[Congressional Record Volume 147, Number 93 (Friday, June 29, 2001)]
[Senate]
[Pages S7205-S7257]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SPECTER (for himself, Ms. Landrieu, Ms. Collins, Mr. 
        Schumer, Ms. Snowe, Mr. Leahy, Mr. Cochran, Mr. Breaux, Mr. 
        Allen, Mr. Biden, Mr. Bond, Mrs. Carnahan, Mr. Carper, Mr. 
        Chafee, Mr. Cleland, Mrs. Clinton, Mr. Dodd, Mr. Edwards, Mr. 
        Frist, Mr. Gregg, Mr. Helms, Mr. Hollings, Mr. Jeffords, Mr. 
        Kennedy, Mr. Kerry, Mr. Lieberman, Mrs. Lincoln, Ms. Mikulski, 
        Mr. Miller, Mr. Reed, Mr. Rockefeller, Mr. Sarbanes, Mr. 
        Sessions, Mr. Shelby, Mr. Smith of New Hampshire, Mr. Thompson, 
        Mr. Thurmond, Mr. Torricelli, and Mr. Warner):
  S. 1157. A bill to reauthorize the consent of Congress to the 
Northeast Interstate Dairy Compact and to grant the consent of Congress 
to the Southern Dairy Compact, a Pacific Northwest Dairy Compact, and 
an Intermountain Dairy Compact; to the Committee on the Judiciary.
  Mr. SPECTER. Mr. President, I join today with thirty-eight of my 
colleagues to introduce legislation authorizing interstate dairy 
compacts. Members of the U.S. House of Representatives have introduced 
similar legislation with 162 cosponsors, including 17 members of the 
Pennsylvania delegation.
  This legislation will create a much needed safety net for dairy 
farmers in the Northeast and other regions and will bring greater 
stability to the prices paid to farmers. The bill authorizes an 
Interstate Compact Commission to take such steps as necessary to assure 
consumers of an adequate local supply of fresh fluid milk and to assure 
the continued viability of dairy farming within the compact region. 
Specifically, states that choose to join a compact would enter into a 
voluntary agreement to create a minimum farm-price for milk within the 
compact region to form a safety net for dairy farmers when farm milk 
prices fall below the established compact price. This price would take 
into account the regional differences in the costs of production for 
milk, thereby providing dairy farmers with a fair and equitable price 
for their product.
  Specifically, the bill would authorize Pennsylvania, New Jersey, 
Delaware, New York, Maryland, and Ohio to join the existing Northeast 
Interstate Dairy Compact, which has been in operation since July 1997. 
Most of these States have already agreed to join the Compact with 
strong support from their governors and legislatures. In the 
Commonwealth of Pennsylvania, Governor Ridge has been a very strong 
supporter and advocate of the Compact. The Pennsylvania Senate and 
House of Representatives have sent a clear signal to Congress by voting 
with overwhelming majorities of 44 to 6 and 181 to 20, respectively, to 
authorize the Commonwealth's participation in the Northeast Dairy 
Compact.
  In addition to expanding the current Northeast Interstate Dairy 
Compact, the bill would authorize southern States to form a similar 
compact to provide price stability in their region. I am pleased to 
join so many of my colleagues from the South in introducing this 
legislation. Finally, the legislation would allow formation of other 
compacts in the Pacific Northwest and Intermountain region within three 
years. We have included language in this bill to recognize the efforts 
in these States to support dairy compacts and to avoid their exclusion 
if these efforts lead to passage of compact legislation by their State 
governments.
  In total, twenty-five States have already approved dairy compact 
legislation. This is a broad mandate from States that are attempting to 
meet the needs of dairy farmers, producers, consumers and other 
citizens concerned with the future of their milk supply. These States 
recognize the many positive aspects of dairy compacts. The benefits 
include providing dairy farmers with a fairer and more stable price 
structure; providing consumers with price stability and a steady, 
reliable source of local milk for their consumption; enhancement of 
conservation efforts in areas threatened by sprawl; and maintenance of 
rural economies that have been suffering for quite some time from the 
loss of income-generating farmers.
  Over the past several years, I have worked closely with my colleagues 
in the Senate in order to provide a more equitable price for our 
nation's milk

[[Page S7248]]

producers. I supported amendments to the Farm Bills of 1981 and 1985, 
the Emergency Supplemental Appropriations Bill of 1991, the Budget 
Resolution of 1995 and the most recent Farm Bill in 1996 in an effort 
to insure that dairy farmers receive a fair price. As a member of the 
U.S. Senate Agriculture Appropriations Subcommittee, I have worked to 
ensure that dairy programs have received the maximum possible funding, 
including high quality dairy research conducted at Penn State 
University. I have also been a leading supporter of the Dairy Export 
Incentive Program which facilitates the development of an international 
market for United States dairy products.

  In recent years, however, dairy farmers have faced low prices for 
dairy products. Prices have fluctuated greatly over the past several 
years, thereby making any long-term planning impossible for farmers. 
These economic conditions have placed our Nation's dairy farmers in an 
all but impossible position and this is borne out in dairy farmers' 
declining ranks.
  Our Nation's farmers are some of the hardest working and most 
dedicated individuals in America. During my tenure as a United States 
Senator, I have visited numerous small dairy farms in Pennsylvania. I 
have seen these hard working men and women who have dedicated their 
lives to their farms. The downward trend in dairy prices is an issue 
that directly affects all of us. We have a duty to ensure that our 
Nation's dairy farmers receive a fair price for their milk. If we do 
nothing, many small dairy farmers will be forced to sell their farms 
and leave the agriculture industry. This will not only impact the lives 
of these farmers, but will also have a significant negative impact on 
the rural economies that depend on the dairy industry for support. 
Further, the large-scale departure of small dairy farmers from 
agriculture could place our nation's steady supply of fresh fluid milk 
in jeopardy, thereby affecting every American.
  We must recognize the importance of this problem and take prompt 
action. Twenty-five States have asked us to pass this legislation and 
provide a necessary tool for their dairy farmers. I urge my colleagues 
to cosponsor and support this legislation as we continue to work in 
Congress to bring greater stability to our Nation's dairy industry.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1157

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Dairy Consumers and 
     Producers Protection Act of 2001''.

     SEC. 2. NORTHEAST INTERSTATE DAIRY COMPACT.

       Section 147 of the Agricultural Market Transition Act (7 
     U.S.C. 7256) is amended--
       (1) in the matter preceding paragraph (1), by striking 
     ``States'' and all that follows through ``Vermont'' and 
     inserting ``States of Connecticut, Delaware, Maine, Maryland, 
     Massachusetts, New Hampshire, New Jersey, New York, 
     Pennsylvania, Rhode Island, and Vermont'';
       (2) by striking paragraphs (1), (3), and (7);
       (3) in paragraph (2), by striking ``Class III-A'' and 
     inserting ``Class IV'';
       (4) by striking paragraph (4) and inserting the following:
       ``(4) Additional state.--Ohio is the only additional State 
     that may join the Northeast Interstate Dairy Compact.'';
       (5) in paragraph (5), by striking ``the projected rate of 
     increase'' and all that follows through ``Secretary'' and 
     inserting ``the operation of the Compact price regulation 
     during the fiscal year, as determined by the Secretary (in 
     consultation with the Commission) using notice and comment 
     procedures provided in section 553 of title 5, United States 
     Code''; and
       (6) by redesignating paragraphs (2), (4), (5), and (6) as 
     paragraphs (1), (2), (3), and (4), respectively.

     SEC. 3. SOUTHERN DAIRY COMPACT.

       (a) In General.--Congress consents to the Southern Dairy 
     Compact entered into among the States of Alabama, Arkansas, 
     Georgia, Kansas, Kentucky, Louisiana, Mississippi, Missouri, 
     North Carolina, Oklahoma, South Carolina, Tennessee, 
     Virginia, and West Virginia, subject to the following 
     conditions:
       (1) Limitation of manufacturing price regulation.--The 
     Southern Dairy Compact Commission may not regulate Class II, 
     Class III, or Class IV milk used for manufacturing purposes 
     or any other milk, other than Class I, or fluid milk, as 
     defined by a Federal milk marketing order issued under 
     section 8c of the Agricultural Adjustment Act (7 U.S.C. 
     608c), reenacted with amendments by the Agricultural 
     Marketing Act of 1937 (referred to in this section as a 
     ``Federal milk marketing order'') unless Congress has first 
     consented to and approved such authority by a law enacted 
     after the date of enactment of this joint resolution.
       (2) Additional states.--Florida, Nebraska, and Texas are 
     the only additional States that may join the Southern Dairy 
     Compact, individually or otherwise.
       (3) Compensation of commodity credit corporation.--Before 
     the end of each fiscal year in which a Compact price 
     regulation is in effect, the Southern Dairy Compact 
     Commission shall compensate the Commodity Credit Corporation 
     for the cost of any purchases of milk and milk products by 
     the Corporation that result from the operation of the Compact 
     price regulation during the fiscal year, as determined by the 
     Secretary (in consultation with the Commission) using notice 
     and comment procedures provided in section 553 of title 5, 
     United States Code.
       (4) Milk marketing order administrator.--At the request of 
     the Southern Dairy Compact Commission, the Administrator of 
     the applicable Federal milk marketing order shall provide 
     technical assistance to the Compact Commission and be 
     compensated for that assistance.
       (b) Compact.--The Southern Dairy Compact is substantially 
     as follows:

