By Armbrister                                          S.B. No. 737
         76R6353 BDH-F                           
                                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.
 1-5           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 may be a delegate or may appoint another person to
1-18     serve as a delegate in the commissioner's place at the pleasure of
1-19     the commissioner. If the commissioner appoints another person as a
1-20     delegate, the commissioner's appointee must be an employee of the
1-21     department, preferably an employee with experience with milk
1-22     marketing and stabilization. The delegate serving under this
1-23     subsection shall serve as chair of the delegation from this state.
1-24           (b)  The governor shall appoint four additional delegates to
 2-1     this state's delegation to the compact commission as follows:
 2-2                 (1)  two delegates who must be dairy farmers engaged in
 2-3     the production of milk at the time of appointment or reappointment;
 2-4                 (2)  one delegate who must be a dairy processor engaged
 2-5     in the production of milk at the time of appointment or
 2-6     reappointment; and
 2-7                 (3)  one delegate who must be a consumer
 2-8     representative.
 2-9           (c)  Each  delegate must be a resident and registered voter
2-10     of this state.
2-11           (d)  A delegate is not an officer of this state by virtue of
2-12     holding the position of delegate.
2-13           Sec. 182.003.  TERMS; REMOVAL; VACANCY.  (a)  Each delegate
2-14     appointed under Section 182.002(b) serves a term of four years.
2-15           (b)  Each delegate appointed under Section 182.002(b) shall
2-16     serve from the date of appointment until a successor is appointed
2-17     and qualified.
2-18           (c)  A delegate appointed under Section 182.002(b) may not
2-19     serve more than three consecutive terms.
2-20           (d)  A delegate appointed under Section 182.002(b) may be
2-21     removed for cause.
2-22           Sec. 182.004.  EFFECTIVE DATE OF COMPACT.  (a)  The compact
2-23     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 VII, 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           Sec. 182.005.  COMPACT TO BE ENTERED; TEXT.  Subject to
 3-9     Section 182.004, the Southern Dairy Compact is hereby entered into
3-10     and enacted into law as follows:
3-12                            DECLARATION OF POLICY
3-14     POLICY.  The purpose of this compact is to recognize the interstate
3-15     character of the southern dairy industry and the prerogative of the
3-16     states under the United States Constitution to form an interstate
3-17     commission for the southern region.  The mission of the commission
3-18     is to take such steps as are necessary to assure the continued
3-19     viability of dairy farming in the South, and to assure consumers of
3-20     an adequate, local supply of pure and wholesome milk.
3-21           The participating states find and declare that the dairy
3-22     industry is an essential agricultural activity of the South.  Dairy
3-23     farms, and associated suppliers, marketers, processors, and
3-24     retailers, are an integral component of the region's economy.
3-25     Their ability to provide a stable, local supply of pure, wholesome
3-26     milk is a matter of great importance to the health and welfare of
3-27     the region.
 4-1           The participating states further find that dairy farms are
 4-2     essential and they are an integral part of the region's rural
 4-3     communities.  The farms preserve land for agricultural purposes and
 4-4     provide needed economic stimuli for rural communities.
 4-5           By entering into this compact, the participating states
 4-6     affirm that their ability to regulate the price which southern
 4-7     dairy farmers receive for their product is essential to the public
 4-8     interest.  Assurance of a fair and equitable price for dairy
 4-9     farmers ensures their ability to provide milk to the market and the
4-10     vitality of the southern dairy industry, with all the associated
4-11     benefits.
4-12           Recent dramatic price fluctuations, with a pronounced
4-13     downward trend, threaten the viability and stability of the
4-14     southern dairy region.  Historically, individual state regulatory
4-15     action had been an effective emergency remedy available to farmers
4-16     confronting a distressed market.  The federal order system,
4-17     implemented by the Agricultural Marketing Agreement Act of 1937,
4-18     establishes only minimum prices paid to producers for raw milk,
4-19     without preempting the power of states to regulate milk prices
4-20     above the minimum levels so established.
4-21           In today's regional dairy marketplace, cooperative, rather
4-22     than individual state action, is needed to more effectively address
4-23     the market disarray.  Under our constitutional system, properly
4-24     authorized states acting cooperatively may exercise more power to
4-25     regulate interstate commerce than they may assert individually
4-26     without such authority.  For this reason, the participating states
4-27     invoke their authority to act in common agreement, with the consent
 5-1     of the United States Congress, under the compact clause of the
 5-2     United States Constitution.
 5-3           In establishing their constitutional regulatory authority
 5-4     over the region's fluid milk market by this compact, the
 5-5     participating states declare their purpose that this compact
 5-6     neither displace the federal order system nor encourage the merging
 5-7     of federal orders.  Specific provisions of the compact itself set
 5-8     forth this basic principle.
