[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2068 Introduced in House (IH)]







105th CONGRESS
  1st Session
                                H. R. 2068

   To provide for the establishment of a multiple-tier price support 
program for milk to assist milk producers to receive an adequate income 
   from their dairy operations and to support long-term conservation 
 practices by milk producers, while assuring sufficient low-cost dairy 
              products for nutrition assistance programs.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 25, 1997

 Mr. Sanders introduced the following bill; which was referred to the 
                        Committee on Agriculture

_______________________________________________________________________

                                 A BILL


 
   To provide for the establishment of a multiple-tier price support 
program for milk to assist milk producers to receive an adequate income 
   from their dairy operations and to support long-term conservation 
 practices by milk producers, while assuring sufficient low-cost dairy 
              products for nutrition assistance programs.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Dairy, Nutrition, 
and Conservation Act of 1997''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.
Sec. 2. Producer referendum to recommend implementation of milk supply 
                            management and nutrition assistance 
                            provisions.
Sec. 3. National Milk Marketing Board.
Sec. 4. Alternative milk price support and inventory management 
                            program.
Sec. 5. Monitoring activities of National Milk Marketing Board.
Sec. 6. Financial assistance for environmental conservation compliance 
                            by milk producers.
Sec. 7. Producer export contracts.

SEC. 2. PRODUCER REFERENDUM TO RECOMMEND IMPLEMENTATION OF MILK SUPPLY 
              MANAGEMENT AND NUTRITION ASSISTANCE PROVISIONS.

    (a) Referendum.--Not later than 30 days after the date of the 
enactment of this Act, the Secretary of Agriculture shall conduct a 
referendum to determine whether milk producers in the 48 contiguous 
States favor the implementation of the alternative milk price support 
and inventory management program under section 4 in lieu of applying 
the rate of price support specified in section 141 of the Agricultural 
Market Transition Act (7 U.S.C. 7251).
    (b) Eligible Voters.--The Secretary shall conduct the referendum 
only among individual milk producers in the 48 contiguous States who 
have been producing milk during a representative period, as determined 
by the Secretary. The Secretary shall maintain a list of eligible 
voters and make it available upon request. Only individual producers 
may cast ballots in the referendum. An organization or other person 
representing milk producers, including a general farm organization, may 
not cast ballots in the referendum on behalf of milk producers.
    (c) Casting Ballots.--The Secretary shall establish the methods by 
which ballots may be cast in the referendum, except that the referendum 
shall be conducted by secret ballot. Bloc voting shall not be 
permitted. The voting methods established by the Secretary shall 
include casting ballots by mail (subject to appropriate safeguards) and 
in person with a representative of the county office, or another 
office, of the Consolidated Farm Service Agency.
    (d) Implementation Required.--If the Secretary determines that a 
simple majority of the milk producers voting in the referendum favor 
the implementation of the alternative milk price support and inventory 
management program under section 4, the Secretary (acting through the 
National Milk Marketing Board established by section 3) shall carry out 
the provisions of such section, beginning with the first calendar year 
that begins after the date on which the referendum is completed. 
Section 141 of the Agricultural Market Transition Act (7 U.S.C. 7251) 
shall not apply during and after that calendar year.
    (e) Conforming Amendment.--Section 141 of the Agricultural Market 
Transition Act (7 U.S.C. 7251) is amended by adding at the end the 
following new subsection:
    ``(i) Effect of Implementation of Alternative Milk Program.--
Notwithstanding subsection (h), upon the implementation of the 
alternative milk price support and inventory management program under 
the Dairy, Nutrition, and Conservation Act of 1997, if required by 
section 2 of such Act, the support price requiremments of this section 
shall not apply.''.

SEC. 3. NATIONAL MILK MARKETING BOARD.