 ``ARTICLE I. STATEMENT OF PURPOSE, FINDINGS AND DECLARATION OF POLICY

     ``Sec. 1. Statement of purpose, findings and declaration of 
       policy

       ``The purpose of this compact is to recognize the 
     interstate character of the southern dairy industry and the 
     prerogative of the states under the United States 
     Constitution to form an interstate commission for the 
     southern region. The mission of the commission is to take 
     such steps as are necessary to assure the continued viability 
     of dairy farming in the south, and to assure consumers of an 
     adequate, local supply of pure and wholesome milk.
       ``The participating states find and declare that the dairy 
     industry is an essential agricultural activity of the south. 
     Dairy farms, and associated suppliers, marketers, processors 
     and retailers are an integral component of the region's 
     economy. Their ability to provide a stable, local supply of 
     pure, wholesome milk is a matter of great importance to the 
     health and welfare of the region.
       ``The participating states further find that dairy farms 
     are essential and they are an integral part of the region's 
     rural communities. The farms preserve land for agricultural 
     purposes and provide needed economic stimuli for rural 
     communities.
       ``In establishing their constitutional regulatory authority 
     over the region's fluid milk market by this compact, the 
     participating states declare their purpose that this compact 
     neither displace the federal order system nor encourage the 
     merging of federal orders. Specific provisions of the compact 
     itself set forth this basic principle.
       ``Designed as a flexible mechanism able to adjust to 
     changes in a regulated marketplace, the compact also contains 
     a contingency provision should the federal order system be 
     discontinued. In that event, the interstate commission is 
     authorized to regulate the marketplace in replacement of the 
     order system. This contingent authority does not anticipate 
     such a change, however, and should not be so construed. It is 
     only provided should developments in the market other than 
     establishment of this compact result in discontinuance of the 
     order system.
       ``By entering into this compact, the participating states 
     affirm that their ability to regulate the price which 
     southern dairy farmers receive for their product is essential 
     to the public interest. Assurance of a fair and equitable 
     price for dairy farmers ensures their ability to provide milk 
     to the market and the vitality of the southern dairy 
     industry, with all the associated benefits.
       ``Recent, dramatic price fluctuations, with a pronounced 
     downward trend, threaten the viability and stability of the 
     southern dairy region. Historically, individual state 
     regulatory action had been an effective emergency remedy 
     available to farmers confronting a distressed market. The 
     federal order system, implemented by the Agricultural 
     Marketing Agreement Act of 1937, establishes only minimum 
     prices paid to producers for raw milk, without preempting the 
     power of states to regulate milk prices above the minimum 
     levels so established.
       ``In today's regional dairy marketplace, cooperative, 
     rather than individual state action is needed to more 
     effectively address the market disarray. Under our 
     constitutional system, properly authorized states acting 
     cooperatively may exercise more power to regulate interstate 
     commerce than they may assert individually without such 
     authority. For this reason, the participating states invoke 
     their authority to act in common agreement, with the consent 
     of Congress, under the compact clause of the Constitution.

          ``ARTICLE II. DEFINITIONS AND RULES OF CONSTRUCTION

     ``Sec. 2. Definitions

       ``For the purposes of this compact, and of any supplemental 
     or concurring legislation enacted pursuant thereto, except as 
     may be otherwise required by the context:
       ``(1) `Class I milk' means milk disposed of in fluid form 
     or as a fluid milk product, subject to further definition in 
     accordance with

[[Page S7249]]

     the principles expressed in subdivision (b) of section three.
       ``(2) `Commission' means the Southern Dairy Compact 
     Commission established by this compact.
       ``(3) `Commission marketing order' means regulations 
     adopted by the commission pursuant to sections nine and ten 
     of this compact in place of a terminated federal marketing 
     order or state dairy regulation. Such order may apply 
     throughout the region or in any part or parts thereof as 
     defined in the regulations of the commission. Such order may 
     establish minimum prices for any or all classes of milk.
       ``(4) `Compact' means this interstate compact.
       ``(5) `Compact over-order price' means a minimum price 
     required to be paid to producers for Class I milk established 
     by the commission in regulations adopted pursuant to sections 
     nine and ten of this compact, which is above the price 
     established in federal marketing orders or by state farm 
     price regulations in the regulated area. Such price may apply 
     throughout the region or in any part or parts thereof as 
     defined in the regulations of the commission.
       ``(6) `Milk' means the lacteral secretion of cows and 
     includes all skim, butterfat, or other constituents obtained 
     from separation or any other process. The term is used in its 
     broadest sense and may be further defined by the commission 
     for regulatory purposes.
       ``(7) `Partially regulated plant' means a milk plant not 
     located in a regulated area but having Class I distribution 
     within such area. Commission regulations may exempt plants 
     having such distribution or receipts in amounts less than the 
     limits defined therein.
       ``(8) `Participating state' means a state which has become 
     a party to this compact by the enactment of concurring 
     legislation.
       ``(9) `Pool plant' means any milk plant located in a 
     regulated area.
       ``(10) `Region' means the territorial limits of the states 
     which are parties to this compact.
       ``(11) `Regulated area' means any area within the region 
     governed by and defined in regulations establishing a compact 
     over-order price or commission marketing order.
       ``(12) `State dairy regulation' means any state regulation 
     of dairy prices, and associated assessments, whether by 
     statute, marketing order or otherwise.

     ``Sec. 3. Rules of construction

       ``(a) This compact shall not be construed to displace 
     existing federal milk marketing orders or state dairy 
     regulation in the region but to supplement them. In the event 
     some or all federal orders in the region are discontinued, 
     the compact shall be construed to provide the commission the 
     option to replace them with one or more commission marketing 
     orders pursuant to this compact.
       ``(b) The compact shall be construed liberally in order to 
     achieve the purposes and intent enunciated in section one. It 
     is the intent of this compact to establish a basic structure 
     by which the commission may achieve those purposes through 
     the application, adaptation and development of the regulatory 
     techniques historically associated with milk marketing and to 
     afford the commission broad flexibility to devise regulatory 
     mechanisms to achieve the purposes of this compact. In 
     accordance with this intent, the technical terms which are 
     associated with market order regulation and which have 
     acquired commonly understood general meanings are not defined 
     herein but the commission may further define the terms used 
     in this compact and develop additional concepts and define 
     additional terms as it may find appropriate to achieve its 
     purposes.

                 ``ARTICLE III. COMMISSION ESTABLISHED

     ``Sec. 4. Commission established

       ``There is hereby created a commission to administer the 
     compact, composed of delegations from each state in the 
     region. The commission shall be known as the Southern Dairy 
     Compact Commission. A delegation shall include not less than 
     three nor more than five persons. Each delegation shall 
     include at least one dairy farmer who is engaged in the 
     production of milk at the time of appointment or 
     reappointment, and one consumer representative. Delegation 
     members shall be residents and voters of, and subject to such 
     confirmation process as is provided for in the appointing 
     state. Delegation members shall serve no more than three 
     consecutive terms with no single term of more than four 
     years, and be subject to removal for cause. In all other 
     respects, delegation members shall serve in accordance with 
     the laws of the state represented. The compensation, if any, 
     of the members of a state delegation shall be determined and 
     paid by each state, but their expenses shall be paid by the 
     commission.

     ``Sec. 5. Voting requirements

       ``All actions taken by the commission, except for the 
     establishment or termination of an over-order price or 
     commission marketing order, and the adoption, amendment or 
     rescission of the commission's by-laws, shall be by majority 
     vote of the delegations present. Each state delegation shall 
     be entitled to one vote in the conduct of the commission's 
     affairs. Establishment or termination of an over-order price 
     or commission marketing order shall require at least a two-
     thirds vote of the delegations present. The establishment of 
     a regulated area which covers all or part of a participating 
     state shall require also the affirmative vote of that state's 
     delegation. A majority of the delegations from the 
     participating states shall constitute a quorum for the 
     conduct of the commission's business.

     ``Sec. 6. Administration and management

       ``(a) The commission shall elect annually from among the 
     members of the participating state delegations a chairperson, 
     a vice-chairperson, and a treasurer. The commission shall 
     appoint an executive director and fix his or her duties and 
     compensation. The executive director shall serve at the 
     pleasure of the commission, and together with the treasurer, 
     shall be bonded in an amount determined by the commission. 
     The commission may establish through its by-laws an executive 
     committee composed of one member elected by each delegation.
       ``(b) The commission shall adopt by-laws for the conduct of 
     its business by a two-thirds vote, and shall have the power 
     by the same vote to amend and rescind these by-laws. The 
     commission shall publish its by-laws in convenient form with 
     the appropriate agency or officer in each of the 
     participating states. The by-laws shall provide for 
     appropriate notice to the delegations of all commission 
     meetings and hearings and of the business to be transacted at 
     such meetings or hearings. Notice also shall be given to 
     other agencies or officers of participating states as 
     provided by the laws of those states.
       ``(c) The commission shall file an annual report with the 
     Secretary of Agriculture of the United States, and with each 
     of the participating states by submitting copies to the 
     governor, both houses of the legislature, and the head of the 
     state department having responsibilities for agriculture.
       ``(d) In addition to the powers and duties elsewhere 
     prescribed in this compact, the commission shall have the 
     power:
       ``(1) To sue and be sued in any state or federal court;
       ``(2) To have a seal and alter the same at pleasure;
       ``(3) To acquire, hold, and dispose of real and personal 
     property by gift, purchase, lease, license, or other similar 
     manner, for its corporate purposes;
       ``(4) To borrow money and issue notes, to provide for the 
     rights of the holders thereof and to pledge the revenue of 
     the commission as security therefor, subject to the 
     provisions of section eighteen of this compact;
       ``(5) To appoint such officers, agents, and employees as it 
     may deem necessary, prescribe their powers, duties and 
     qualifications; and
       ``(6) To create and abolish such offices, employments and 
     positions as it deems necessary for the purposes of the 
     compact and provide for the removal, term, tenure, 
     compensation, fringe benefits, pension, and retirement rights 
     of its officers and employees. The commission may also retain 
     personal services on a contract basis.

     ``Sec. 7. Rulemaking power

       ``In addition to the power to promulgate a compact over-
     order price or commission marketing orders as provided by 
     this compact, the commission is further empowered to make and 
     enforce such additional rules and regulations as it deems 
     necessary to implement any provisions of this compact, or to 
     effectuate in any other respect the purposes of this compact.