 5-9           Designed as a flexible mechanism able to adjust to changes in
5-10     a regulated marketplace, the compact also contains a contingency
5-11     provision should the federal order system be discontinued.  In that
5-12     event, the interstate commission is authorized to regulate the
5-13     marketplace in replacement of the order system.  This contingent
5-14     authority does not anticipate such a change, however, and should
5-15     not be so construed.  It is only provided should developments in
5-16     the market other than establishment of this compact result in
5-17     discontinuance of the order system.
5-19           Sec. 2.  DEFINITIONS.  For the purposes of this compact, and
5-20     of any supplemental or concurring legislation enacted pursuant
5-21     thereto, except as may be otherwise required by the context:
5-22                 (1)  "Class I milk" means milk disposed of in fluid
5-23     form or as a fluid milk product, subject to further definition in
5-24     accordance with the principles expressed in Section 3(b) of this
5-25     compact.
5-26                 (2)  "Commission" means the Southern Dairy Compact
5-27     Commission established by this compact.
 6-1                 (3)  "Commission marketing order" means regulations
 6-2     adopted by the commission pursuant to Sections 9 and 10 of this
 6-3     compact in place of a terminated federal marketing order or state
 6-4     dairy regulation.  Such order may apply throughout the region or in
 6-5     any part or parts thereof as defined in the regulations of the
 6-6     commission. Such order may establish minimum prices for any or all
 6-7     classes of milk.
 6-8                 (4)  "Compact" means this interstate compact.
 6-9                 (5)  "Compact over-order price" means a minimum price
6-10     required to be paid to producers for Class I milk established by
6-11     the commission in regulations adopted pursuant to Sections 9 and 10
6-12     of this compact, which is above the price established in federal
6-13     marketing orders or by state farm price regulation in the regulated
6-14     area.  Such price may apply throughout the region or in any part or
6-15     parts thereof as defined in the regulations of the commission.
6-16                 (6)  "Milk" means the lacteal secretion of cows and
6-17     includes all skim, butterfat, or other constituents obtained from
6-18     separation or any other process.  The term is used in its broadest
6-19     sense and may be further defined by the commission for regulatory
6-20     purposes.
6-21                 (7)  "Partially regulated plant" means a milk plant not
6-22     located in a regulated area but having Class I distribution within
6-23     such area.  Commission regulations may exempt plants having such
6-24     distribution or receipts in amounts less than the limits defined
6-25     therein.
6-26                 (8)  "Participating state" means a state which has
6-27     become a party to this compact by the enactment of concurring
 7-1     legislation.
 7-2                 (9)  "Pool plant" means any milk plant located in a
 7-3     regulated area.
 7-4                 (10)  "Region" means the territorial limits of the
 7-5     states which are parties to this compact.
 7-6                 (11)  "Regulated area" means any area within the region
 7-7     governed by and defined in regulations establishing a compact
 7-8     over-order price or commission marketing order.
 7-9                 (12)  "State dairy regulation" means any state
7-10     regulation of dairy prices, and associated assessments, whether by
7-11     statute, marketing order, or otherwise.
7-12           Sec. 3.  RULES OF CONSTRUCTION.  (a)  This compact shall not
7-13     be construed to displace existing federal milk marketing orders or
7-14     state dairy regulation in the region but to supplement them.  In
7-15     the event some or all federal orders in the region are
7-16     discontinued, the compact shall be construed to provide the
7-17     commission the option to replace them with one or more commission
7-18     marketing orders pursuant to this compact.
7-19           (b)  This compact shall be construed liberally in order to
7-20     achieve the purposes and intent enunciated in Section 1 of this
7-21     compact.  It is the intent of this compact to establish a basic
7-22     structure by which the commission may achieve those purposes
7-23     through the application, adaptation, and development of the
7-24     regulatory techniques historically associated with milk marketing
7-25     and to afford the commission broad flexibility to devise regulatory
7-26     mechanisms to achieve the purposes of this compact.  In accordance
7-27     with this intent, the technical terms which are associated with
 8-1     market order regulation and which have acquired commonly understood
 8-2     general meanings are not defined herein, but the commission may
 8-3     further define the terms used in this compact and develop
 8-4     additional concepts and define additional terms as it may find
 8-5     appropriate to achieve its purposes.
 8-7           Sec. 4.  COMMISSION ESTABLISHED.  There is hereby created a
 8-8     commission to administer the compact, composed of delegations from
 8-9     each state in the region.  The commission shall be known as the
8-10     Southern Dairy Compact Commission.  A delegation shall include not
8-11     less than three nor more than five persons.  Each delegation shall
8-12     include at least one dairy farmer who is engaged in the production
8-13     of milk at the time of appointment or reappointment, and one
8-14     consumer representative.  Delegation members shall be residents and
8-15     voters of, and subject to such confirmation process as is provided
8-16     for in, the appointing state.  Delegation members shall serve no
8-17     more than three consecutive terms with no single term of more than
8-18     four years and be subject to removal for cause.  In all other
8-19     respects, delegation members shall serve in accordance with the
8-20     laws of the state represented.  The compensation, if any, of the
8-21     members of a state delegation shall be determined and paid by each
8-22     state, but their expenses shall be paid by the commission.