    (a) Election of Board Required.--
            (1) Election.--If the implementation of the alternative 
        milk price support and inventory management program under 
        section 4 is approved in the referendum required by section 2, 
        the Secretary of Agriculture shall conduct an election for a 
        National Milk Marketing Board to assist the Secretary in 
        establishing an adequate national supply and demand for milk 
        under the alternative milk price support and inventory 
        management program under section 4. To the extent practicable, 
        the election shall be conducted not later than 60 days before 
        the date on which the alternative milk price support and 
        inventory management program takes effect. If the election is 
        not completed by that date, or the Board is not capable of 
participating in the alternative milk price support and inventory 
management program by that date, the Secretary shall temporarily 
operate the program until the Board determines that it is ready to 
assume its duties under the program.
            (2) Board defined.--For purposes of this Act, the term 
        ``Board'' means the National Milk Marketing Board elected under 
        this section.
    (b) Membership.--The Board shall consist of 23 members as follows:
            (1) Fourteen milk producers, two from each region specified 
        in subsection (c), who shall be elected by milk producers.
            (2) Seven representatives of consumers of milk and milk 
        products, one from each region specified in subsection (c), who 
        may not be milk producers, but who shall be elected by milk 
        producers.
            (3) Two members appointed by the Secretary from among 
        individuals who have a demonstrable expertise in the area of 
        milk production, processing, or marketing.
    (c) Election Process.--
            (1) Conduct of elections.--The Secretary shall conduct 
        elections to select the members of the Board specified in 
        paragraphs (1) and (2) of subsection (b). A separate election 
        shall be held in each of the seven geographic regions specified 
        in paragraph (2) to elect the two milk producer members and one 
        consumer member from each region. The initial elections may be 
        conducted by the Secretary in conjunction with the referendum 
        required under section 2 to permit the timely establishment of 
        the Board before the date on which the alternative milk price 
        support and inventory management program would take effect.
            (2) Board regions.--For purposes of electing members for 
        the Board, the 48 contiguous States shall be organized into 
        seven geographic regions as follows:
                    (A) California, Oregon, and Washington.
                    (B) Arizona, Arkansas, Colorado, Idaho, Kansas, 
                Montana, Nevada, New Mexico, Oklahoma, Texas, Utah, and 
                Wyoming.
                    (C) Iowa, Minnesota, Missouri, Nebraska, North 
                Dakota, and South Dakota.
                    (D) Wisconsin and Illinois.
                    (E) Alabama, Florida, Georgia, Kentucky, Louisiana, 
                Mississippi, North Carolina, South Carolina, Tennessee, 
                and Virginia.
                    (F) Delaware, Indiana, Maryland, Michigan, New 
                Jersey, Ohio, Pennsylvania, and West Virginia.
                    (G) Connecticut, Maine, Massachusetts, New 
                Hampshire, New York, Rhode Island, and Vermont.
            (3) Procedure for election.--As soon as practicable after 
        the date of the enactment of this Act, the Secretary shall 
        conduct a broad-based publicity effort about the election 
        process and solicit the names of individuals to be included as 
        candidates on the ballot for the election in each region. The 
        names of proposed milk producer members may be submitted by 
        milk producers in the region or by organizations, except that 
        each nominee must be supported by at least 25 individual milk 
        producer signatures, and the nominee must be a milk producer 
        who has sold milk in the past six months. The names of proposed 
        consumer members may be submitted by such persons as the 
        Secretary considers appropriate.
            (4) Conflict of interest.--The Secretary shall reject any 
        nominee to an elected position who is directly involved in the 
        marketing of dairy products, since the election of such a 
        nominee would create a conflict of interest.
            (5) Voting by producers.--
                    (A) Eligible voters.--The Secretary shall conduct 
                an election in each region to determine the members of 
                the Board from that region. The election shall be 
                conducted only among individual milk producers who have 
                been producing milk during any six months of the 
                previous year.
                    (B) Prohibition on bloc voting.--Only individual 
                milk producers may cast ballots in the election. An 
                organization or other person representing milk 
                producers, including a general farm organization, may 
                not cast ballots in the election on behalf of milk 
                producers.
                    (C) Casting ballots.--The Secretary shall establish 
                the methods by which ballots may be cast. Such methods 
                shall include casting ballots by mail (subject to 
                appropriate safeguards) and in person with a 
                representative of the county or other office of the 
                Consolidated Farm Service Agency.
    (d) Regional Board.--The three members elected to the Board from 
each region shall also serve as a Regional Milk Marketing Board for 
that region.
    (e) Meetings of the Board.--
            (1) First meeting.--Within two weeks after the completion 
