive committee composed of one member elected by each
9-23     delegation.
9-24           (b)  The commission shall adopt bylaws for the conduct of its
9-25     business by a two-thirds vote and shall have the power by the same
9-26     vote to amend and rescind these bylaws.  The commission shall
9-27     publish its bylaws in convenient form with the appropriate agency
 10-1    or officer in each of the participating states.  The bylaws shall
 10-2    provide for appropriate notice to the delegations of all commission
 10-3    meetings and hearings and of the business to be transacted at such
 10-4    meetings or hearings.  Notice also shall be given to other agencies
 10-5    or officers of participating states as provided by the laws of
 10-6    those states.
 10-7          (c)  The commission shall file an annual report with the
 10-8    secretary of agriculture of the United States, and with each of the
 10-9    participating states by submitting copies to the governor, both
10-10    houses of the legislature, and the head of the state department
10-11    having responsibilities for agriculture.
10-12          (d)  In addition to the powers and duties elsewhere
10-13    prescribed in this compact, the commission shall have the power:
10-14                (1)  to sue and be sued in any state or federal court;
10-15                (2)  to have a seal and alter the same at pleasure;
10-16                (3)  to acquire, hold, and dispose of real and personal
10-17    property by gift, purchase, lease, license, or other similar
10-18    manner, for its corporate purposes;
10-19                (4)  to borrow money and to issue notes, to provide for
10-20    the rights of the holders thereof and to pledge the revenue of the
10-21    commission as security therefore, subject to the provisions of
10-22    Section 18 of this compact;
10-23                (5)  to appoint such officers, agents, and employees as
10-24    it may deem necessary and prescribe their powers, duties, and
10-25    qualifications; and
10-26                (6)  to create and abolish such offices, employments,
10-27    and positions as it deems necessary for the purposes of the compact
 11-1    and provide for the removal, term, tenure, compensation, fringe
 11-2    benefits, pension, and retirement rights of its officers and
 11-3    employees.  The commission may also retain personal services  on a
 11-4    contract basis.
 11-5          Sec. 7.  RULEMAKING POWER.  In addition to the power to
 11-6    promulgate a compact over-order price or commission marketing
 11-7    orders as provided by this compact, the commission is further
 11-8    empowered to make and enforce such additional rules and regulations
 11-9    as it deems necessary to implement any provisions of this compact,
11-10    or to effectuate in any other respect the purposes of this compact.
11-11                   ARTICLE IV.  POWERS OF THE COMMISSION
11-12          Sec. 8.  POWERS TO PROMOTE REGULATORY UNIFORMITY, SIMPLICITY,
11-13    AND INTERSTATE COOPERATION.  The commission is hereby empowered to:
11-14                (1)  Investigate or provide for investigations or
11-15    research projects designed to review the existing laws and
11-16    regulations of the participating states, to consider their
11-17    administration and costs, and to measure their impact on the
11-18    production and marketing of milk and their effects on the shipment
11-19    of milk and milk products within the region.
11-20                (2)  Study and recommend to the participating states
11-21    joint or cooperative programs for the administration of the dairy
11-22    marketing laws and regulations and to prepare estimates of cost
11-23    savings and benefits of such programs.
11-24                (3)  Encourage the harmonious relationships between the
11-25    various elements in the industry for the solution of their material
11-26    problems.  Conduct symposia or conferences designed to improve
11-27    industry relations or a better understanding of problems.
 12-1                (4)  Prepare and release periodic reports on activities
 12-2    and results of the commission's efforts to the participating
 12-3    states.
 12-4                (5)  Review the existing marketing system for milk and
 12-5    milk products and recommend changes in the existing structure for
 12-6    assembly and distribution of milk which may assist, improve, or
 12-7    promote more efficient assembly and distribution of milk.
 12-8                (6)  Investigate costs and charges for producing,
 12-9    hauling, handling, processing, distributing, selling, and for all
12-10    other services performed with respect to milk.
12-11                (7)  Examine current economic forces affecting
12-12    producers, probable trends in production and consumption, the level
12-13    of dairy farm prices in relation to costs, the financial conditions
12-14    of dairy farmers, and the need for an emergency order to relieve
12-15    critical  conditions on dairy farms.