8-23           Sec. 5.  VOTING REQUIREMENTS.  All actions taken by the
8-24     commission, except for the establishment or termination of an
8-25     over-order price or commission marketing order, and the adoption,
8-26     amendment, or rescission of the commission's bylaws shall be by
8-27     majority vote of the delegations present.  Each state delegation
 9-1     shall be entitled to one vote in the conduct of the commission's
 9-2     affairs.  Establishment or termination of an over-order price or
 9-3     commission marketing order shall require at least a two-thirds vote
 9-4     of the delegations present.  The establishment of a regulated area
 9-5     which covers all or part of a participating state shall require
 9-6     also the affirmative vote of that state's delegation.  A majority
 9-7     of the delegations from the participating states shall constitute a
 9-8     quorum for the conduct of the commission's business.
 9-9           Sec. 6.  ADMINISTRATION AND MANAGEMENT.  (a)  The commission
9-10     shall elect annually from among the members of the participating
9-11     state delegations a chairperson, a vice-chairperson, and a
9-12     treasurer.  The commission shall appoint an executive director and
9-13     fix his or her duties and compensation.  The executive director
9-14     shall serve at the pleasure of the commission, and, together with
9-15     the treasurer, shall be bonded in an amount determined by the
9-16     commission.  The commission may establish through its bylaws an
9-17     executive committee composed of one member elected by each
9-18     delegation.
9-19           (b)  The commission shall adopt bylaws for the conduct of its
9-20     business by a two-thirds vote and shall have the power by the same
9-21     vote to amend and rescind these bylaws.  The commission shall
9-22     publish its bylaws in convenient form with the appropriate agency
9-23     or officer in each of the participating states.  The bylaws shall
9-24     provide for appropriate notice to the delegations of all commission
9-25     meetings and hearings and of the business to be transacted at such
9-26     meetings or hearings.  Notice also shall be given to other agencies
9-27     or officers of participating states as provided by the laws of
 10-1    those states.
 10-2          (c)  The commission shall file an annual report with the
 10-3    secretary of agriculture of the United States, and with each of the
 10-4    participating states by submitting copies to the governor, both
 10-5    houses of the legislature, and the head of the state department
 10-6    having responsibilities for agriculture.
 10-7          (d)  In addition to the powers and duties elsewhere
 10-8    prescribed in this compact, the commission shall have the power:
 10-9                (1)  to sue and be sued in any state or federal court;
10-10                (2)  to have a seal and alter the same at pleasure;
10-11                (3)  to acquire, hold, and dispose of real and personal
10-12    property by gift, purchase, lease, license, or other similar
10-13    manner, for its corporate purposes;
10-14                (4)  to borrow money and to issue notes, to provide for
10-15    the rights of the holders thereof and to pledge the revenue of the
10-16    commission as security therefore, subject to the provisions of
10-17    Section 18 of this compact;
10-18                (5)  to appoint such officers, agents, and employees as
10-19    it may deem necessary and prescribe their powers, duties, and
10-20    qualifications; and
10-21                (6)  to create and abolish such offices, employments,
10-22    and positions as it deems necessary for the purposes of the compact
10-23    and provide for the removal, term, tenure, compensation, fringe
10-24    benefits, pension, and retirement rights of its officers and
10-25    employees.  The commission may also retain personal services  on a
10-26    contract basis.
10-27          Sec. 7.  RULEMAKING POWER.  In addition to the power to
 11-1    promulgate a compact over-order price or commission marketing
 11-2    orders as provided by this compact, the commission is further
 11-3    empowered to make and enforce such additional rules and regulations
 11-4    as it deems necessary to implement any provisions of this compact,
 11-5    or to effectuate in any other respect the purposes of this compact.
 11-6                   ARTICLE IV.  POWERS OF THE COMMISSION
 11-8    AND INTERSTATE COOPERATION.  The commission is hereby empowered to:
 11-9                (1)  Investigate or provide for investigations or
11-10    research projects designed to review the existing laws and
11-11    regulations of the participating states, to consider their
11-12    administration and costs, and to measure their impact on the
11-13    production and marketing of milk and their effects on the shipment
11-14    of milk and milk products within the region.
11-15                (2)  Study and recommend to the participating states
11-16    joint or cooperative programs for the administration of the dairy
11-17    marketing laws and regulations and to prepare estimates of cost
11-18    savings and benefits of such programs.
11-19                (3)  Encourage the harmonious relationships between the
11-20    various elements in the industry for the solution of their material
11-21    problems.  Conduct symposia or conferences designed to improve
11-22    industry relations or a better understanding of problems.
11-23                (4)  Prepare and release periodic reports on activities
11-24    and results of the commission's efforts to the participating
11-25    states.
11-26                (5)  Review the existing marketing system for milk and
11-27    milk products and recommend changes in the existing structure for
 12-1    assembly and distribution of milk which may assist, improve, or
 12-2    promote more efficient assembly and distribution of milk.