        of the first election of Board members under subsection (d) in 
        each region, the Board shall convene for its initial meeting 
        and elect officers.
            (2) Other meetings.--The Board shall meet at the call of 
        the chair, or as requested by the Secretary, but at least once 
        every three months. The public shall be notified of meetings 
        one month prior to each meeting.
    (f) Procedures of the Board.--
            (1) Quorum.--A quorum of the Board shall be 12 members.
            (2) Rules of procedure and bylaws.--The Board shall adopt 
        written bylaws and rules of procedures to govern its 
        operations.
            (3) Ex officio representation.--The Board shall notify the 
        Secretary in advance of each meeting of the Board. The 
        Secretary, or a representative of the Secretary, shall attend 
        each meeting as a nonvoting ex officio member of the Board.
    (g) Terms; Compensation.--
            (1) Full term.--Each member of the Board shall serve a 
        four-year term, except that, for the initial Board, the member 
        elected under subsection (b)(1) from each region who received 
        the fewer votes shall serve a two-year term. The consumer 
        members shall be elected for a four-year term with an alternate 
        nonvoting consumer member. The Secretary may remove for cause a 
        member from the Board before the expiration of the term of the 
        member.
            (2) Vacancies.--A vacancy on the Board shall be filled by 
        Secretarial appointment with the term expiring at the next 
        scheduled election. Regional boards shall hold regional 
        elections to fill vacancies.
            (3) Term limits.--A member of the Board may not serve on 
        the Board for more than two consecutive full terms or a total 
        of eight years, whichever occurs first. However, a member of 
        the Board subject to the preceding sentence shall become 
        eligible for reelection or reappointment to the Board upon the 
        expiration of the four-year period beginning on the date the 
        member became ineligible for the Board under such sentence.
            (4) Reimbursement for expenses.--The members of the Board 
        shall serve without compensation, but shall be reimbursed for 
        reasonable expenses incurred in performing their duties as 
        members of the Board, including a per diem.
    (h) Duties.--
            (1) Participation in dairy program.--The Board shall assist 
        the Secretary in implementing, administering, and operating the 
        alternative milk price support and inventory management program 
        under section 4. The program shall remain under the final 
        authority and control of the Secretary.
            (2) Monitoring actual price received by producers.--The 
        Board may monitor actual prices received by representative 
        producers for milk produced in the 48 contiguous States and 
        marketed for domestic use in order to compare those prices with 
        the rate of price support for milk in effect for that month and 
        dairy prices at the processor and retail levels. The Board 
        shall publish and disseminate reports regarding the results of 
        this monitoring.
    (i) Powers.--The Board shall have such incidental powers consistent 
with the requirements of this section and section 4 as the Secretary 
may prescribe. Such powers shall include the power to hire such staff 
and incur such other administrative expenses as necessary to meet the 
responsibilities of the Board.
    (j) Funding and Budgets.--
            (1) Board funds; operating assessment.--Consistent with the 
        approved budget of the Board, funds of the Commodity Credit 
        Corporation shall be available to pay for activities under this 
section and section 4. In order to ensure adequate Commodity Credit 
Corporation funds to finance Board activities, all producers of milk 
produced in the continental United States and marketed for commercial 
use shall be assessed a National Milk Marketing Board operating fee, 
not to exceed 1.5 cents per hundredweight of milk produced.
            (2) Budgets and operating plans.--The Board shall submit to 
        the Secretary its proposed annual budget and plan of operations 
        for each calendar year in which it operates. The budget and 
        plan of operations shall be subject to the approval of the 
        Secretary, and the Secretary may require such changes in the 
        budget or plan of operations as the Secretary considers to be 
        necessary. The Board may not enter into any obligations or 
        expend any funds for a year, except as authorized in the budget 
        for the year approved by the Secretary.
    (k) Books and Records of the Board.--
            (1) Recordkeeping and accounting requirements.--The Board 
        shall--
                    (A) maintain such books and records, which shall be 
                available to the Secretary for inspection and audit, as 
                the Secretary may prescribe;
                    (B) prepare and submit to the Secretary such 
                reports as the Secretary may prescribe; and
                    (C) account for the receipt and disbursement of all 
                funds entrusted to the Board.
            (2) Annual independent audits.--The Board shall cause its 
        books and records to be audited by an independent auditor at 
        the end of each calendar year and a report of such audit to be 
        submitted to the Secretary. The Secretary shall make such 
        report available to the public upon request.
            (3) Access by comptroller general.--The Comptroller General 
        and the duly authorized representatives of the Comptroller 
        General shall have access to and the right to examine all 
        books, documents, papers, records, or other recorded 
        information within the possession or control of the Board.