                 ``ARTICLE IV. POWERS OF THE COMMISSION

     ``Sec. 8. Powers to promote regulatory uniformity, 
       simplicity, and interstate cooperation

       ``The commission is hereby empowered to:
       ``(1) Investigate or provide for investigations or research 
     projects designed to review the existing laws and regulations 
     of the participating states, to consider their administration 
     and costs, to measure their impact on the production and 
     marketing of milk and their effects on the shipment of milk 
     and milk products within the region.
       ``(2) Study and recommend to the participating states joint 
     or cooperative programs for the administration of the dairy 
     marketing laws and regulations and to prepare estimates of 
     cost savings and benefits of such programs.
       ``(3) Encourage the harmonious relationships between the 
     various elements in the industry for the solution of their 
     material problems. Conduct symposia or conferences designed 
     to improve industry relations, or a better understanding of 
     problems.
       ``(4) Prepare and release periodic reports on activities 
     and results of the commission's efforts to the participating 
     states.
       ``(5) Review the existing marketing system for milk and 
     milk products and recommend changes in the existing structure 
     for assembly and distribution of milk which may assist, 
     improve or promote more efficient assembly and distribution 
     of milk.
       ``(6) Investigate costs and charges for producing, hauling, 
     handling, processing, distributing, selling and for all other 
     services performed with respect to milk.
       ``(7) Examine current economic forces affecting producers, 
     probable trends in production and consumption, the level of 
     dairy farm prices in relation to costs, the financial 
     conditions of dairy farmers, and the need for an emergency 
     order to relieve critical conditions on dairy farms.

     ``Sec. 9. Equitable farm prices

       ``(a) The powers granted in this section and section ten 
     shall apply only to the establishment of a compact over-order 
     price, so long as federal milk marketing orders remain in 
     effect in the region. In the event that any or all such 
     orders are terminated, this article

[[Page S7250]]

     shall authorize the commission to establish one or more 
     commission marketing orders, as herein provided, in the 
     region or parts thereof as defined in the order.
       ``(b) A compact over-order price established pursuant to 
     this section shall apply only to Class I milk. Such compact 
     over-order price shall not exceed one dollar and fifty cents 
     per gallon at Atlanta, Ga., however, this compact over-order 
     price shall be adjusted upward or downward at other locations 
     in the region to reflect differences in minimum federal order 
     prices. Beginning in nineteen hundred ninety, and using that 
     year as a base, the foregoing one dollar fifty cents per 
     gallon maximum shall be adjusted annually by the rate of 
     change in the Consumer Price Index as reported by the Bureau 
     of Labor Statistics of the United States Department of Labor. 
     For purposes of the pooling and equalization of an over-order 
     price, the value of milk used in other use classifications 
     shall be calculated at the appropriate class price 
     established pursuant to the applicable federal order or state 
     dairy regulation and the value of unregulated milk shall be 
     calculated in relation to the nearest prevailing class price 
     in accordance with and subject to such adjustments as the 
     commission may prescribe in regulations.
       ``(c) A commission marketing order shall apply to all 
     classes and uses of milk.
       ``(d) The commission is hereby empowered to establish a 
     compact over-order price for milk to be paid by pool plants 
     and partially regulated plants. The commission is also 
     empowered to establish a compact over-order price to be paid 
     by all other handlers receiving milk from producers located 
     in a regulated area. This price shall be established either 
     as a compact over-order price or by one or more commission 
     marketing orders. Whenever such a price has been established 
     by either type of regulation, the legal obligation to pay 
     such price shall be determined solely by the terms and 
     purpose of the regulation without regard to the situs of the 
     transfer of title, possession or any other factors not 
     related to the purposes of the regulation and this compact. 
     Producer-handlers as defined in an applicable federal market 
     order shall not be subject to a compact over-order price. The 
     commission shall provide for similar treatment of producer-
     handlers under commission marketing orders.
       ``(e) In determining the price, the commission shall 
     consider the balance between production and consumption of 
     milk and milk products in the regulated area, the costs of 
     production including, but not limited to the price of feed, 
     the cost of labor including the reasonable value of the 
     producer's own labor and management, machinery expense, and 
     interest expense, the prevailing price for milk outside the 
     regulated area, the purchasing power of the public and the 
     price necessary to yield a reasonable return to the producer 
     and distributor.
       ``(f) When establishing a compact over-order price, the 
     commission shall take such other action as is necessary and 
     feasible to help ensure that the over-order price does not 
     cause or compensate producers so as to generate local 
     production of milk in excess of those quantities necessary to 
     assure consumers of an adequate supply for fluid purposes.
       ``(g) The commission shall whenever possible enter into 
     agreements with state or federal agencies for exchange of 
     information or services for the purpose of reducing 
     regulatory burden and cost of administering the compact. The 
     commission may reimburse other agencies for the reasonable 
     cost of providing these services.

     ``Sec. 10. Optional provisions for pricing order

       ``Regulations establishing a compact over-order price or a 
     commission marketing order may contain, but shall not be 
     limited to any of the following:
       ``(1) Provisions classifying milk in accordance with the 
     form in which or purpose for which it is used, or creating a 
     flat pricing program.
       ``(2) With respect to a commission marketing order only, 
     provisions establishing or providing a method for 
     establishing separate minimum prices for each use 
     classification prescribed by the commission, or a single 
     minimum price for milk purchased from producers or 
     associations of producers.
       ``(3) With respect to an over-order minimum price, 
     provisions establishing or providing a method for 
     establishing such minimum price for Class I milk.
       ``(4) Provisions for establishing either an over-order 
     price or a commission marketing order may make use of any 
     reasonable method for establishing such price or prices 
     including flat pricing and formula pricing. Provision may 
     also be made for location adjustments, zone differentials and 
     for competitive credits with respect to regulated handlers 
     who market outside the regulated area.
       ``(5) Provisions for the payment to all producers and 
     associations of producers delivering milk to all handlers of 
     uniform prices for all milk so delivered, irrespective of the 
     uses made of such milk by the individual handler to whom it 
     is delivered, or for the payment of producers delivering milk 
     to the same handler of uniform prices for all milk delivered 
     by them.
       ``(A) With respect to regulations establishing a compact 
     over-order price, the commission may establish one 
     equalization pool within the regulated area for the sole 
     purpose of equalizing returns to producers throughout the 
     regulated area.
       ``(B) With respect to any commission marketing order, as 
     defined in section two, subdivision three, which replaces one 
     or more terminated federal orders or state dairy regulations, 
     the marketing area of now separate state or federal orders 
     shall not be merged without the affirmative consent of each 
     state, voting through its delegation, which is partly or 
     wholly included within any such new marketing area.
       ``(6) Provisions requiring persons who bring Class I milk 
     into the regulated area to make compensatory payments with 
     respect to all such milk to the extent necessary to equalize 
     the cost of milk purchased by handlers subject to a compact 
     over-order price or commission marketing order. No such 
     provisions shall discriminate against milk producers outside 
     the regulated area. The provisions for compensatory payments 
     may require payment of the difference between the Class I 
     price required to be paid for such milk in the state of 
     production by a federal milk marketing order or state dairy 
     regulation and the Class I price established by the compact 
     over-order price or commission marketing order.
       ``(7) Provisions specially governing the pricing and 
     pooling of milk handled by partially regulated plants.
       ``(8) Provisions requiring that the account of any person 
     regulated under the compact over-order price shall be 
     adjusted for any payments made to or received by such persons 
     with respect to a producer settlement fund of any federal or 
     state milk marketing order or other state dairy regulation 
     within the regulated area.
       ``(9) Provision requiring the payment by handlers of an 
     assessment to cover the costs of the administration and 
     enforcement of such order pursuant to Article VII, Section 
     18(a).
       ``(10) Provisions for reimbursement to participants of the 
     Women, Infants and Children Special Supplemental Food Program 
     of the United States Child Nutrition Act of 1966.
       ``(11) Other provisions and requirements as the commission 
     may find are necessary or appropriate to effectuate the 
     purposes of this compact and to provide for the payment of 
     fair and equitable minimum prices to producers.

                   ``ARTICLE V. RULEMAKING PROCEDURE

     ``Sec. 11. Rulemaking procedure

       ``Before promulgation of any regulations establishing a 
     compact over-order price or commission marketing order, 
     including any provision with respect to milk supply under 
     subsection 9(f), or amendment thereof, as provided in Article 
     IV, the commission shall conduct an informal rulemaking 
     proceeding to provide interested persons with an opportunity 
     to present data and views. Such rulemaking proceeding shall 
     be governed by section four of the Federal Administrative 
     Procedure Act, as amended (5 U.S.C. Sec. 553). In addition, 
     the commission shall, to the extent practicable, publish 
     notice of rulemaking proceedings in the official register of 
     each participating state. Before the initial adoption of 
     regulations establishing a compact over-order price or a 
     commission marketing order and thereafter before any 
     amendment with regard to prices or assessments, the 
     commission shall hold a public hearing. The commission may 
     commence a rulemaking proceeding on its own initiative or may 
     in its sole discretion act upon the petition of any person 
     including individual milk producers, any organization of milk 
     producers or handlers, general farm organizations, consumer 
     or public interest groups, and local, state or federal 
     officials.

     ``Sec. 12. Findings and referendum

       ``(a) In addition to the concise general statement of basis 
     and purpose required by section 4(b) of the Federal 
     Administrative Procedure Act, as amended (5 U.S.C. 
     Sec. 553(c)), the commission shall make findings of fact with 
     respect to:
       ``(1) Whether the public interest will be served by the 
     establishment of minimum milk prices to dairy farmers under 
     Article IV.
       ``(2) What level of prices will assure that producers 
     receive a price sufficient to cover their costs of production 
     and will elicit an adequate supply of milk for the 
     inhabitants of the regulated area and for manufacturing 
     purposes.
       ``(3) Whether the major provisions of the order, other than 
     those fixing minimum milk prices, are in the public interest 
     and are reasonably designed to achieve the purposes of the 
     order.
       ``(4) Whether the terms of the proposed regional order or 
     amendment are approved by producers as provided in section 
     thirteen.