12-16          Sec. 9.  EQUITABLE FARM PRICES.  (a)  The powers granted in
12-17    this section and Section 10 of this compact shall apply only to the
12-18    establishment of a compact over-order price, so long as federal
12-19    milk marketing orders remain in effect in the region.  In the event
12-20    that any or all such orders are terminated, this article shall
12-21    authorize the commission to establish one or more commission
12-22    marketing orders, as herein provided, in the region or parts
12-23    thereof as defined in the order.
12-24          (b)  A compact over-order price established pursuant to this
12-25    section shall apply only to Class I milk.  Such compact over-order
12-26    price shall not exceed $1.50 per gallon at Atlanta, Georgia;
12-27    however, this compact over-order price shall be adjusted upward or
 13-1    downward at other locations in the region to reflect differences in
 13-2    minimum federal order prices.  Beginning in 1990, and using that
 13-3    year as a base, the foregoing $1.50 per gallon maximum shall be
 13-4    adjusted annually by the rate of change in the Consumer Price Index
 13-5    as reported by the Bureau of Labor Statistics of the United States
 13-6    Department of Labor.  For purposes of the pooling and equalization
 13-7    of an over-order price, the value of milk used in other use
 13-8    classifications shall be calculated at the appropriate class price
 13-9    established pursuant to the applicable federal order or state dairy
13-10    regulation, and the value of unregulated milk shall be calculated
13-11    in relation to the nearest prevailing class price in accordance
13-12    with and subject to such adjustments as the commission may
13-13    prescribe in regulations.
13-14          (c)  A commission marketing order shall apply to all classes
13-15    and uses of milk.
13-16          (d)  The commission is hereby empowered to establish a
13-17    compact over-order price for milk to be paid by pool plants and
13-18    partially regulated plants.  The commission is also empowered to
13-19    establish a compact over-order price to be paid by all other
13-20    handlers receiving milk from producers located in a regulated area.
13-21    This price shall be established either as a compact over-order
13-22    price or by one or more commission marketing orders.  Whenever such
13-23    a price has been established by either type of regulation, the
13-24    legal obligation to pay such price shall be determined solely by
13-25    the terms and purpose of the regulation without regard to the situs
13-26    of the transfer of title, possession, or any other factors not
13-27    related to the purposes of the regulation and this compact.
 14-1    Producer-handlers as defined in an applicable federal market order
 14-2    shall not be subject to a compact over-order price.  The commission
 14-3    shall provide for similar treatment of producer-handlers under
 14-4    commission marketing orders.
 14-5          (e)  In determining the price, the commission shall consider
 14-6    the balance between production and consumption of milk and milk
 14-7    products in the regulated area, the costs of production including,
 14-8    but not limited to, the price of feed, the cost of labor, including
 14-9    the reasonable value of the producer's own labor and management,
14-10    machinery expense, and interest expense, the prevailing price for
14-11    milk outside the regulated area, the purchasing power of the
14-12    public, and the price necessary to yield a reasonable return to the
14-13    producer and distributor.
14-14          (f)  When establishing a compact over-order price, the
14-15    commission shall take such other action as is necessary and
14-16    feasible to help ensure that the over-order price does not cause or
14-17    compensate producers so as to generate local production of milk in
14-18    excess of those quantities necessary to assure consumers of an
14-19    adequate supply for fluid purposes.
14-20          (g)  The commission shall whenever possible enter into
14-21    agreements with state or federal agencies for exchange of
14-22    information or services for the purpose of reducing regulatory
14-23    burden and cost of administering the compact.  The commission may
14-24    reimburse other agencies for the reasonable cost of providing these
14-25    services.