 12-3                (6)  Investigate costs and charges for producing,
 12-4    hauling, handling, processing, distributing, selling, and for all
 12-5    other services performed with respect to milk.
 12-6                (7)  Examine current economic forces affecting
 12-7    producers, probable trends in production and consumption, the level
 12-8    of dairy farm prices in relation to costs, the financial conditions
 12-9    of dairy farmers, and the need for an emergency order to relieve
12-10    critical  conditions on dairy farms.
12-11          Sec. 9.  EQUITABLE FARM PRICES.  (a)  The powers granted in
12-12    this section and Section 10 of this compact shall apply only to the
12-13    establishment of a compact over-order price, so long as federal
12-14    milk marketing orders remain in effect in the region.  In the event
12-15    that any or all such orders are terminated, this article shall
12-16    authorize the commission to establish one or more commission
12-17    marketing orders, as herein provided, in the region or parts
12-18    thereof as defined in the order.
12-19          (b)  A compact over-order price established pursuant to this
12-20    section shall apply only to Class I milk.  Such compact over-order
12-21    price shall not exceed $1.50 per gallon at Atlanta, Georgia;
12-22    however, this compact over-order price shall be adjusted upward or
12-23    downward at other locations in the region to reflect differences in
12-24    minimum federal order prices.  Beginning in 1990, and using that
12-25    year as a base, the foregoing $1.50 per gallon maximum shall be
12-26    adjusted annually by the rate of change in the Consumer Price Index
12-27    as reported by the Bureau of Labor Statistics of the United States
 13-1    Department of Labor.  For purposes of the pooling and equalization
 13-2    of an over-order price, the value of milk used in other use
 13-3    classifications shall be calculated at the appropriate class price
 13-4    established pursuant to the applicable federal order or state dairy
 13-5    regulation, and the value of unregulated milk shall be calculated
 13-6    in relation to the nearest prevailing class price in accordance
 13-7    with and subject to such adjustments as the commission may
 13-8    prescribe in regulations.
 13-9          (c)  A commission marketing order shall apply to all classes
13-10    and uses of milk.
13-11          (d)  The commission is hereby empowered to establish a
13-12    compact over-order price for milk to be paid by pool plants and
13-13    partially regulated plants.  The commission is also empowered to
13-14    establish a compact over-order price to be paid by all other
13-15    handlers receiving milk from producers located in a regulated area.
13-16    This price shall be established either as a compact over-order
13-17    price or by one or more commission marketing orders.  Whenever such
13-18    a price has been established by either type of regulation, the
13-19    legal obligation to pay such price shall be determined solely by
13-20    the terms and purpose of the regulation without regard to the situs
13-21    of the transfer of title, possession, or any other factors not
13-22    related to the purposes of the regulation and this compact.
13-23    Producer-handlers as defined in an applicable federal market order
13-24    shall not be subject to a compact over-order price.  The commission
13-25    shall provide for similar treatment of producer-handlers under
13-26    commission marketing orders.
13-27          (e)  In determining the price, the commission shall consider
 14-1    the balance between production and consumption of milk and milk
 14-2    products in the regulated area, the costs of production including,
 14-3    but not limited to, the price of feed, the cost of labor, including
 14-4    the reasonable value of the producer's own labor and management,
 14-5    machinery expense, and interest expense, the prevailing price for
 14-6    milk outside the regulated area, the purchasing power of the
 14-7    public, and the price necessary to yield a reasonable return to the
 14-8    producer and distributor.
 14-9          (f)  When establishing a compact over-order price, the
14-10    commission shall take such other action as is necessary and
14-11    feasible to help ensure that the over-order price does not cause or
14-12    compensate producers so as to generate local production of milk in
14-13    excess of those quantities necessary to assure consumers of an
14-14    adequate supply for fluid purposes.
14-15          (g)  The commission shall whenever possible enter into
14-16    agreements with state or federal agencies for exchange of
14-17    information or services for the purpose of reducing regulatory
14-18    burden and cost of administering the compact.  The commission may
14-19    reimburse other agencies for the reasonable cost of providing these
14-20    services.