SEC. 4. ALTERNATIVE MILK PRICE SUPPORT AND INVENTORY MANAGEMENT 
              PROGRAM.

    (a) Price Support Rate to Reflect Cost of Production.--
            (1) Annual adjustment.--The price of milk shall be 
        supported at a rate established by the Secretary of Agriculture 
        and adjusted annually to reflect the cost of production for 
        milk producers.
            (2) Determination of cost of production.--To determine the 
        cost of milk production on a per hundredweight basis, the 
        Secretary shall consider the following:
                    (A) The latest cash cost of production (as 
                estimated by the Secretary), adjusted annually by the 
                wholesale price index.
                    (B) Domestic market/nutrition assistance 
                adjustments equal to 7.5 percent of adjusted cash cost 
                of production.
                    (C) Return on investment established at 8 percent 
                of 70 percent of total farm assets (as estimated by the 
                Secretary) figured on a per hundredweight basis.
                    (D) Cost of conservation and environmental 
                requirements and improvements as determined by the 
                Secretary on a per hundredweight basis, prorated over a 
                10-year period.
            (3) Basic formula price and class differentials.--
                    (A) Calculation.--The basic formula price shall be 
                equal to the sum of subparagraphs (A), (B), (C) of 
                paragraph (2). If the sum of such subparagraphs is at 
least $14 per hundredweight, then the Secretary may also factor in the 
cost of conservation improvements determined under subparagraph (D) of 
paragraph (2).
                    (B) Class iii.--Milk used for products of milk 
                listed as Class III products shall receive a price not 
                lower than the basic formula price per hundredweight.
                    (C) Class ii.--Milk used for products of milk 
                listed as Class II products shall receive a price equal 
                to Class III products plus a differential of 30 cents 
                per hundredweight.
                    (D) Class i.--Milk used for products of milk listed 
                as Class I products shall receive a price equal to--
                            (i) the basic formula price; plus
                            (ii) an amount determined by a formula 
                        based on a nine-hour day (milk related labor) 
                        multiplied by 365 days and gross hourly 
                        earnings MFR Labor (based on calculations of 
                        the Bureau of Labor Statistics) and divided by 
                        1,500,000 pounds (which is the equivalent of 
                        15,000 hundredweight, the estimated 1995 
                        average production per farm).
                    (E) Application.--The Class I price differential 
                determined under subparagraph (D) shall be used in all 
                Federal and State milk marketing orders in operation in 
                the 48 contiguous States.
    (b) Milk Production and Consumption Estimate.--
            (1) Annual estimate.--Not later than November 20 of each 
        calendar year, the Secretary, in consultation with the Board, 
        shall publish in the Federal Register an estimate of--
                    (A) the amount of milk and the products of milk in 
                pounds (on a milk equivalent, total milk solids basis) 
                necessary to satisfy domestic consumption, government 
                domestic assistance programs, of milk during the 
                following calendar year and maintain a reasonable milk 
                reserve;
                    (B) the amount of milk and the products of milk in 
                pounds (on a milk equivalent, total milk solids basis) 
                to be produced in the 48 contiguous States during the 
                following year; and
                    (C) the amount of milk and the products of milk in 
                pounds (on a milk equivalent, total milk solids basis) 
                that the Commodity Credit Corporation would purchase 
                during the following calendar year under this section.
            (2) Rules for estimate.--When making an estimate under this 
        subsection, the Secretary shall--
                    (A) consider any existing inventory management 
                programs to balance domestic supply and demand; and
                    (B) consider conditions affecting import 
                projections of all dairy products.
    (c) Milk Marketing Allocation Factor.--On the basis of the 
estimates prepared under subsection (b)(1) for a calendar year, the 
Board shall develop a milk marketing allocation factor for the purpose 
of determining milk producer bases for that year and submit to the 
Secretary. The milk marketing allocation factor shall be equal to the 
ratio of subparagraphs (A) and (C) of subsection (b)(1) to subparagraph 
(B) of such subsection.
    (d) Milk Marketing Histories.--
            (1) Producer to include certain milk producers using 
        another's land.--For purposes of this section, the term 
        ``producer'' includes a person who is actively engaged in a 
        dairy operation on a farm, as a full-time occupation (as 
        evidenced by the person's contribution of active personal labor 
        and dairy cows to the operation), although the person uses the 
        land, equipment, or facilities of another person.
            (2) One- or five-year average.--Upon the implementation of 
        this Act, the Secretary shall assign to each producer of milk a 
        milk marketing history equal (at the producer's option) to--
                    (A) the quantity of milk marketed by the producer 
                during the calendar year preceding the enactment of 
                such Act; or
                    (B) the average quantity of milk marketed by the 
                producer during the five calendar years preceding the 