14-26          Sec. 10.  OPTIONAL PROVISIONS FOR PRICING ORDER.  Regulations
14-27    establishing a compact over-order price or a commission marketing
 15-1    order may contain, but shall not be limited to, any of the
 15-2    following:
 15-3                (1)  provisions classifying milk in accordance with the
 15-4    form in which or purpose for which it is used, or creating a flat
 15-5    pricing program;
 15-6                (2)  with respect to a commission marketing order only,
 15-7    provisions establishing or providing a method for establishing
 15-8    separate minimum prices for each use classification prescribed by
 15-9    the commission, or a single minimum price for milk purchased from
15-10    producers or associations of producers;
15-11                (3)  with respect to an over-order minimum price,
15-12    provisions establishing or providing a method for establishing such
15-13    minimum price for Class I milk;
15-14                (4)  provisions for establishing either an over-order
15-15    price or a commission marketing order may make use of any
15-16    reasonable method for establishing such price or prices, including
15-17    flat pricing and formula pricing.  Provision may also be made for
15-18    location adjustments, zone differentials, and for competitive
15-19    credits with respect to regulated handlers who market outside the
15-20    regulated area;
15-21                (5)  provisions for the payment to all producers and
15-22    associations of producers delivering milk to all handlers of
15-23    uniform prices for all milk so delivered, irrespective of the uses
15-24    made of such milk by the individual handler to whom it is
15-25    delivered, or for the payment of producers delivering milk to the
15-26    same handler of uniform prices for all milk delivered by them;
15-27                      (A)  With respect to regulations establishing a
 16-1    compact over-order price, the  commission may establish one
 16-2    equalization pool within the regulated area for the sole purpose of
 16-3    equalizing returns to producers throughout the regulated area.
 16-4                      (B)  With respect to any commission marketing
 16-5    order, as defined in Section 2(3) of this compact, which replaces
 16-6    one or more terminated federal orders or state dairy regulation,
 16-7    the marketing area of now separate state or federal orders shall
 16-8    not be merged without the affirmative consent of each state, voting
 16-9    through its delegation, which is partly or wholly included within
16-10    any such new marketing area.
16-11                (6)  provisions requiring persons who bring Class I
16-12    milk into the regulated area to make compensatory payments with
16-13    respect to all such milk to the extent necessary to equalize the
16-14    cost of milk purchased by handlers subject to a compact over-order
16-15    price or commission marketing order.  No such provisions shall
16-16    discriminate against milk producers outside the regulated area.
16-17    The provisions for compensatory payments may require payment of the
16-18    difference between the Class I price required to be paid for such
16-19    milk in the state of production by a federal milk marketing order
16-20    or state dairy regulation and the Class I price established by the
16-21    compact over-order price or commission marketing order;
16-22                (7)  provisions specially governing the pricing and
16-23    pooling of milk handled by partially regulated plants;
16-24                (8)  provisions requiring that the account of any
16-25    person regulated under the compact over-order price shall be
16-26    adjusted for any payments made to or received by such persons with
16-27    respect to a producer settlement fund of any federal or state milk
 17-1    marketing order or other state dairy regulation within the
 17-2    regulated area;
 17-3                (9)  provisions requiring the payment by handlers of an
 17-4    assessment to cover the costs of the administration and enforcement
 17-5    of such order pursuant to Section 18(a), Article VII, of this
 17-6    compact;
 17-7                (10)  provisions for reimbursement to participants of
 17-8    the Women, Infants and Children Special Supplemental Food Program
 17-9    of the United States Child Nutrition Act of 1966; and
17-10                (11)  other provisions and requirements as the
17-11    commission may find are necessary or appropriate to effectuate the
17-12    purposes of this compact and to provide for the payment of fair and
17-13    equitable minimum prices to producers.
17-14                     ARTICLE V.  RULEMAKING PROCEDURE
17-15          Sec. 11.  RULEMAKING PROCEDURE.  Before promulgation of any
17-16    regulations establishing a compact over-order price or commission
17-17    marketing order, including any provision with respect to milk
17-18    supply under Section 9(f) of this compact, or amendment thereof, as
17-19    provided in Article IV of this compact, the commission shall
17-20    conduct an informal rulemaking proceeding to provide interested
17-21    persons with an opportunity to present data and views.  Such
17-22    rulemaking proceeding shall be governed by Section 4, federal
17-23    Administrative Procedure Act (5 U.S.C. Section 553), as amended.