14-21          Sec. 10.  OPTIONAL PROVISIONS FOR PRICING ORDER.  Regulations
14-22    establishing a compact over-order price or a commission marketing
14-23    order may contain, but shall not be limited to, any of the
14-24    following:
14-25                (1)  provisions classifying milk in accordance with the
14-26    form in which or purpose for which it is used, or creating a flat
14-27    pricing program;
 15-1                (2)  with respect to a commission marketing order only,
 15-2    provisions establishing or providing a method for establishing
 15-3    separate minimum prices for each use classification prescribed by
 15-4    the commission, or a single minimum price for milk purchased from
 15-5    producers or associations of producers;
 15-6                (3)  with respect to an over-order minimum price,
 15-7    provisions establishing or providing a method for establishing such
 15-8    minimum price for Class I milk;
 15-9                (4)  provisions for establishing either an over-order
15-10    price or a commission marketing order may make use of any
15-11    reasonable method for establishing such price or prices, including
15-12    flat pricing and formula pricing.  Provision may also be made for
15-13    location adjustments, zone differentials, and for competitive
15-14    credits with respect to regulated handlers who market outside the
15-15    regulated area;
15-16                (5)  provisions for the payment to all producers and
15-17    associations of producers delivering milk to all handlers of
15-18    uniform prices for all milk so delivered, irrespective of the uses
15-19    made of such milk by the individual handler to whom it is
15-20    delivered, or for the payment of producers delivering milk to the
15-21    same handler of uniform prices for all milk delivered by them;
15-22                      (A)  With respect to regulations establishing a
15-23    compact over-order price, the  commission may establish one
15-24    equalization pool within the regulated area for the sole purpose of
15-25    equalizing returns to producers throughout the regulated area.
15-26                      (B)  With respect to any commission marketing
15-27    order, as defined in Section 2(3) of this compact, which replaces
 16-1    one or more terminated federal orders or state dairy regulation,
 16-2    the marketing area of now separate state or federal orders shall
 16-3    not be merged without the affirmative consent of each state, voting
 16-4    through its delegation, which is partly or wholly included within
 16-5    any such new marketing area.
 16-6                (6)  provisions requiring persons who bring Class I
 16-7    milk into the regulated area to make compensatory payments with
 16-8    respect to all such milk to the extent necessary to equalize the
 16-9    cost of milk purchased by handlers subject to a compact over-order
16-10    price or commission marketing order.  No such provisions shall
16-11    discriminate against milk producers outside the regulated area.
16-12    The provisions for compensatory payments may require payment of the
16-13    difference between the Class I price required to be paid for such
16-14    milk in the state of production by a federal milk marketing order
16-15    or state dairy regulation and the Class I price established by the
16-16    compact over-order price or commission marketing order;
16-17                (7)  provisions specially governing the pricing and
16-18    pooling of milk handled by partially regulated plants;
16-19                (8)  provisions requiring that the account of any
16-20    person regulated under the compact over-order price shall be
16-21    adjusted for any payments made to or received by such persons with
16-22    respect to a producer settlement fund of any federal or state milk
16-23    marketing order or other state dairy regulation within the
16-24    regulated area;
16-25                (9)  provisions requiring the payment by handlers of an
16-26    assessment to cover the costs of the administration and enforcement
16-27    of such order pursuant to Section 18(a), Article VII, of this
 17-1    compact;
 17-2                (10)  provisions for reimbursement to participants of
 17-3    the Women, Infants and Children Special Supplemental Food Program
 17-4    of the United States Child Nutrition Act of 1966; and
 17-5                (11)  other provisions and requirements as the
 17-6    commission may find are necessary or appropriate to effectuate the
 17-7    purposes of this compact and to provide for the payment of fair and
 17-8    equitable minimum prices to producers.
 17-9                     ARTICLE V.  RULEMAKING PROCEDURE
17-10          Sec. 11.  RULEMAKING PROCEDURE.  Before promulgation of any
17-11    regulations establishing a compact over-order price or commission
17-12    marketing order, including any provision with respect to milk
17-13    supply under Section 9(f) of this compact, or amendment thereof, as
17-14    provided in Article IV of this compact, the commission shall
17-15    conduct an informal rulemaking proceeding to provide interested
17-16    persons with an opportunity to present data and views.  Such
17-17    rulemaking proceeding shall be governed by Section 4, federal
17-18    Administrative Procedure Act (5 U.S.C. Section 553), as amended.
17-19    In addition, the commission shall, to the extent practicable,
17-20    publish notice of rulemaking proceedings in the official register
17-21    of each participating state.  Before the initial adoption of
17-22    regulations establishing a compact over-order price or a commission
17-23    marketing order and thereafter before any amendment with regard to
17-24    prices or assessments, the commission shall hold a public hearing.
17-25    The commission may commence a rulemaking proceeding on its own
17-26    initiative or may in its sole discretion act upon the petition of
17-27    any person including individual milk producers, any organization of
 18-1    milk producers or handlers, general farm organizations, consumer or
 18-2    public interest groups, and local, state, or federal officials.
 18-3          Sec. 12.  FINDINGS AND REFERENDUM.  In addition to the
 18-4    concise general statement of basis and purpose required by Section
 18-5    4(b), federal Administrative Procedure Act (5 U.S.C. Section 553
 18-6    (c)), as amended, the commission shall make findings of fact with
 18-7    respect to:
 18-8                (1)  whether the public interest will be served by the
 18-9    establishment of minimum milk prices to dairy farmers under Article
18-10    IV of this compact;
18-11                (2)  the level of prices that will assure that
18-12    producers receive a price sufficient to cover their costs of
18-13    production and will elicit an adequate supply of milk for the
18-14    inhabitants of the regulated area and for manufacturing purposes;
18-15                (3)  whether the major provisions of the order, other
18-16    than those fixing minimum milk prices, are in the public interest
18-17    and are reasonably designed to achieve the purposes of the order;
18-18    and
18-19                (4)  whether the terms of the proposed regional order
18-20    or amendment are approved by producers as provided in Section 13 of
18-21    this compact.