     ``Sec. 13. Producer referendum

       ``(a) For the purpose of ascertaining whether the issuance 
     or amendment of regulations establishing a compact over-order 
     price or a commission marketing order, including any 
     provision with respect to milk supply under subsection 9(f), 
     is approved by producers, the commission shall conduct a 
     referendum among producers. The referendum shall be held in a 
     timely manner, as determined by regulation of the commission. 
     The terms and conditions of the proposed order or amendment 
     shall be described by the commission in the ballot used in 
     the conduct of the referendum, but the nature, content, or 
     extent of such description shall not be a basis for attacking 
     the legality of the order or any action relating thereto.
       ``(b) An order or amendment shall be deemed approved by 
     producers if the commission determines that it is approved by 
     at least two-thirds of the voting producers who,

[[Page S7251]]

     during a representative period determined by the commission, 
     have been engaged in the production of milk the price of 
     which would be regulated under the proposed order or 
     amendment.
       ``(c) For purposes of any referendum, the commission shall 
     consider the approval or disapproval by any cooperative 
     association of producers, qualified under the provisions of 
     the Act of Congress of February 18, 1922, as amended, known 
     as the Capper-Volstead Act, bona fide engaged in marketing 
     milk, or in rendering services for or advancing the interests 
     of producers of such commodity, as the approval or 
     disapproval of the producers who are members or stockholders 
     in, or under contract with, such cooperative association of 
     producers, except as provided in subdivision (1) hereof and 
     subject to the provisions of subdivision (2) through (5) 
     hereof.
       ``(1) No cooperative which has been formed to act as a 
     common marketing agency for both cooperatives and individual 
     producers shall be qualified to block vote for either.
       ``(2) Any cooperative which is qualified to block vote 
     shall, before submitting its approval or disapproval in any 
     referendum, give prior written notice to each of its members 
     as to whether and how it intends to cast its vote. The notice 
     shall be given in a timely manner as established, and in the 
     form prescribed, by the commission.
       ``(3) Any producer may obtain a ballot from the commission 
     in order to register approval or disapproval of the proposed 
     order.
       ``(4) A producer who is a member of a cooperative which has 
     provided notice of its intent to approve or not to approve a 
     proposed order, and who obtains a ballot and with such ballot 
     expresses his approval or disapproval of the proposed order, 
     shall notify the commission as to the name of the cooperative 
     of which he or she is a member, and the commission shall 
     remove such producer's name from the list certified by such 
     cooperative with its corporate vote.
       ``(5) In order to insure that all milk producers are 
     informed regarding the proposed order, the commission shall 
     notify all milk producers that an order is being considered 
     and that each producer may register his approval or 
     disapproval with the commission either directly or through 
     his or her cooperative.

     ``Sec. 14. Termination of over-order price or marketing order

       ``(a) The commission shall terminate any regulations 
     establishing an over-order price or commission marketing 
     order issued under this article whenever it finds that such 
     order or price obstructs or does not tend to effectuate the 
     declared policy of this compact.
       ``(b) The commission shall terminate any regulations 
     establishing an over-order price or a commission marketing 
     order issued under this article whenever it finds that such 
     termination is favored by a majority of the producers who, 
     during a representative period determined by the commission, 
     have been engaged in the production of milk the price of 
     which is regulated by such order; but such termination shall 
     be effective only if announced on or before such date as may 
     be specified in such marketing agreement or order.
       ``(c) The termination or suspension of any order or 
     provision thereof, shall not be considered an order within 
     the meaning of this article and shall require no hearing, but 
     shall comply with the requirements for informal rulemaking 
     prescribed by section four of the Federal Administrative 
     Procedure Act, as amended (5 U.S.C. Sec. 553).

                       ``ARTICLE VI. ENFORCEMENT

     ``Sec. 15. Records; reports; access to premises

       ``(a) The commission may by rule and regulation prescribe 
     record keeping and reporting requirements for all regulated 
     persons. For purposes of the administration and enforcement 
     of this compact, the commission is authorized to examine the 
     books and records of any regulated person relating to his or 
     her milk business and for that purpose, the commission's 
     properly designated officers, employees, or agents shall have 
     full access during normal business hours to the premises and 
     records of all regulated persons.
       ``(b) Information furnished to or acquired by the 
     commission officers, employees, or its agents pursuant to 
     this section shall be confidential and not subject to 
     disclosure except to the extent that the commission deems 
     disclosure to be necessary in any administrative or judicial 
     proceeding involving the administration or enforcement of 
     this compact, an over-order price, a compact marketing order, 
     or other regulations of the commission. The commission may 
     promulgate regulations further defining the confidentiality 
     of information pursuant to this section. Nothing in this 
     section shall be deemed to prohibit (i) the issuance of 
     general statements based upon the reports of a number of 
     handlers, which do not identify the information furnished by 
     any person, or (ii) the publication by direction of the 
     commission of the name of any person violating any regulation 
     of the commission, together with a statement of the 
     particular provisions violated by such person.
       ``(c) No officer, employee, or agent of the commission 
     shall intentionally disclose information, by inference or 
     otherwise, which is made confidential pursuant to this 
     section. Any person violating the provisions of this section 
     shall, upon conviction, be subject to a fine of not more than 
     one thousand dollars or to imprisonment for not more than one 
     year, or to both, and shall be removed from office. The 
     commission shall refer any allegation of a violation of this 
     section to the appropriate state enforcement authority or 
     United States Attorney.

     ``Sec. 16. Subpoena; hearings and judicial review

       ``(a) The commission is hereby authorized and empowered by 
     its members and its properly designated officers to 
     administer oaths and issue subpoenas throughout all signatory 
     states to compel the attendance of witnesses and the giving 
     of testimony and the production of other evidence.
       ``(b) Any handler subject to an order may file a written 
     petition with the commission stating that any such order or 
     any provision of any such order or any obligation imposed in 
     connection therewith is not in accordance with law and 
     praying for a modification thereof or to be exempted 
     therefrom. He shall thereupon be given an opportunity for a 
     hearing upon such petition, in accordance with regulations 
     made by the commission. After such hearing, the commission 
     shall make a ruling upon the prayer of such petition which 
     shall be final, if in accordance with law.
       ``(c) The district courts of the United States in any 
     district in which such handler is an inhabitant, or has his 
     principal place of business, are hereby vested with 
     jurisdiction to review such ruling, provided a complaint for 
     that purpose is filed within thirty days from the date of the 
     entry of such ruling. Service of process in such proceedings 
     may be had upon the commission by delivering to it a copy of 
     the complaint. If the court determines that such ruling is 
     not in accordance with law, it shall remand such proceedings 
     to the commission with directions either (1) to make such 
     ruling as the court shall determine to be in accordance with 
     law, or (2) to take such further proceedings as, in its 
     opinion, the law requires. The pendency of proceedings 
     instituted pursuant to this subdivision shall not impede, 
     hinder, or delay the commission from obtaining relief 
     pursuant to section seventeen. Any proceedings brought 
     pursuant to section seventeen, except where brought by way of 
     counterclaim in proceedings instituted pursuant to this 
     section, shall abate whenever a final decree has been 
     rendered in proceedings between the same parties, and 
     covering the same subject matter, instituted pursuant to this 
     section.

     ``Sec. 17. Enforcement with respect to handlers

       ``(a) Any violation by a handler of the provisions of 
     regulations establishing an over-order price or a commission 
     marketing order, or other regulations adopted pursuant to 
     this compact shall:
       ``(1) Constitute a violation of the laws of each of the 
     signatory states. Such violation shall render the violator 
     subject to a civil penalty in an amount as may be prescribed 
     by the laws of each of the participating states, recoverable 
     in any state or federal court of competent jurisdiction. Each 
     day such violation continues shall constitute a separate 
     violation.
       ``(2) Constitute grounds for the revocation of license or 
     permit to engage in the milk business under the applicable 
     laws of the participating states.
       ``(b) With respect to handlers, the commission shall 
     enforce the provisions of this compact, regulations 
     establishing an over-order price, a commission marketing 
     order or other regulations adopted hereunder by:
       ``(1) Commencing an action for legal or equitable relief 
     brought in the name of the commission of any state or federal 
     court of competent jurisdiction; or
       ``(2) Referral to the state agency for enforcement by 
     judicial or administrative remedy with the agreement of the 
     appropriate state agency of a participating state.
       ``(c) With respect to handlers, the commission may bring an 
     action for injunction to enforce the provisions of this 
     compact or the order or regulations adopted thereunder 
     without being compelled to allege or prove that an adequate 
     remedy of law does not exist.

                         ``ARTICLE VII. FINANCE

     ``Sec. 18. Finance of start-up and regular costs

       ``(a) To provide for its start-up costs, the commission may 
     borrow money pursuant to its general power under section six, 
     subdivision (d), paragraph four. In order to finance the 
     costs of administration and enforcement of this compact, 
     including payback of start-up costs, the commission is hereby 
     empowered to collect an assessment  from each handler who 
     purchases milk from producers within the region. If 
     imposed, this assessment shall be collected on a monthly 
     basis for up to one year from the date the commission 
     convenes, in an amount not to exceed $.015 per 
     hundredweight of milk purchased from producers during the 
     period of the assessment. The initial assessment may apply 
     to the projected purchases of handlers for the two-month 
     period following the date the commission convenes. In 
     addition, if regulations establishing an over-order price 
     or a compact marketing order are adopted, they may include 
     an assessment for the specific purpose of their 
     administration. These regulations shall provide for 
     establishment of a reserve for the commission's ongoing 
     operating expenses.
       ``(b) The commission shall not pledge the credit of any 
     participating state or of the United States. Notes issued by 
     the commission and all other financial obligations incurred 
     by it, shall be its sole responsibility and no participating 
     state or the United States shall be liable therefor.

[[Page S7252]]

     ``Sec. 19. Audit and accounts

       ``(a) The commission shall keep accurate accounts of all 
     receipts and disbursements, which shall be subject to the 
     audit and accounting procedures established under its rules. 
     In addition, all receipts and disbursements of funds handled 
     by the commission shall be audited yearly by a qualified 
     public accountant and the report of the audit shall be 
     included in and become part of the annual report of the 
     commission.
       ``(b) The accounts of the commission shall be open at any 
     reasonable time for inspection by duly constituted officers 
     of the participating states and by any persons authorized by 
     the commission.
       ``(c) Nothing contained in this article shall be construed 
     to prevent commission compliance with laws relating to audit 
     or inspection of accounts by or on behalf of any 
     participating state or of the United States.