17-24    In addition, the commission shall, to the extent practicable,
17-25    publish notice of rulemaking proceedings in the official register
17-26    of each participating state.  Before the initial adoption of
17-27    regulations establishing a compact over-order price or a commission
 18-1    marketing order and thereafter before any amendment with regard to
 18-2    prices or assessments, the commission shall hold a public hearing.
 18-3    The commission may commence a rulemaking proceeding on its own
 18-4    initiative or may in its sole discretion act upon the petition of
 18-5    any person including individual milk producers, any organization of
 18-6    milk producers or handlers, general farm organizations, consumer or
 18-7    public interest groups, and local, state, or federal officials.
 18-8          Sec. 12.  FINDINGS AND REFERENDUM.  In addition to the
 18-9    concise general statement of basis and purpose required by Section
18-10    4(b), federal Administrative Procedure Act (5 U.S.C. Section 553
18-11    (c)), as amended, the commission shall make findings of fact with
18-12    respect to:
18-13                (1)  whether the public interest will be served by the
18-14    establishment of minimum milk prices to dairy farmers under Article
18-15    IV of this compact;
18-16                (2)  the level of prices that will assure that
18-17    producers receive a price sufficient to cover their costs of
18-18    production and will elicit an adequate supply of milk for the
18-19    inhabitants of the regulated area and for manufacturing purposes;
18-20                (3)  whether the major provisions of the order, other
18-21    than those fixing minimum milk prices, are in the public interest
18-22    and are reasonably designed to achieve the purposes of the order;
18-23    and
18-24                (4)  whether the terms of the proposed regional order
18-25    or amendment are approved by producers as provided in Section 13 of
18-26    this compact.
18-27          Sec. 13.  PRODUCER REFERENDUM.  (a)  For the purpose of
 19-1    ascertaining whether the issuance or amendment of regulations
 19-2    establishing a compact over-order price or a commission marketing
 19-3    order, including any provision with respect to milk supply under
 19-4    Section 9(f) of this compact, is approved by producers, the
 19-5    commission shall conduct a referendum among producers.  The
 19-6    referendum shall be held in a timely manner, as determined by
 19-7    regulation of the commission.  The terms and conditions of the
 19-8    proposed order or amendment shall be described by the commission in
 19-9    the ballot used in the conduct of the referendum, but the nature,
19-10    content, or extent of such description shall not be a basis for
19-11    attacking the legality of the order or any action relating thereto.
19-12          (b)  An order or amendment shall be deemed approved by
19-13    producers if the commission determines that it is approved by at
19-14    least two-thirds of the voting producers who, during a
19-15    representative period determined by the commission, have been
19-16    engaged in the production of milk, the price of which would be
19-17    regulated under the proposed order or amendment.
19-18          (c)  For purposes of any referendum, the commission shall
19-19    consider the approval or disapproval by any cooperative association
19-20    of producers, qualified under the provisions of the Act of Congress
19-21    of February 18, 1922, as amended, known as the Capper-Volstead Act,
19-22    bona fide engaged in marketing milk, or in rendering services for
19-23    or advancing the interests of producers of such commodity, as the
19-24    approval or disapproval of the producers who are members or
19-25    stockholders in, or under contract with, such cooperative
19-26    association of producers, except as provided in Subdivision (1) of
19-27    this subsection and subject to the provisions of Subdivisions (2)
 20-1    through (5) of this subsection.
 20-2                (1)  No cooperative which has been formed to act as a
 20-3    common marketing agency for both cooperatives and individual
 20-4    producers shall be qualified to block vote for either.
 20-5                (2)  Any cooperative which is qualified to block vote
 20-6    shall, before submitting its approval or disapproval in any
 20-7    referendum, give prior written notice to each of its members as to
 20-8    whether and how it intends to cast its vote.  The notice shall be
 20-9    given in a timely manner as established and in the form prescribed
20-10    by the commission.
20-11                (3)  Any producer may obtain a ballot from the
20-12    commission in order to register approval or disapproval of the
20-13    proposed order.