18-22          Sec. 13.  PRODUCER REFERENDUM.  (a)  For the purpose of
18-23    ascertaining whether the issuance or amendment of regulations
18-24    establishing a compact over-order price or a commission marketing
18-25    order, including any provision with respect to milk supply under
18-26    Section 9(f) of this compact, is approved by producers, the
18-27    commission shall conduct a referendum among producers.  The
 19-1    referendum shall be held in a timely manner, as determined by
 19-2    regulation of the commission.  The terms and conditions of the
 19-3    proposed order or amendment shall be described by the commission in
 19-4    the ballot used in the conduct of the referendum, but the nature,
 19-5    content, or extent of such description shall not be a basis for
 19-6    attacking the legality of the order or any action relating thereto.
 19-7          (b)  An order or amendment shall be deemed approved by
 19-8    producers if the commission determines that it is approved by at
 19-9    least two-thirds of the voting producers who, during a
19-10    representative period determined by the commission, have been
19-11    engaged in the production of milk, the price of which would be
19-12    regulated under the proposed order or amendment.
19-13          (c)  For purposes of any referendum, the commission shall
19-14    consider the approval or disapproval by any cooperative association
19-15    of producers, qualified under the provisions of the Act of Congress
19-16    of February 18, 1922, as amended, known as the Capper-Volstead Act,
19-17    bona fide engaged in marketing milk, or in rendering services for
19-18    or advancing the interests of producers of such commodity, as the
19-19    approval or disapproval of the producers who are members or
19-20    stockholders in, or under contract with, such cooperative
19-21    association of producers, except as provided in Subdivision (1) of
19-22    this subsection and subject to the provisions of Subdivisions (2)
19-23    through (5) of this subsection.
19-24                (1)  No cooperative which has been formed to act as a
19-25    common marketing agency for both cooperatives and individual
19-26    producers shall be qualified to block vote for either.
19-27                (2)  Any cooperative which is qualified to block vote
 20-1    shall, before submitting its approval or disapproval in any
 20-2    referendum, give prior written notice to each of its members as to
 20-3    whether and how it intends to cast its vote.  The notice shall be
 20-4    given in a timely manner as established and in the form prescribed
 20-5    by the commission.
 20-6                (3)  Any producer may obtain a ballot from the
 20-7    commission in order to register approval or disapproval of the
 20-8    proposed order.
 20-9                (4)  A producer who is a member of a cooperative which
20-10    has provided notice of its intent to approve or not to approve a
20-11    proposed order, and who obtains a ballot and with such ballot
20-12    expresses his approval or disapproval of the proposed order, shall
20-13    notify the commission as to the name of the cooperative of which he
20-14    or she is a member, and the commission shall remove such producer's
20-15    name from the list certified by such cooperative with its corporate
20-16    vote.
20-17                (5)  In order to ensure that all milk producers are
20-18    informed regarding a proposed order, the commission shall notify
20-19    all milk producers that an order is being considered and that each
20-20    producer may register his approval or disapproval with the
20-21    commission either directly or through his or her cooperative.
20-23    (a)  The commission shall terminate any regulations establishing an
20-24    over-order price or commission marketing order issued under this
20-25    article whenever it finds that such order or price obstructs or
20-26    does not tend to effectuate the declared policy of this compact.
20-27          (b)  The commission shall terminate any regulations
 21-1    establishing an over-order price or a commission marketing order
 21-2    issued under this article whenever it finds that such termination
 21-3    is favored by a majority of the producers who, during a
 21-4    representative period determined by the commission, have been
 21-5    engaged in the production of milk the price of which is regulated
 21-6    by such order; but such termination shall be effective only if
 21-7    announced on or before such date as may be specified in such
 21-8    marketing agreement or order.
 21-9          (c)  The termination or suspension of any order or provision
21-10    thereof shall not be considered an order within the meaning of this
21-11    article and shall require no hearing but shall comply with the
21-12    requirements for informal rulemaking prescribed by Section 4,
21-13    federal Administrative Procedure Act (5 U.S.C. Section 553), as
21-14    amended.
21-15                          ARTICLE VI. ENFORCEMENT
21-16          Sec. 15.  RECORDS, REPORTS, ACCESS TO PREMISES.  (a)  The
21-17    commission may by rule and regulation prescribe recordkeeping and
21-18    reporting requirements for all regulated persons.  For purposes of
21-19    the administration and enforcement of this compact, the commission
21-20    is authorized to examine the books and records of any regulated
21-21    person relating to his or her milk business, and for that purpose,
21-22    the commission's properly designated officers, employees, or agents
21-23    shall have full access during normal business hours to the premises
21-24    and records of all regulated persons.