  ``ARTICLE VIII. ENTRY INTO FORCE; ADDITIONAL MEMBERS AND WITHDRAWAL

     ``Sec. 20. Entry into force; additional members

       ``The compact shall enter into force effective when enacted 
     into law by any three states of the group of states composed 
     of Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, 
     Maryland, Mississippi, North Carolina, Oklahoma, South 
     Carolina, Tennessee, Texas, Virginia and West Virginia and 
     when the consent of Congress has been obtained.

     ``Sec. 21. Withdrawal from compact

       ``Any participating state may withdraw from this compact by 
     enacting a statute repealing the same, but no such withdrawal 
     shall take effect until one year after notice in writing of 
     the withdrawal is given to the commission and the governors 
     of all other participating states. No withdrawal shall affect 
     any liability already incurred by or chargeable to a 
     participating state prior to the time of such withdrawal.

     ``Sec. 22. Severability

       ``If any part or provision of this compact is adjudged 
     invalid by any court, such judgment shall be confined in its 
     operation to the part or provision directly involved in the 
     controversy in which such judgment shall have been rendered 
     and shall not affect or impair the validity of the remainder 
     of this compact. In the event Congress consents to this 
     compact subject to conditions, said conditions shall not 
     impair the validity of this compact when said conditions are 
     accepted by three or more compacting states. A compacting 
     state may accept the conditions of Congress by implementation 
     of this compact.''.

     SEC. 4. PACIFIC NORTHWEST DAIRY COMPACT.

       Congress consents to a Pacific Northwest Dairy Compact 
     proposed for the States of California, Oregon, and 
     Washington, subject to the following conditions:
       (1) Text.--The text of the Pacific Northwest Dairy Compact 
     shall be identical to the text of the Southern Dairy Compact, 
     except as follows:
       (A) References to ``south'', ``southern'', and ``Southern'' 
     shall be changed to ``Pacific Northwest''.
       (B) In section 9(b), the reference to ``Atlanta, Georgia'' 
     shall be changed to ``Seattle, Washington''.
       (C) In section 20, the reference to ``any three'' and all 
     that follows shall be changed to ``California, Oregon, and 
     Washington.''.
       (2) Limitation of manufacturing price regulation.--The 
     Dairy Compact Commission established to administer the 
     Pacific Northwest Dairy Compact (referred to in this section 
     as the ``Commission'') may not regulate Class II, Class III, 
     or Class IV milk used for manufacturing purposes or any other 
     milk, other than Class I, or fluid milk, as defined by a 
     Federal milk marketing order issued under section 8c of the 
     Agricultural Adjustment Act (7 U.S.C. 608c), reenacted with 
     amendments by the Agricultural Marketing Act of 1937 
     (referred to in this section as a ``Federal milk marketing 
     order'').
       (3) Effective date.--Congressional consent under this 
     section takes effect on the date (not later than 3 year after 
     the date of enactment of this Act) on which the Pacific 
     Northwest Dairy Compact is entered into by the second of the 
     3 States specified in the matter preceding paragraph (1).
       (4) Compensation of commodity credit corporation.--Before 
     the end of each fiscal year in which a price regulation is in 
     effect under the Pacific Northwest Dairy Compact, the 
     Commission shall compensate the Commodity Credit Corporation 
     for the cost of any purchases of milk and milk products by 
     the Corporation that result from the operation of the Compact 
     price regulation during the fiscal year, as determined by the 
     Secretary (in consultation with the Commission) using notice 
     and comment procedures provided in section 553 of title 5, 
     United States Code.
       (5) Milk marketing order administrator.--At the request of 
     the Commission, the Administrator of the applicable Federal 
     milk marketing order shall provide technical assistance to 
     the Commission and be compensated for that assistance.

     SEC. 5. INTERMOUNTAIN DAIRY COMPACT.

       Congress consents to an Intermountain Dairy Compact 
     proposed for the States of Colorado, Nevada, and Utah, 
     subject to the following conditions:
       (1) Text.--The text of the Intermountain Dairy Compact 
     shall be identical to the text of the Southern Dairy Compact, 
     except as follows:
       (A) In section 1, the references to ``southern'' and 
     ``south'' shall be changed to ``Intermountain'' and 
     ``Intermountain region'', respectively.
       (B) References to ``Southern'' shall be changed to 
     ``Intermountain ''.
       (C) In section 9(b), the reference to ``Atlanta, Georgia'' 
     shall be changed to ``Salt Lake City, Utah''.
       (D) In section 20, the reference to ``any three'' and all 
     that follows shall be changed to ``Colorado, Nevada, and 
     Utah.''.
       (2) Limitation of manufacturing price regulation.--The 
     Dairy Compact Commission established to administer the 
     Intermountain Dairy Compact (referred to in this section as 
     the ``Commission'') may not regulate Class II, Class III, or 
     Class IV milk used for manufacturing purposes or any other 
     milk, other than Class I, or fluid milk, as defined by a 
     Federal milk marketing order issued under section 8c of the 
     Agricultural Adjustment Act (7 U.S.C. 608c), reenacted with 
     amendments by the Agricultural Marketing Act of 1937 
     (referred to in this section as a ``Federal milk marketing 
     order'').
       (3) Effective date.--Congressional consent under this 
     section takes effect on the date (not later than 3 year after 
     the date of enactment of this Act) on which the Intermountain 
     Dairy Compact is entered into by the second of the 3 States 
     specified in the matter preceding paragraph (1).
       (4) Compensation of commodity credit corporation.--Before 
     the end of each fiscal year in which a price regulation is in 
     effect under the Intermountain Dairy Compact, the Commission 
     shall compensate the Commodity Credit Corporation for the 
     cost of any purchases of milk and milk products by the 
     Corporation that result from the operation of the Compact 
     price regulation during the fiscal year, as determined by the 
     Secretary (in consultation with the Commission) using notice 
     and comment procedures provided in section 553 of title 5, 
     United States Code.
       (5) Milk marketing order administrator.--At the request of 
     the Commission, the Administrator of the applicable Federal 
     milk marketing order shall provide technical assistance to 
     the Commission and be compensated for that assistance.

  Ms. LANDRIEU. Mr. President, today I rise, along with thirty-eight of 
my colleagues, to introduce legislation which would reauthorize the 
Northwest Dairy Compact and establish the Southern, Pacific and Inter-
mountain Compacts.
  State officials and dairy producers across the country are concerned 
that the current Federal milk marketing order pricing system does not 
fully account for regional differences in the costs of producing milk. 
As a result, 25 States, including my State of Louisiana, have passed 
legislation requesting that Congress approve their right to form 
regional compacts. The compact, when ratified by Congress, authorizes 
creation of an interstate compact commission which would guide the 
pricing of fluid milk sold in the region. Consumers, processors, 
producers, State officials and the public all participate in 
determining Class I fluid milk prices.
  The Northeast Dairy Compact, enacted in 1996, and due to expire this 
year, has proven extremely successful in balancing the interests of 
consumers, dairy farmers, processors and retailers by maintaining milk 
price stability and doing so at no cost to taxpayers.
  By ratifying the Southern Dairy Compact we have the opportunity to 
assure consumers an adequate, affordable and fresh milk supply while 
preserving the health of farms, whose social and economic contributions 
remain so critical to the vitality of our country's rural communities.
  In my State of Louisiana, over four hundred dairy farms help maintain 
economic stability in one of our Nation's poorest regions. In the past 
ten years, nearly a quarter of the dairy farms in my State have gone 
out of business, and many more are in danger of shutting down unless we 
authorize the return of milk pricing power back to the States. Had 
Louisiana been a member of a Southern Dairy Compact last year, its 468 
dairy farms would have received $11.9 million in compact payments, 
increasing income for the average Louisiana dairy farmer by nearly 
thirteen percent. This, at a time when dairy farmers are faced with 
depressed prices not seen in the last 25 years.
  There are those in Congress who have opposed dairy compacts since the 
day the idea was introduced. However, dairy compacts are not antitrade, 
do not increase milk production and milk from outside the compact 
region is not excluded from sale in the compact region. Over the past 
five years, New England's dairy farmers have put into practice the 
compact's promise of providing stable prices for farmers and

[[Page S7253]]