20-14                (4)  A producer who is a member of a cooperative which
20-15    has provided notice of its intent to approve or not to approve a
20-16    proposed order, and who obtains a ballot and with such ballot
20-17    expresses his approval or disapproval of the proposed order, shall
20-18    notify the commission as to the name of the cooperative of which he
20-19    or she is a member, and the commission shall remove such producer's
20-20    name from the list certified by such cooperative with its corporate
20-21    vote.
20-22                (5)  In order to ensure that all milk producers are
20-23    informed regarding a proposed order, the commission shall notify
20-24    all milk producers that an order is being considered and that each
20-25    producer may register his approval or disapproval with the
20-26    commission either directly or through his or her cooperative.
20-27          Sec. 14.  TERMINATION OF OVER-ORDER PRICE OR MARKETING ORDER.
 21-1    (a)  The commission shall terminate any regulations establishing an
 21-2    over-order price or commission marketing order issued under this
 21-3    article whenever it finds that such order or price obstructs or
 21-4    does not tend to effectuate the declared policy of this compact.
 21-5          (b)  The commission shall terminate any regulations
 21-6    establishing an over-order price or a commission marketing order
 21-7    issued under this article whenever it finds that such termination
 21-8    is favored by a majority of the producers who, during a
 21-9    representative period determined by the commission, have been
21-10    engaged in the production of milk the price of which is regulated
21-11    by such order; but such termination shall be effective only if
21-12    announced on or before such date as may be specified in such
21-13    marketing agreement or order.
21-14          (c)  The termination or suspension of any order or provision
21-15    thereof shall not be considered an order within the meaning of this
21-16    article and shall require no hearing but shall comply with the
21-17    requirements for informal rulemaking prescribed by Section 4,
21-18    federal Administrative Procedure Act (5 U.S.C. Section 553), as
21-19    amended.
21-20                          ARTICLE VI. ENFORCEMENT
21-21          Sec. 15.  RECORDS, REPORTS, ACCESS TO PREMISES.  (a)  The
21-22    commission may by rule and regulation prescribe recordkeeping and
21-23    reporting requirements for all regulated persons.  For purposes of
21-24    the administration and enforcement of this compact, the commission
21-25    is authorized to examine the books and records of any regulated
21-26    person relating to his or her milk business, and for that purpose,
21-27    the commission's properly designated officers, employees, or agents
 22-1    shall have full access during normal business hours to the premises
 22-2    and records of all regulated persons.
 22-3          (b)  Information furnished to or acquired by commission
 22-4    officers, employees, or agents pursuant to this section shall be
 22-5    confidential and not subject to disclosure except to the extent
 22-6    that the commission deems disclosure to be necessary in any
 22-7    administrative or judicial proceeding involving the administration
 22-8    or enforcement of this compact, an over-order price, a compact
 22-9    marketing order, or other regulations of the commission.  The
22-10    commission may promulgate regulations further defining the
22-11    confidentiality of information pursuant to this section.  Nothing
22-12    in this section shall be deemed to prohibit (i) the issuance of
22-13    general statements based upon the reports of a number of handlers
22-14    which do not identify the information furnished by any person, or
22-15    (ii) the publication by direction of the commission of the name of
22-16    any person violating any regulation of the commission, together
22-17    with a statement of the particular provisions violated by such
22-18    person.
22-19          (c)  No officer, employee, or agent of the commission shall
22-20    intentionally disclose information, by inference or otherwise,
22-21    which is made confidential pursuant to this section.  Any person
22-22    violating the provisions of this section shall, upon conviction, be
22-23    subject to a fine of not more than $1,000 or to imprisonment for
22-24    not more than one year, or both, and shall be removed from office.
22-25    The commission shall refer any allegation of a violation of this
22-26    section to the appropriate state enforcement authority or the
22-27    United States Attorney.
 23-1          Sec. 16.  SUBPOENA, HEARINGS, AND JUDICIAL REVIEW.  (a)  The
 23-2    commission is hereby authorized and empowered by its members and
 23-3    its properly designated officers to administer oaths and issue
 23-4    subpoenas throughout all signatory states to compel the attendance
 23-5    of witnesses and the giving of testimony and the production of
 23-6    other evidence.