21-25          (b)  Information furnished to or acquired by commission
21-26    officers, employees, or agents pursuant to this section shall be
21-27    confidential and not subject to disclosure except to the extent
 22-1    that the commission deems disclosure to be necessary in any
 22-2    administrative or judicial proceeding involving the administration
 22-3    or enforcement of this compact, an over-order price, a compact
 22-4    marketing order, or other regulations of the commission.  The
 22-5    commission may promulgate regulations further defining the
 22-6    confidentiality of information pursuant to this section.  Nothing
 22-7    in this section shall be deemed to prohibit (i) the issuance of
 22-8    general statements based upon the reports of a number of handlers
 22-9    which do not identify the information furnished by any person, or
22-10    (ii) the publication by direction of the commission of the name of
22-11    any person violating any regulation of the commission, together
22-12    with a statement of the particular provisions violated by such
22-13    person.
22-14          (c)  No officer, employee, or agent of the commission shall
22-15    intentionally disclose information, by inference or otherwise,
22-16    which is made confidential pursuant to this section.  Any person
22-17    violating the provisions of this section shall, upon conviction, be
22-18    subject to a fine of not more than $1,000 or to imprisonment for
22-19    not more than one year, or both, and shall be removed from office.
22-20    The commission shall refer any allegation of a violation of this
22-21    section to the appropriate state enforcement authority or the
22-22    United States Attorney.
22-23          Sec. 16.  SUBPOENA, HEARINGS, AND JUDICIAL REVIEW.  (a)  The
22-24    commission is hereby authorized and empowered by its members and
22-25    its properly designated officers to administer oaths and issue
22-26    subpoenas throughout all signatory states to compel the attendance
22-27    of witnesses and the giving of testimony and the production of
 23-1    other evidence.
 23-2          (b)  Any handler subject to an order may file a written
 23-3    petition with the commission stating that any such order or any
 23-4    provision of any such order or any obligation imposed in connection
 23-5    therewith is not in accordance with law and praying for a
 23-6    modification thereof or to be exempted therefrom.  He shall
 23-7    thereupon be given an opportunity for a hearing upon such petition,
 23-8    in accordance with regulations made by the commission.  After such
 23-9    hearing, the commission shall make a ruling upon the prayer of such
23-10    petition which shall be final, if in accordance with law.
23-11          (c)  The district courts of the United States in any district
23-12    in which such handler is an inhabitant, or has his principal place
23-13    of business, are hereby vested with jurisdiction to review such
23-14    ruling, provided a complaint for that purpose is filed within 30
23-15    days from the date of the entry of such ruling.  Service of process
23-16    in such proceedings may be had upon the commission by delivering to
23-17    it a copy of the complaint.  If the court determines that such
23-18    ruling is not in accordance with law, it shall remand such
23-19    proceedings to the commission with directions either (1) to make
23-20    such ruling as the court shall determine to be in accordance with
23-21    law, or (2) to take such further proceedings as, in its opinion,
23-22    the law requires.  The pendency of proceedings instituted pursuant
23-23    to this subsection shall not impede, hinder, or delay the
23-24    commission from obtaining relief pursuant to Section 17 of this
23-25    compact.  Any proceedings brought pursuant to Section 17 of this
23-26    compact, except where brought by way of counterclaim in proceedings
23-27    instituted pursuant to this section, shall abate whenever a final
 24-1    decree has been rendered in proceedings between the same parties,
 24-2    and covering the same subject matter, instituted pursuant to this
 24-3    section.
 24-4          Sec. 17.  ENFORCEMENT WITH RESPECT TO HANDLERS.  (a)  Any
 24-5    violation by a handler of the provisions of regulations
 24-6    establishing an over-order price or a commission marketing order,
 24-7    or other regulations adopted pursuant to this compact, shall:
 24-8                (1)  Constitute a violation of the laws of each of the
 24-9    signatory states.  Such violation shall render the violator subject
24-10    to a civil penalty in an amount as may be prescribed by the laws of
24-11    each of the participating states, recoverable in any state or
24-12    federal court of competent jurisdiction.  Each day such violation
24-13    continues shall constitute a separate violation.
24-14                (2)  Constitute grounds for the revocation of a license
24-15    or permit to engage in the milk business under the applicable laws
24-16    of the participating states.
24-17          (b)  With respect to handlers, the commission shall enforce
24-18    the provisions of this compact, regulations establishing an
24-19    over-order price, a commission marketing order, or other
24-20    regulations adopted hereunder by:
24-21                (1)  commencing an action for legal or equitable relief
24-22    brought in the name of the commission in any state or federal court
24-23    of competent jurisdiction; or
24-24                (2)  referral to the state agency for enforcement by
24-25    judicial or administrative remedy with the agreement of the
24-26    appropriate state agency of a participating state.