consumers, strengthening rural communities and preserving our 
environment. It is time to allow the States the opportunity to provide 
their farmers the stability they so desperately need.
  Ms. COLLINS. Mr. President, I rise with my colleagues today to 
introduce the Dairy Consumers and Producers Protection Act. Our 
legislation reauthorizes the Northeast Interstate Diary Compact and 
allows other regions of the country to form compacts as well. In doing 
so, our bill extends to additional consumers and producers the benefits 
we enjoy in the Northeast.
  The Northeast Dairy Compact has proven successful in balancing the 
interests of processors, retailers, consumers and dairy farmers by 
maintaining milk price stability. Last year, 458 dairy farmers in Maine 
received payments under the compact totaling $4.8 million. The payments 
averaged approximately $10,500 per farmer, or enough to help farmers 
maintain viable operations, sustain rural communities, and ensure a 
reliable supply of wholesome dairy products for consumers.
  The Northeast Dairy Compact is an innovative approach to promoting 
stability in the New England dairy industry. The Compact provides for a 
commission, comprised of delegates from each State, which is granted 
the authority to set a minimum farm price for Class I (fluid) milk. The 
difference between the compact price and the Federal milk order price, 
or the ``over-order obligation,'' is paid to the commission by the 
processors. The commission then redistributes these funds to compact 
producers based on the volume of milk sold by the farmer within the 
region.
  The success of the Northeast Dairy Compact in promoting the viability 
of dairy farming and sustaining rural communities in New England has 
not gone unnoticed. Nineteen additional State legislatures have 
overwhelmingly passed compact legislation. Our legislation recognizes 
this strong support for compacts on the state level and provides 
Congressional consent for these States to join the Northeast compact or 
form compacts of their own.
  For all that the Compact accomplishes for farmers in the Northeast, 
one might think that it puts farmers from other parts of the country at 
a competitive disadvantage. However, this is not the case. The Compact 
Commission has instituted safeguards, as required by the authorizing 
legislation, that prevents the overproduction of milk. Incentive 
payments are provided to farmers who do not increase production and 
have actually led to a decrease of 0.6 percent in the amount of milk 
produced in the region. Consequently, we can be sure that surplus milk 
from the Northeast is not impacting milk markets in other regions of 
the country. It is important to note that our legislation includes the 
overproduction protections included in the original Dairy Compact 
legislation.
  The Northeast Dairy Compact is set to expire on September 30, 2001. 
While the saying goes that all good things must come to an end, I do 
not believe that ought to be the case with the Compact. Dairy farmers 
in my State agree and have written, e-mailed, and called to express to 
me their hope that Congress will extend the authorization of the 
Northeast Dairy Compact. I have appreciated hearing just how important 
the Compact is to my constituents, and I look forward to working with 
my colleagues in the Senate to see that the Diary Consumers and 
Producers Protection Act is enacted.
  Mr. JOHNSON. Mr. President, I rise today to strongly support the 
extension and the expansion of the Northeast Dairy Compact as a 
reasonable and proven way to help dairy farmers in New England and 
beyond.
  Dairy farms are truly the agricultural heart of New York State. Their 
survival is vital to the economic, social, and cultural well-being of 
the State. I am such an enthusiastic advocate for the Compact because, 
it offers the means to maintain not only healthy dairy farms in my 
State, but the rural settings and communities upon which so much of New 
York and the rest of the country depend.
  Historically, dairy prices have been subject to unpredictable and 
unacceptable fluctuations in prices. In the face of such uncertainty, 
the current Federal price support system was designed to provide basic 
levels of assistance to dairy producers. Unfortunately, the support 
provided, while helpful, is often inadequate. Many dairy farmers in New 
York and elsewhere are unable to operate at a profit. As a remedy, the 
Dairy Compact was designed to provide producers with supplemental 
support, through assessments to processors, when the Marketing Order 
price is low. Most importantly, the price stability afforded by the 
Compact is especially important to farmers as a planning tool.
  As originally implemented, the Dairy Compact did not include New 
York. The Bill that has been introduced would allow New York State and 
other States in the Northeast, Southeast and elsewhere to join the 
Compact. The New York Legislature, like 25 other State Legislatures, 
has voted to join the Compact. Why? Because over the 4 years that the 
Compact has been in existence it has made the difference for many 
family farmers between surviving as a dairy producer or selling their 
land for development which is slowly decimating our rural landscape. It 
has helped us maintain a local supply of affordable milk for consumers 
including women and children throughout the Compact region at no cost 
to the government and without placing an undue burden on consumers.
  New York is an important dairy producing and consuming State. As of 
the year 2000, we had about 7,200 dairy herds and produced 11.9 billion 
pounds of milk. That year, New York ranked third behind California and 
Wisconsin in both the number of milk cows and total milk produced. The 
viability of dairy farms is very, very important to my State. If New 
York had been a member of compact that year when dairy prices were at 
rock bottom, they would have received an average payment per farm of 
$18,200. While that size payment will not lead to prosperity, it will 
help keep the farm going. Several New York dairy farms sell milk to the 
Compact, and thus receive some of these benefits. I want to ensure that 
all dairy farms are in the State can participate, and the only way to 
do that is to expand the Compact.
  Opponents of the Compact claim that if it were to be expanded, 
farmers in the Compact region would overproduce fluid milk thus driving 
prices down in other parts of the country. This is not the case. The 
Compact legislation that we propose today specifically acts to prevent 
such an over production through a supply management feature that 
rewards dairy producers in the Compact who maintain relatively stable 
levels of production. If needed, this tool could be used to control 
over-production from an expanded Compact and thus minimize negative 
impacts elsewhere.

  Other important features of the Compact that are important to 
remember include the following: It has been fully reviewed and found to 
be legal. It includes a feature to protect disadvantaged women, infant 
and children, and in fact, in the year 2000, the Compact paid the WIC 
program close to $1.8 million to reimburse WIC for any extra expense 
the program incurred under the Compact. Approximately 1 percent of 
Compact payments are similarly set aside to reimburse school lunch 
programs.
  I am concerned about the move towards consolidation in the dairy 
industry. While some concentration is to be expected, recent trends 
indicate that a few very large dairy operations and processing plants 
are grabbing up more and more. Many dairy operations are also 
succumbing to unplanned sprawl. By helping small at-risk farms stay 
afloat, the Compact is a hedge against unhealthy amounts of 
consolidation. It also helps to preserve the rural life style, the 
countryside settings with open spaces, and the economic core of 
communities that are so important to my New York and so many others.
  In sum, the Dairy Compact is an effective way for States, New York 
and others, to obtain from Congress the regulatory authority over the 
region's interstate markets for milk. It offers a price stability that 
is incredibly helpful, and it helps to slow the demise of a tradition 
that our country holds dear, the family farm.
  Ms. SNOWE. Mr. President, I rise today to join Senator Specter of 
Pennsylvania in support of the Dairy Consumers and Producers Protection 
Act of 2001. We are joined by 37 of our colleagues from New England and 
throughout the Mid-Atlantic and the Southeast.

[[Page S7254]]

  This legislation reauthorizes the very successful Northeast 
Interstate Dairy Compact which allows the producers of milk to, as a 
dairy farmer from York Country, ME, recently said, set a little higher 
bottom for the price of locally produced fresh milk. The current 
Compact only adds a small incremental cost to the current Federal milk 
marketing order system that already sets a floor price for fluid milk 
in New England. The bill also gives approval for States contiguous to 
the participating New England States to join, in this case, 
Pennsylvania, New York, New Jersey, Delaware, and Maryland.
  The legislation also grants Congressional approval for a new Southern 
Dairy Compact, made up of 14 States: Alabama, Arkansas, Georgia, 
Kansas, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, 
Oklahoma, South Carolina, Tennessee, Virginia, and West Virginia.
  This issue is really a State rights issue more than anything else, 
Mr. President, as the only action the Senate needs to take is to give 
its congressional consent under the Compact Clause of the United States 
Constitution, Article I, section 10, clause 3, to allow the 25 States 
to proceed with their two independent compacts.
  All of the legislatures in these twenty-five States have ratified 
legislation that allows their individual States to join a Compact, and 
the Governor of every State has signed a compact bill into law. Half of 
the States in this country, await our Congressional approval to address 
farm insecurity by stabilizing the price of fresh fluid milk on grocery 
shelves and to protect consumers against volatile price swings.
  All of the Northeast and Southern Compact States together make up 
about 28 percent of the Nation's fluid milk market--New England 
production is only about 3\1/2\ percent of this. This is somewhat 
comparable to Minnesota and Wisconsin which together make up to 24 
percent of the fluid milk market. California makes up another 20 
percent.
  Over ninety-seven percent of the fluid milk market in New England is 
contained within the area, and fluid milk markets are local due to the 
demand for freshness and because of high transportation costs, so any 
complaints raised in other areas about unfair competition simply does 
not hold water. The existence of the Northeast Dairy Compact does not 
threaten or financially harm any other dairy farmer in the country. Nor 
is there one penny of Federal funds involved--not one cent.
  Only the consumers and the processors in the New England region pay 
to support the minimum price to provide for a fairer return to the 
area's family dairy farmers and to protect a way of life important to 
the people of the Northeast. Importantly, under the Compact, New 
England retail milk prices have been among the lowest and the most 
stable in the country. No wonder other States want to follow our lead.
  When Congress wants to try something new, it often sets up a pilot 
program to test out an idea in a particular locality or region, and 
then appraises the outcome to see if the project was successful. This 
is how the Northeast Dairy Compact originated as it was included in the 
1996 Farm bill as a three year pilot program--to sunset on April 4, 
1999--at the same time as the adoption of the required consolidation of 
Federal milk marketing orders. The milk marketing orders were extended 
until October 1, 1999 in the Omnibus Appropriations of FY 1999, which 
also automatically extended the Compact until October 1, 1999.
  Because of efforts by myself and other Compact supporters, we fought 
to receive a two-year extension of the Northeast Compact, which was 
incorporated in the Omnibus spending bill funding several government 
agencies for FY 2000. The Compact will expire on September 30 of this 
year if no further action is taken by this body.
  I want to make it clear to my colleagues how important the 
continuation of the Northeast Dairy Compact is to me and the dairy 
farmers and consumers in Maine. I stand here not with my hand 
outstretched for federal farm dollars for Maine--of all income received 
by farmers in my State, only about 9 percent comes from Federal 
funding, unlike other States whose income received through Federal 
dollars is well over 75 percent--rather to urge you to support a very 
successful program that does not cost the federal government one 
penny--not one cent, and is supported by the very people who are 
affected by it.
  I plan to use every avenue open to me to make sure the Compact 
continues to operate as, once the Compact Commission is shut down even 
temporarily, it cannot magically be brought back to life again. It 
would take many months if not a year to restore the successful process 
that is now in place. I will not gamble with the livelihoods of the 
dairy farmers of Maine in that irresponsible fashion.
  All during the time of the Northeast Compact, fluid milk prices in 
New England have been among the lowest and have reflected great price 
stability. The consumers of New England have been spending a few extra 
pennies for fresh fluid milk--a recent University of Connecticut report 
recently estimated no more than 4.5 cents a gallon--to ensure a safety 
net for dairy farmers so that they can continue a historic way of life 
that is helpful to the regional economy.
  I have been pleasantly surprised that, while my mail certainly 
reflects discontent when gasoline prices rise by pennies, I have not 
received any swell of outrage of consumer complaints about milk prices 
over the last 3\1/2\ years that the Compact has been in place. The 
reality is that the initial pilot Compact project we so thoughtfully 
created has been a huge success.
  In 2000, dairy farmers in Maine received on average, $10,500 per 
dairy farm from the Compact Commission, the governing body set up to 
keep overproduction of fluid milk in check, and among other duties, 
ensure that the Federal nutrition programs, such as the Women, Infants, 
and Children Program, or WIC, are held harmless under the Compact. In 
fact, the advocates of these federal nutrition programs support the 
Compact and serve on its commission.
  The Northeast Interstate Dairy Compact has provided the very safety 
net that we had hoped for when the Compact passed as part of the 
omnibus farm bill of 1996. The Dairy Compact has helped farmers 
maintain a stable price for fluid milk during times of volatile swings 
in farm milk prices.
  Also, consider what has happened to the number of dairy farms staying 
in business since the formation of the Dairy Compact. It is now known 
that, throughout New England, there has been a decline in the number of 
dairy farmers going out of business. In Maine, for instance, the loss 
of dairy farms was 16 percent from 1993 to 1997. The Compact then went 
into effect and from that time until now, the loss of dairy farms has 
dropped to 9 percent.
  The Compact has given dairy farmers a measure of confidence in the 
near term for the price of their milk so they have been willing to 
reinvest in their operations by upgrading and modernizing facilities, 
acquiring more efficient equipment, purchasing additional cropland and 
improving the genetic base of their herds. Without the Compact, farmers 
would not have had the courage to do these things and their lenders 
would not have had the willingness to meet their capital needs.
  The Compact has also protected future generations by helping local 
milk remain in the region and preventing dependence on milk a single 
source of milk that can lead to higher milk prices through increased 
transportation costs and increased vulnerability to natural 
catastrophes.
  The bottom line is, the Compact has helped the economies of the New 
England States. The presence of farms are protecting open spaces 
critical to every State's recreational, environmental and conservation 
interests. These open spaces also serve as a buffer to urban sprawl and 
boost tourism so important to my home state of Maine.
  Through its bylaws, the Compact has also preserved State sovereignty 
by adopting the principle of ``one state--one vote,'' requiring that 
any pricing change be approved by two-thirds of the participating 
states in the Compact.
  There are compensation procedures that are implemented by the New 
England Dairy Commission specifically to protect against increased 
production of fresh milk. The Compact requires that the Compact 
Commission take such action as necessary to ensure that a minimum price 
set by the commission for