 23-7          (b)  Any handler subject to an order may file a written
 23-8    petition with the commission stating that any such order or any
 23-9    provision of any such order or any obligation imposed in connection
23-10    therewith is not in accordance with law and praying for a
23-11    modification thereof or to be exempted therefrom.  He shall
23-12    thereupon be given an opportunity for a hearing upon such petition,
23-13    in accordance with regulations made by the commission.  After such
23-14    hearing, the commission shall make a ruling upon the prayer of such
23-15    petition which shall be final, if in accordance with law.
23-16          (c)  The district courts of the United States in any district
23-17    in which such handler is an inhabitant, or has his principal place
23-18    of business, are hereby vested with jurisdiction to review such
23-19    ruling, provided a complaint for that purpose is filed within 30
23-20    days from the date of the entry of such ruling.  Service of process
23-21    in such proceedings may be had upon the commission by delivering to
23-22    it a copy of the complaint.  If the court determines that such
23-23    ruling is not in accordance with law, it shall remand such
23-24    proceedings to the commission with directions either (1) to make
23-25    such ruling as the court shall determine to be in accordance with
23-26    law, or (2) to take such further proceedings as, in its opinion,
23-27    the law requires.  The pendency of proceedings instituted pursuant
 24-1    to this subsection shall not impede, hinder, or delay the
 24-2    commission from obtaining relief pursuant to Section 17 of this
 24-3    compact.  Any proceedings brought pursuant to Section 17 of this
 24-4    compact, except where brought by way of counterclaim in proceedings
 24-5    instituted pursuant to this section, shall abate whenever a final
 24-6    decree has been rendered in proceedings between the same parties,
 24-7    and covering the same subject matter, instituted pursuant to this
 24-8    section.
 24-9          Sec. 17.  ENFORCEMENT WITH RESPECT TO HANDLERS.  (a)  Any
24-10    violation by a handler of the provisions of regulations
24-11    establishing an over-order price or a commission marketing order,
24-12    or other regulations adopted pursuant to this compact, shall:
24-13                (1)  Constitute a violation of the laws of each of the
24-14    signatory states.  Such violation shall render the violator subject
24-15    to a civil penalty in an amount as may be prescribed by the laws of
24-16    each of the participating states, recoverable in any state or
24-17    federal court of competent jurisdiction.  Each day such violation
24-18    continues shall constitute a separate violation.
24-19                (2)  Constitute grounds for the revocation of a license
24-20    or permit to engage in the milk business under the applicable laws
24-21    of the participating states.
24-22          (b)  With respect to handlers, the commission shall enforce
24-23    the provisions of this compact, regulations establishing an
24-24    over-order price, a commission marketing order, or other
24-25    regulations adopted hereunder by:
24-26                (1)  commencing an action for legal or equitable relief
24-27    brought in the name of the commission in any state or federal court
 25-1    of competent jurisdiction; or
 25-2                (2)  referral to the state agency for enforcement by
 25-3    judicial or administrative remedy with the agreement of the
 25-4    appropriate state agency of a participating state.
 25-5          (c)  With respect to handlers, the commission may bring an
 25-6    action for injunction to enforce the provisions of this compact or
 25-7    the order or regulations adopted thereunder without being compelled
 25-8    to allege or prove that an adequate remedy of law does not exist.
 25-9                           ARTICLE VII.  FINANCE
25-10          Sec. 18.  FINANCE OF START-UP AND REGULAR COSTS.  (a)  To
25-11    provide for its start-up costs, the commission may borrow money
25-12    pursuant to its general power under Section 6(d)(4) of this
25-13    compact.  In order to finance the costs of administration and
25-14    enforcement of this compact, including payback of start-up costs,
25-15    the commission is hereby empowered to collect an assessment from
25-16    each handler who purchases milk from producers within the region.
25-17    If imposed, this assessment shall be collected on a monthly basis
25-18    for up to one year from the date the commission convenes, in an
25-19    amount not to exceed $.015 per hundredweight of milk purchased from
25-20    producers during the period of the assessment.  The initial
25-21    assessment may apply to the projected purchases of handlers for the
25-22    two-month period following the date the commission convenes.  In
25-23    addition, if regulations establishing an over-order price or a
25-24    compact marketing order are adopted, they may include an assessment
25-25    for the specific purpose of their administration.  These
25-26    regulations shall provide for establishment of a reserve for the
25-27    commission's ongoing operating expenses.