24-27          (c)  With respect to handlers, the commission may bring an
 25-1    action for injunction to enforce the provisions of this compact or
 25-2    the order or regulations adopted thereunder without being compelled
 25-3    to allege or prove that an adequate remedy of law does not exist.
 25-4                           ARTICLE VII.  FINANCE
 25-5          Sec. 18.  FINANCE OF START-UP AND REGULAR COSTS.  (a)  To
 25-6    provide for its start-up costs, the commission may borrow money
 25-7    pursuant to its general power under Section 6(d)(4) of this
 25-8    compact.  In order to finance the costs of administration and
 25-9    enforcement of this compact, including payback of start-up costs,
25-10    the commission is hereby empowered to collect an assessment from
25-11    each handler who purchases milk from producers within the region.
25-12    If imposed, this assessment shall be collected on a monthly basis
25-13    for up to one year from the date the commission convenes, in an
25-14    amount not to exceed $.015 per hundredweight of milk purchased from
25-15    producers during the period of the assessment.  The initial
25-16    assessment may apply to the projected purchases of handlers for the
25-17    two-month period following the date the commission convenes.  In
25-18    addition, if regulations establishing an over-order price or a
25-19    compact marketing order are adopted, they may include an assessment
25-20    for the specific purpose of their administration.  These
25-21    regulations shall provide for establishment of a reserve for the
25-22    commission's ongoing operating expenses.
25-23          (b)  The commission shall not pledge the credit of any
25-24    participating state or of the United States.  Notes issued by the
25-25    commission and all other financial obligations incurred by it shall
25-26    be its sole responsibility and no participating state or the United
25-27    States shall be liable therefor.
 26-1          Sec. 19.  AUDIT AND ACCOUNTS.  (a)  The commission shall keep
 26-2    accurate accounts of all receipts and disbursements, which shall be
 26-3    subject to the audit and accounting procedures established under
 26-4    its rules.  In addition, all receipts and disbursements of funds
 26-5    handled by the commission shall be audited yearly by a qualified
 26-6    public accountant and the report of the audit shall be included in
 26-7    and become part of the annual report of the commission.
 26-8          (b)  The accounts of the commission shall be open at any
 26-9    reasonable time for inspection by duly constituted officers of the
26-10    participating states and by any persons authorized by the
26-11    commission.
26-12          (c)  Nothing contained in this article shall be construed to
26-13    prevent commission compliance with laws relating to audit or
26-14    inspection of accounts by or on behalf of any participating state
26-15    or of the United States.
26-17          Sec. 20.  ENTRY INTO FORCE; ADDITIONAL MEMBERS.  The compact
26-18    shall enter into force effective when enacted into law by any three
26-19    states of the group of states composed of Alabama, Arkansas,
26-20    Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North
26-21    Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and
26-22    West Virginia and when the consent of the United States Congress
26-23    has been obtained.
26-24          Sec. 21.  WITHDRAWAL FROM COMPACT.  Any participating state
26-25    may withdraw from this compact by enacting a statute repealing the
26-26    same, but no such withdrawal shall take effect until one year after
26-27    notice in writing of the withdrawal is given to the commission and
 27-1    the governors of all other participating states.  No withdrawal
 27-2    shall affect any liability already incurred by or chargeable to a
 27-3    participating state before the time of such withdrawal.
 27-4          Sec. 22.  SEVERABILITY.  If any part or provision of this
 27-5    compact is adjudged invalid by any court, such judgment shall be
 27-6    confined in its operation to the part or provision directly
 27-7    involved in the controversy in which such judgment shall have been
 27-8    rendered and shall not affect or impair the validity of the
 27-9    remainder of this compact.  In the event the United States Congress
27-10    consents to this compact subject to conditions, said conditions
27-11    shall not impair the validity of this compact when said conditions
27-12    are accepted by three or more compacting states. A compacting state
27-13    may accept the conditions of the United States Congress by
27-14    implementation of this compact.
27-15          SECTION 2.  Section 12.020(c), Agriculture Code, is amended
27-16    to read as follows:
27-17          (c)  The provisions of this code subject to this section and
27-18    the applicable penalty amounts are as follows:
27-19                      Provision
27-20                                                           Maximum
27-21    Penalty
27-22          Chapters 13, 14, 18, 61, 94, 95, 101,
27-23                                   $500
27-24    102, 103, 121, 125, 132, [and] 134, and 182
27-25          Subchapter B, Chapter 71
27-26                                                        $2,000
27-27          Chapter 19
 28-1          Chapters 75 and 76
 28-2          Subchapters A and C, Chapter 71                                     
 28-3          Chapters 72, 73 and 74
 28-4                                                                  $5,000.
 28-5          SECTION 3.  The importance of this legislation and the
 28-6    crowded condition of the calendars in both houses create an
 28-7    emergency and an imperative public necessity that the
 28-8    constitutional rule requiring bills to be read on three several
 28-9    days in each house be suspended, and this rule is hereby suspended,
28-10    and that this Act take effect and be in force from and after its
28-11    passage, and it is so enacted.