[[Page S7255]]

the region over the Federal milk marketing order floor price does not 
create an incentive for producers to generate additional supplies of 
milk. When there has been a rise in the Federal floor price for Class I 
fluid milk, the Compact has automatically shut itself off from the 
pricing process. Since there is no incentive to overproduce, there has 
been no rush to increase milk production in the Northeast as was feared 
by Compact opponents. No other region should feel threatened by a dairy 
compact for fluid milk produced and sold mainly at home.
  The consumers in the Northeast Compact area, the now in the Mid-
Atlantic area and the Southeast area, have shown their willingness to 
pay a few pennies more for their milk if the additional money is going 
directly to the dairy farmer. Environmental organizations have also 
supported dairy compacting as Compacts help to preserve dwindling 
agricultural land and open spaces.
  I urge my colleague not to look success in the face and turn the 
other way, but to support us in passing this legislation that half of 
our states have requested.
  Mrs. CLINTON. Mr. President. I am pleased to join with my colleagues 
today as an original cosponsor of the Dairy Consumers and Producers 
Protection Act of 2001. This legislation is vitally important to New 
York dairy farmers, New York's economy, and rural communities around 
the country.
  From Watertown and Glen Falls to Ithaca and Jamestown, NY farmers and 
New York farms are an invaluable part of our State's economy and its 
landscape. Agriculture is one of New York's top industries. What is 
grown in our State makes its way to homes and kitchen tables across the 
country, and around the world.
  In particular, the dairy industry is a pillar of New York's economy. 
Milk is New York's leading agricultural product, creating almost $2 
billion in receipts. And New York ranks third in the country in terms 
of the value of dairy products sold, surpassed only by California and 
Wisconsin.
  Yet, as I travel throughout New York State, I meet dairy farmers who 
are working harder, but still struggling to make ends meet. Volatile 
milk prices make it very difficult for New York dairy farmers to 
negotiate loans, to invest in expansion, and to plan for the future.
  That is why it is so important that we join with our colleagues from 
other States to expand the Northeast Dairy Compact to include New York. 
If New York had been a member of the Northeast Dairy Compact last year, 
the over 7,000 dairy farms in New York would have received an estimated 
$132.6 million in payments, an average of $18,200 for each farm, 
thereby increasing income for the average New York dairy farm by 
approximately eight percent.
  In addition, New York farmland and farms have become prime land for 
development and sprawl. We must make sure that farmers all across New 
York and around the country get the help that they need to hold onto 
their farms, and to preserve our fields and open spaces. They are an 
important part of what makes New York so unique and so beautiful.
  Helping to preserve New York's dairy farms by expanding the Northeast 
Diary Compact is the right thing to do. Not only does it ensure the 
security of our dairy farmers in New York and in other parts of the 
country, it guarantees an adequate supply of fresh milk at reasonable 
prices and helps to preserve precious open space.
  Mr. JEFFORDS. Mr. President, today, I rise today to express my 
support for the Dairy Consumers and Producers Protection Act of 2001, 
important legislation that would re-authorized and expand the Northeast 
Dairy Compact, and ratify a Southern Compact. Growing support and 
recognition of the effectiveness and ingenuity of the Northeast Dairy 
Compact has led twenty-five States to enact compact legislation. These 
States now look to Congress to grant them the right to join the 
Northeast Compact, or to form a Southern Compact.
  It is critical that we keep pace with the demands of State 
governments, and provide them with the authority to develop a regional 
pricing mechanism for Class I (fluid) milk. Farmers across our Nation 
face radically different conditions and factors of production. 
Differences in climate, transportation, feed, energy and land value 
validate the need for regional pricing. Compacts allow States to 
address these differences and create a price level that is appropriate 
for producers, processors, retailers, and consumers.
  The Northeast Dairy Compact was originally authorized as a three-year 
pilot program in the 1996 Farm Bill. Sine July of 1997, when the 
Compact Commission first set the Class I over-order price at $16.94, 
the Northeast Dairy Compact has proven to be a great success, providing 
farmers with a fair price for their milk, protecting consumers from 
price spikes, reducing market dependency upon milk from a single 
source, controlling excess supply, and helping to preserve rural 
landscapes by strengthening farm communities. And, unlike so many of 
our country's agricultural programs, the benefits of the dairy compact 
are realized at no cost to the Federal Government.
  The Northeast Dairy Compact is managed by the Compact Commission. The 
Commission, comprised of 26 delegates from the six New England member 
States, includes producers, processors, retailers and consumer 
representatives. Each State governor appoints three or five delegates 
to represent their State's vote on the Commission. The Commission meets 
monthly to evaluate and establish the current Compact over-order price 
for Class I (fluid) milk. Using a formal rule-making process, the 
Commission hears testimony to establish a price that takes into account 
the purchasing power of the public, and the price necessary to yield a 
reasonable return to producers and distributors. Any price change 
proposed by the Commission is subject to a two-thirds vote by the State 
delegations as well as a producer referendum.
  The Compact Commission's price regulation works in conjunction with 
the Federal Government's pricing program, which establishes minimum 
prices paid to dairy farmers for their raw milk. Under the Compact, 
processors pay the difference between the Compact over-order price for 
fluid milk, currently $16,94, and the price established monthly by 
federal regulation for the same milk. The over-order premium is paid on 
class I (fluid) milk, and is only paid when the Compact over-order 
price is higher than the price set by the Federal milk marketing 
orders. Processors purchasing milk for other dairy products such as 
cheese or ice cream are not subject to the Compact's pricing 
regulations, although all farmers producing milk in the region, for any 
purpose, share equally in the Compact's benefits.

  In order to protect low-income consumers from any increases in cost 
caused by the Compact, the Compact legislation imposes regulations on 
the Commission requiring that the Women, Infants and Children, WIC 
program, as well as School Lunch Programs, must be reimbursed for any 
additional costs they may incur as a result of compact activity. Three 
percent of the pooled proceeds are set aside to fulfill these 
obligations.
  Compact legislation also contains a clause that holds the Commission 
responsible for any purchases of milk or milk products by the Commodity 
Credit Corporation, CCC, that result from the operation of the Compact. 
The Secretary of Agriculture has the authority to determine those costs 
and ensure that the Commission honors its obligations.
  After money is withheld for the WIC and School Lunch programs, as 
well the CCC, the Compact Commission makes disbursements to farmer 
cooperatives and milk handlers. These entities then make payments to 
individual farmers based on their level of production. These payments 
are only made when the Federal market order price falls below the price 
set by the Compact Commission, effectively creating a floor for milk 
prices. This, in turn, decreases price volatility in the region.
  The stability created by the Compact pricing mechanism is important 
for several reasons. It guarantees farmers a fair price for their 
product and allows them to plan for the future. Farmers, knowing that 
they can count on a fair price, can allocate money to purchase and 
repair machinery, improve farming practices, and above all, stay in 
business.