                enactment of such Act, excluding the year in which the 
                largest quantity was marketed and the year in which the 
                smallest quantity was marketed.
            (3) Amounts produced.--For purposes of determining the milk 
        marketing history of a producer under paragraph (2), all milk 
        marketed by the producer from all farms of the producer for the 
        calendar years involved shall be counted.
            (4) Use of county committees.--Subject to paragraph (5), 
        county and other committees established under section 8(b)(5) 
        of the Soil Conservation and Domestic Allotment Act (16 U.S.C. 
        590h(b)(5)) shall be responsible for local administration of 
the alternative milk price support and inventory management programs.
            (5) County dairy committee.--
                    (A) Election.--Milk producers in each county shall 
                elect a separate dairy committee who are active milk 
                producers. This committee shall be responsible for 
                decisions concerning market history allocation and 
                appeals. Counties that have fewer than 50 active milk 
                producers shall join with other counties in order to 
                compose an adequate dairy committee. This committee 
                shall serve milk producers in the combined counties and 
                adopt a single Consolidated Farm Service Agency office 
                to perform their duties. Each committee shall consist 
                of five milk producers with a one-year term of office.
                    (B) Compensation.--The members of a dairy committee 
                shall be entitled to per diem and mileage reimbursement 
                in the same manner as committees referred to in 
                paragraph (4), and subject to the same hourly 
                limitations.
                    (C) Funding.--The Board shall make funds available 
                to an appropriate official of the Consolidated Farm 
                Service Agency to finance the cost of the dairy 
                committees.
            (6) Nontransferability; exceptions.--A producer's marketing 
        history may not be transferred (by sale, lease, gift, devise, 
        or other method) except as follows:
                    (A) There is no restriction on the ability of a 
                producer who is an individual to transfer the marketing 
                history of the producer to an immediate family member 
                (such as the spouse, parent, brother or sister, or 
                child of the producer or a person to whom the producer 
                stands in loco parentis) for use on the same farm.
                    (B) There is no restriction on the ability of a 
                producer to sell, lease, or otherwise transfer the 
                Class I base of the producer for a farm in areas in 
                which Class I bases have been established.
                    (C) The relevant dairy committee shall permit a 
                producer to reestablish the marketing history of a farm 
                owned or leased by the producer at another farm owned 
                or leased by the same producer.
                    (D) The relevant dairy committee may approve the 
                transfer of the marketing history of a producer (for 
                use on the same farm or another farm) to prevent 
                extreme hardship.
                    (E) Any producer with a marketing history shall be 
                allowed to relocate the marketing history to another 
                location in the 48 contiguous States upon notification 
                of the dairy committee for the new location.
            (7) Set-aside of unused marketing history for dairy 
        committees.--Subject to transfer options specified in paragraph 
        (6), if a producer in a county receives a milk marketing 
        history under this subsection and ceases the production of milk 
        during any subsequent calendar year, the portion of that milk 
        marketing history remaining unused shall be available to the 
        dairy committee in which the producer is located for transfer 
        among eligible producers on an equitable basis in accordance 
        with this paragraph. The dairy committee shall transfer any 
        milk marketing history available to the committee under this 
        paragraph to persons (excluding nonfarm corporations and 
        investors) in the following order of priority:
                    (A) New milk producers described in paragraph (8).
                    (B) Producers in the county whose milk marketing 
                history for the calendar year involved is less than 
                1,000,000 pounds for each producer.
                    (C) Milk producers who have been in operation for 
                less than 5 years.
                    (D) Other producers in the county.
                    (E) Other producers in the region in which the 
                county is located, to be recommended by the relevant 
                regional milk marketing board established under section 
                3.
                    (F) Other regions of the Continental United States.
            (8) New or reentry producers.--The relevant dairy committee 
        shall assign to a new milk producer a milk marketing history at 
        a reasonable level taking into consideration the milk marketing 
        histories of similarly situated producers in the county and the 
        availability of excess milk marketing histories for 
        distribution by the committee under paragraph (7). The term 
        ``new milk producer'' means a person who does not have a milk 
        marketing history and is purchasing production units (cows or a 
        farm) or who previously relinquished the producer's milk 
        marketing history.
            (9) Scheme or device.--If the Secretary makes a final 
        determination that a producer has adopted a scheme or device to 
        inflate the milk marketing history of the producer or to evade 