 26-1          (b)  The commission shall not pledge the credit of any
 26-2    participating state or of the United States.  Notes issued by the
 26-3    commission and all other financial obligations incurred by it shall
 26-4    be its sole responsibility and no participating state or the United
 26-5    States shall be liable therefor.
 26-6          Sec. 19.  AUDIT AND ACCOUNTS.  (a)  The commission shall keep
 26-7    accurate accounts of all receipts and disbursements, which shall be
 26-8    subject to the audit and accounting procedures established under
 26-9    its rules.  In addition, all receipts and disbursements of funds
26-10    handled by the commission shall be audited yearly by a qualified
26-11    public accountant and the report of the audit shall be included in
26-12    and become part of the annual report of the commission.
26-13          (b)  The accounts of the commission shall be open at any
26-14    reasonable time for inspection by duly constituted officers of the
26-15    participating states and by any persons authorized by the
26-16    commission.
26-17          (c)  Nothing contained in this article shall be construed to
26-18    prevent commission compliance with laws relating to audit or
26-19    inspection of accounts by or on behalf of any participating state
26-20    or of the United States.
26-21    ARTICLE VIII.  ENTRY INTO FORCE; ADDITIONAL MEMBERS AND WITHDRAWAL
26-22          Sec. 20.  ENTRY INTO FORCE; ADDITIONAL MEMBERS.  The compact
26-23    shall enter into force effective when enacted into law by any three
26-24    states of the group of states composed of Alabama, Arkansas,
26-25    Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North
26-26    Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and
26-27    West Virginia and when the consent of the United States Congress
 27-1    has been obtained.
 27-2          Sec. 21.  WITHDRAWAL FROM COMPACT.  Any participating state
 27-3    may withdraw from this compact by enacting a statute repealing the
 27-4    same, but no such withdrawal shall take effect until one year after
 27-5    notice in writing of the withdrawal is given to the commission and
 27-6    the governors of all other participating states.  No withdrawal
 27-7    shall affect any liability already incurred by or chargeable to a
 27-8    participating state before the time of such withdrawal.
 27-9          Sec. 22.  SEVERABILITY.  If any part or provision of this
27-10    compact is adjudged invalid by any court, such judgment shall be
27-11    confined in its operation to the part or provision directly
27-12    involved in the controversy in which such judgment shall have been
27-13    rendered and shall not affect or impair the validity of the
27-14    remainder of this compact.  In the event the United States Congress
27-15    consents to this compact subject to conditions, said conditions
27-16    shall not impair the validity of this compact when said conditions
27-17    are accepted by three or more compacting states. A compacting state
27-18    may accept the conditions of the United States Congress by
27-19    implementation of this compact.
27-20          SECTION 2.  Section 12.020(c), Agriculture Code, is amended
27-21    to read as follows:
27-22          (c)  The provisions of this code subject to this section and
27-23    the applicable penalty amounts are as follows:
27-24                      Provision
27-25                                                           Maximum
27-26    Penalty
27-27          Chapters 13, 14, 18, 61, 94, 95, 101,
 28-1                                   $500
 28-2    102, 103, 121, 125, 132, [and] 134, and 182
 28-3          Subchapter B, Chapter 71
 28-4                                                        $2,000
 28-5          Chapter 19
 28-6          Chapters 75 and 76
 28-7          Subchapters A and C, Chapter 71                                     
 28-8          Chapters 72, 73 and 74
 28-9                                                                  $5,000.
28-10          SECTION 3.  The importance of this legislation and the
28-11    crowded condition of the calendars in both houses create an
28-12    emergency and an imperative public necessity that the
28-13    constitutional rule requiring bills to be read on three several
28-14    days in each house be suspended, and this rule is hereby suspended,
28-15    and that this Act take effect and be in force from and after its
28-16    passage, and it is so enacted.