[[Page S7256]]

  Throughout our great Nation, the family farm continues to be a vital 
part of our rural community and agricultural infrastructure. In New 
England, and across our country, farms continue to support our rural 
economies. Farms create economic stability by supporting local 
businesses such as feed stores, farm equipment suppliers and local 
banks. The continuing disappearance of small farms is making life very 
difficult for agri-businesses and disrupting the overall rural economic 
infrastructure.
  The importance of the family farm extends well beyond the rural 
economy, however. Preservation of the family farm has important 
environmental consequences as well. Numerous environmental 
organizations have expressed their support for dairy compacts. They 
recognize the ability of compacts to protect our farms and preserve our 
dairy industry. These organizations include the Sierra Club, the 
Conservation Law Foundation and the National Trust for Historic 
Preservation. These groups, as well as numerous other environmentally 
conscious organizations, recognize farmers as good stewards of the 
land, and value the ability of farms to sustain productive use of the 
land, while preserving open space.
  Even though compacts enjoy widespread support across much of our 
country, opponents have worked tirelessly to discredit the merits of 
dairy compacts. These critics, however, must contend with the strong 
record of success that the Northeast Dairy Compact has put forth.
  During its first four years, the Northeast Compact has stood up to 
numerous legal challenges. Courts have ruled in favor of the Compact on 
every level, including the U.S. Supreme Court. The courts have 
recognized the Compact as a proper and constitutional grant of 
congressional authority, permitted under the Commerce and Compact 
clauses of the U.S. Constitution. These decisions have upheld the 
Commission's authority to regulate milk within the region, as well as 
milk produced outside of the region.
  Concerns have also been raised about the Compact's effect on 
interstate trade. Opponents of the Northeast Compact argue that 
compacts restrict the movement of milk between States that are in the 
Compact, and States that lie outside the Compact. Compacts, however, do 
not restrict the movement of milk into the region. For example, 
producers in eastern New York State benefit from the Northeast Compact. 
By shipping their milk in the region, farmers are eligible to receive 
the Compact price for their products.
  Another common misconception is that the Compact leads to 
overproduction. The Northeast Dairy Compact, however, has not led to 
overproduction during its first four years. In fact, during 2000, the 
Northeast Dairy Compact states produced 4.7 billion pounds of milk, a 
0.6 percent reduction from 1999. Since the Northeast Dairy Compact has 
been in effect, milk production in the region has risen by just 2.2 
percent. Nationally, milk production rose 7.4 percent from 1997 to 
2000. Over this same period, California, the largest milk producing 
Sate in the country, increased its milk production by 16.9 percent.
  To protect against overproduction, the Compact Commission has 
developed a supply management program that rewards farmers who do not 
increase production. Under the program, 7.5 cents per hundred-weight is 
withheld by the Commission. This money is refunded to producers that 
have not increased their production by more than 1 percent during the 
given year. While this program has only been in place since 2000, we 
believe that it will be a useful tool in preventing overproduction.
  Finally, opponents argue that compacts are harmful to consumers, 
especially low-income consumers. The facts show that this not the case. 
On May 2, 2001, an independent study out of the University of 
Connecticut's Food Marketing Policy Center offers new evidence 
regarding the impact of the Northeast Dairy Compact on consumer prices. 
The Food Marketing Policy Center performed a four-year analysis of 
retail milk prices using supermarket scanner data from 18 months prior 
to Compact implementation, up through July of 2000. This period of time 
captured the volatile prices preceding Compact implementation, as well 
as the pricing behavior that followed. The study found that the 
Northeast Dairy Compact was responsible for only 4.5 cents of the 29-
cent increase in retail prices following Compact implementation. The 
study concludes that wider profit margins by processors and retailers 
account for 11 cents of the 29-cent increase. Since the Compact went 
into effect, these wider profit margins have drawn nearly $50 million 
out of the pockets of New England consumers.

  The study suggests that retail stores and processors have used price 
gouging and ``tacitly collusive price conduct'' to lock in wider profit 
margins. The study states: ``Leading firms in the supermarket-marketing 
channel have used their dominant market positions to elevate retail 
prices in the Northeast Compact Region.'' In conclusion, the study 
contends: ``The major policy now facing New England consumers of fluid 
milk is not the Northeast Dairy Compact. It is the exercise of market 
power by the region's leading retailers and milk processor.'' While 
this study raises some serious concerns regarding the New England dairy 
industry, it illustrates that the effects of the Compact on consumers 
have been benign.
  A May 11, 2001 article in Cheese Market News written by Jim Tillison, 
Chairman of the Alliance of Western Producers, further addresses the 
consumer issue. Mr. Tillison writes:

       ``Now, unless I am wrong, in every dairy state there are 
     many times more consumers than dairy farmers. It would seem 
     that it would be very difficult to get compact legislation 
     passed if consumers were strongly opposed to it. That must 
     not have been the case if some 25 state legislatures have 
     passed compact legislation. What's more, 25 governors who 
     have had the power to veto state compact legislation haven't. 
     (Cheese Market News, May 11, 2001)

  Tillison continues by examining the reasons why consumers support the 
Compact. These include decreases in retail price volatility and the 
need for a fresh supply of milk. Tillison states, ``Consumers like the 
idea of milk for their kids being produced locally. Even though the 
milkman delivering ``fresh'' milk to the consumer's doorstep is a thing 
of the past, that doesn't mean that consumers don't want fresh milk.'' 
At this time, I would ask unanimous consent that Jim Tillison's 
article, ``Let's Talk About Compacts'' be submitted for the Record.
  Under our legal system, individual states have the authority to 
establish their own dairy pricing mechanism. Because of the nature and 
size of the dairy industries in the Northeast and South, states in 
these regions are better served by coming together to form a unified 
pricing mechanism. By supporting the rights of states to form dairy 
compacts, we maintain the safety and continuity of our milk supply, 
protect consumers from volatile milk prices, and conserve open land.
  Originally created as a three-year pilot program, the Northeast Dairy 
Compact has been extremely successful in demonstrating the merits of 
compacts. We no longer need to speculate about the potential effects of 
compacts. We now have the hard evidence, they are good for farmers, 
good for consumers, and good for the environment. I ask that the Senate 
recognize this by extending and expanding the Northeast Dairy Compact, 
and ratifying a Southern Compact.
  In closing, I urge the Senate to support this important legislation. 
Our States have come to us, and asked us to grant them the right to 
regulate the minimum farm price of milk, the right to save their family 
farms. We must grant them that right.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

              [From the Cheese Market News, May 11, 2001]

                       Let's Talk About Compacts

                           (By Jim Tillison)

       Here we go again. The issue of dairy compacts is ``heating 
     up'' once again. Studies have been done and to now one's 
     surprise they are biased depending on which aide you are on. 
     Let's try to look past all the rhetoric to what is causing 
     all the stir and discuss the stir that is being caused.
       First, let us review the process involved in putting a 
     dairy compact in place.
       Essentially, the compact process result in negating 
     interstate commerce laws. In other words, it allows the dairy 
     producers in a number of states to regulate the price of milk 
     paid by fluid processors in those states. Any milk brought 
     into the state for fluid purposes is subject to the compact.
       The process starts with the state legislatures in each 
     state in which interested producers reside passing 
     legislation supporting

[[Page S7257]]

     putting a compact in place. Now, unless I am wrong, in every 
     dairy state there are many times more consumers than dairy 
     farmers. It would seem that it would be very difficult to get 
     compact legislation passed if consumers were strongly opposed 
     to it. That must not be the case if some 25 state 
     legislatures have passed compact legislation. What's more, 25 
     governors who have had the power to veto state compact 
     legislation haven't.
       Arguably, this is proof that consumers are not opposed to 
     dairy compacts even though it can result in higher milk 
     prices. One reason could be that the extra revenue the 
     compact price generates over and above the federal order 
     price (when, and only when, it is higher than the set compact 
     price) goes directly to the dairy farmers.
       Another reason could be that a compact minimum Class I 
     price removes much of the volatility from consumer prices. 
     Just as there was a lot less volatility in milk prices when 
     the support price was $13.10, there is a lot less volatility 
     when Class I has a minimum price, too.
       Still another reason could be that consumers like the idea 
     of milk for their kids being produced ``locally.'' Milk isn't 
     orange juice. It has a different mystique. Even though the 
     milkman delivering ``fresh'' milk to the consumer's doorstep 
     is a thing of the past, that doesn't mean that consumers 
     don't want fresh milk. The lack of success that UHT milk and 
     powdered milks have had here as compared to Europe, one could 
     argue, is because of consumers' desire for (and the 
     availability of) fresh milk.
       One can sort of understand fluid processors opposing dairy 
     compacts. It certainly can result in higher average milk 
     costs for processors. Fortunately for the processor, the 
     consumer is apparently willing to accept the slight increase. 
     And, if one study reported on is correct, processors and 
     retailers are taking advantage of the consumer's willingness 
     as well.
       What is difficult to understand is the opposition to 
     compacts by some producers. This opposition seems to be based 
     on the fear that it will negatively affect them. This fear 
     appears to have been generated more by economic theory than 
     fact.
       The theory was based on a single premise--money makes milk, 
     more money makes more milk. A dairy compact will give 
     producers in compact states more money. This will result in 
     them producing more milk. This additional milk will go into 
     manufactured products which will hurt producers in states 
     where the majority of milk goes into cheese. At least that's 
     the theory.
       The fact is that more money hasn't brought on more milk in 
     the one compact area currently in existence. Only one of the 
     Northeast compact states, Vermont, is in the top 20 milk-
     producing states. And, the total area has not seen milk 
     production rise faster there than the national average.
       Has the Northeast Compact hurt producers in other areas of 
     the country? The answer is no. Will a Southeast Compact bring 
     on a surge of milk production? Again, the answer is no. Just 
     take a look at what happened after Class I differentials were 
     raised $1.00 per hundred weight in the Southeast in 1986. Did 
     milk production boom? Did it outstrip demand? Did cheese 
     plants spring up from Arkansas to Florida? No, no, no.
       Finally, the argument that really makes me knuckle is that 
     the Northeast Compact passage and implementation was 
     political. It wasn't mandated by Congress. It didn't stand on 
     its own two feet. Congress never got to vote on the compact 
     on its own. It was only supposed to be a transition program 
     while federal order reform was taking place. Secretary of 
     Agriculture Dan Glickman didn't have to implement it.
       Don't ask me to respond to those kind of comments. What 
     hearing was ever held or separate vote taken on forward 
     contracting? I don't recall any serious discussion of the 
     portion of a recent budget bill that exempted one county in 
     Nevada from federal order Class I differentials. Of course 
     Glickman had to implement it . . . the pet project of a 
     Vermont Democratic senior senator in an election year. Think 
     about it.
       The dairy industry has many more important issues to spend 
     political capital on. Issues that really are having, or will 
     have, an impact on it. Instead of fighting over compacts, it 
     should be working together to improve our potential for 
     growth in world markets by really pushing for fair trade, 
     dealing with environmental and food safety issues and 
     developing programs that will allow all segments of the 
     industry to continue to flourish in the 21st century.
       The views expressed by CMN's guest columnists are their own 
     opinions and do not necessarily reflect those of Cheese 
     Market News.

                          ____________________