        reductions in price required under this section, the producer 
        shall be ineligible for two calendar years to receive any 
        marketing history under this subsection or to receive any 
        domestic production base under subsection (e). A producer shall 
        have the right to appeal an adverse decision under this 
        paragraph in the manner provided by subtitle H of title II of 
        the Federal Crop Insurance Reform and Department of Agriculture 
        Reorganization Act of 1994 (7 U.S.C. 6991 et seq.).
    (e) Determination of Domestic Production Base.--
            (1) Notification.--Before January 1 of each calendar year, 
        the Secretary, in consultation with the Board, shall notify 
        each milk producer in the 48 contiguous States of the domestic 
        production base of the producer for that year.
            (2) Marketing history equal to or under 1,000,000 pounds.--
        If the milk marketing history determined under subsection (d) 
        for a milk producer does not exceed 1,000,000 pounds, the 
        domestic production base for the producer shall be equal to the 
        product of--
                    (A) the milk marketing history of the producer; and
                    (B) the milk marketing allocation factor determined 
                for that year under subsection (c) or one, whichever is 
                greater.
            (3) Marketing history in excess of 1,000,000 pounds.--If 
        the milk marketing history determined under subsection (d) for 
        a milk producer exceeds 1,000,000 pounds, the domestic 
        production base for the producer shall be equal to the sum of--
                    (A) 1,000,000 pounds; and
                    (B) the product of--
                            (i) the milk marketing history of the 
                        producer (reduced by 1,000,000 pounds); and
                            (ii) the milk marketing allocation factor 
                        determined for that year under subsection (c).
            (4) Reduction for disuse.--Any producer who produces less 
        than the producer's domestic production base for two 
        consecutive years (except in the case of a disaster) shall have 
        the producer's domestic marketing base reduced to an amount 
        equal to the average of the two lower years. The amount of base 
        reduction shall then be reallocated by the relevant dairy 
        committee.
    (f) Designation of Nutrition Assistance Base.--
            (1) Purpose of base.--To assure adequate quantities of low-
        cost milk and milk products for the Commodity Credit 
        Corporation for distribution through nutrition assistance 
        programs, the Secretary, in consultation with the Board, shall 
        assign to each milk producer a nutrition assistance base for 
        each calendar year. The nutrition assistance base shall be part 
        of the domestic production base of the producer. The Commodity 
        Credit Corporation shall offer to purchase from each purchaser, 
        at the reduced price specified in subsection (g)(1), a quantity 
        of milk corresponding to the nutrition assistance base of the 
        producer.
            (2) Determination.--The nutrition assistance base for a 
        producer shall be equal to not more than five percent of the 
        domestic production base of the producer under subsection (e).
            (3) Notification.--The notification required to be provided 
        to milk producers under subsection (e)(1) for each calendar 
        year shall also include the nutrition assistance base for the 
        producers for that year.
    (g) Dairy Nutrition Assistance Price Reduction.--
            (1) Price reduction.--All milk producers in the 48 
        contiguous States shall receive a reduced price for that 
        percentage of their domestic production base that is determined 
        by the Secretary, in consultation with the Board, to be 
        required to fulfill the needs of domestic nutrition assistance 
        programs. The amount of reduction under this subsection shall 
        be equal to the product of--
                    (A) 70 percent of the rate of price support for 
                milk per hundredweight in effect for that calendar year 
                for the class of milk involved; and
                    (B) the quantity of milk (in hundredweight) so 
                marketed.
            (2) Duration.--These reductions shall be made on a monthly 
        basis until the producer's total nutrition assistance base has 
        been fulfilled.
    (h) Excess Production.--
            (1) Use as exports.--If a milk producer in the 48 
        contiguous States produces milk in excess of the domestic 
        production base of the producer, the producer may dispose of 
such excess production only on the export market as provided in section 
7.
            (2) Penalties.--If any person fails to comply with the 
        requirements of paragraph (1) regarding the disposal of excess 
        production, the person shall be liable for a civil penalty up 
        to an amount determined by multiplying--
                    (A) the quantity of milk involved in the violation; 
                by
                    (B) 80 percent of the rate of price support for 
                milk per hundredweight in effect for that calendar year 
                for the class of milk involved in the violation.
            (3) Enforcement.--The Secretary may enforce paragraph (2) 
        in the courts of the United States.
            (4) Product and penalty distribution.--
                    (A) Use of acquired milk.--Products of milk 
                purchased by the Commodity Credit Corporation under 
                this subsection shall be used for United States foreign 
                food assistance programs.
                    (B) Use of payments.--Penalty payments received by 
                the Commodity Credit Corporation under this subsection 
                shall be used to help fund the Dairy Export Incentive 
                Program.

SEC. 5. MONITORING ACTIVITIES OF NATIONAL MILK MARKETING BOARD.

    (a) Monitoring Activities.--The National Milk Marketing Board shall 
continuously monitor--
            (1) the relationship between the price received by milk 
        producers for sales of milk, the profits received by processors 
        of milk and milk products, and the prices paid by consumers for 
        milk and milk products; and
            (2) the actual need of nutrition assistance programs of the 
        United States for milk and milk products.
    (b) Reporting.--Not less than twice annually, the Board shall 
submit to Congress the results of its monitoring activities under 
subsection (a).

SEC. 6. FINANCIAL ASSISTANCE FOR ENVIRONMENTAL CONSERVATION COMPLIANCE 
              BY MILK PRODUCERS.

    (a) Funds for Environmental Conservation Compliance.--To encourage 
environmentally sound conservation practices by milk producers in the 
48 contiguous States, the Secretary of Agriculture shall determine the 
amount of money, on a per hundredweight of milk basis, that would cover 
the cost of environmentally sound conservation practices by such milk 
producers mandated by Federal, State, or local laws.
    (b) Availability.--To the extent funds are available under 
subsection (d) to carry out this section, such funds shall be provided 
to milk producers on an annual basis, subject to Consolidated Farm 
Service Agency committee approval. Amounts provided under this 
subsection shall be in addition to any Federal cost share payments made 
to milk producers under any other law.
    (c) Amount of Payments.--State and county Consolidated Farm Service 
Agency committees shall determine which farm practices for which 
payments are applicable to each milk producer based on the producer's 
farm plan and other factors. Payments to each milk producer shall be 
based on the economic cost of obtaining and maintaining compliance and 
the number of programs in which the producer participates.
    (d) Deduction.--The amount of money involved shall be considered an 
environmental conservation compliance fee deducted from the Federal or 
State order pool prior to the computation of the Federal order price. 
These deductions shall be made and held in escrow by the State 
Consolidated Farm Service Agency director in the State of the 
producer's residence until compliance payments are made. In the case of 
nonregulated areas, provisions shall be made for environmental 
conservation compliance fees to be deducted by the State Regulatory 
Commission involved or the State Commissioner of Agriculture.
    (e) Environmental Conservation Compliance Programs.--Environmental 
conservation compliance programs shall include at least the following:
            (1) Manure management systems and composting systems.
            (2) Waste water management.
            (3) Wetland conservation practices.
            (4) Pesticide and herbicide alternatives.
            (5) Rotational grazing.
            (6) Green strips.

SEC. 7. PRODUCER EXPORT CONTRACTS.

    (a) Export Contracts.--Any milk producer in the 48 contiguous 
States shall be allowed to contract directly (or indirectly through 
another person) any volume of milk in hundredweights or products of 
milk at a predetermined price agreed to by all parties involved for the 
sole purpose of export out of the United States.
    (b) Submission of Contracts.--A milk producer shall make copies of 
each export contract entered into under this section available to--
            (1) the Federal and State market administrator involved; 
        and
            (2) the relevant committee of the Consolidated Farm Service 
        Agency with oversight of that producer's domestic production 
        base.
    (c) Scheme or Device.--If the Secretary determines that a person 
has adopted a scheme or device that would circumvent the isolation of 
export contract milk, that person shall be ineligible to participate in 
any Government programs for the following two years.
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